It’s easy for those of
us who work in real estate every day to forget that the general public, who
maybe buy or sell only a handful of properties in a lifetime, aren’t always well
versed in real estate terminology. There is a language that is specific to the
world of real estate, from terms involved with listing properties to the
language of a real estate contract. The more accessible we can make that
language to our clients, the more comfortable and at ease they are going to be
during the process.
Here are some basic
terms you may hear mentioned when talking about property sales:
Conditional: “It’s
still conditional” – this means that there is an offer to purchase which has
been accepted by the seller, and the buyers and/or sellers are now working
through the items they placed as subject conditions on the offer to purchase;
this is referred to as the due diligence period. There is a set date for these
conditions to be removed and if they are the contract will then be considered
unconditional. When a contract is in its conditional phase, there is a chance
that the purchase may not go through, as the conditions may not be satisfied.
Subject-Free: This
relates to the conditions set on a contract (or perhaps there are no conditions).
When all subject conditions have been waived or removed and both parties are in
agreement then a deal is considered ‘subject-free’ and buyer and seller are
obligated to complete the deal as outlined in the contract.
Deposit: While the
concept of the deposit is fairly obvious, clients don’t always understand that
the deposit will form part of the agreed upon purchase price if the sale goes
ahead and is not a separate, stand-alone amount of money.
Appraisal vs
Assessment: An appraisal of a property is done by a professional third party
accredited appraiser and provides the property’s value as set out in the scope
of the appraisal (if it is for market value or lender value for example). An
assessment is provided for the local municipality as value of the property and
is used to apply taxes to the property.
Commission: The gross
commission for a listed property is determined at the time of the listing. If there
is one agent for the sellers and one agent for the buyers, they will share that
gross commission in a pre-determined way (also set out in the listing contract
for the property). The gross commission is paid by the seller upon the receipt
of funds for the sale of the home, and both agents are then paid from that
monies.
The best advice when
it comes to dealing with real estate and the language is to ask lots of
questions. Your real estate agent is there to assist you, and explaining things
you don’t understand is part of the job.
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