While it is easy for us in the real estate industry to just assume that everyone understands what we are talking about when it comes to property and buying or selling real estate, this week we thought we should give a refresher on some commonly used terms. Have a read below and if you need any further clarification on these or other real estate terminology please don’t hesitate to get in touch!
Listing: When a property is listed for sale it means the agent has a signed Agency Agreement and the property is now compliant to go to market. The term ‘new listing’ refers to a property only just launched to market for sale.
Price Guide: In NSW, Legislation states that an agent must provide the seller with a reasonable estimate of selling price for their property. Known as the ESP, to publish this price it can have no more than a 10% variance and must be justified by comparable sales and market dynamics evidence. It can be shown as a guide, i.e. $1,000,000 to $1,1000,000 or can be shown as a single figure i.e., $1,000,000 or at any figure above the lowest number. Quoting a figure less than this is classed as under-quoting. Price or Auction Guides are used extensively for both Auction and Sales by Negotiation.
Asking Price: This is used with the traditional method of sale called ‘Private Treaty’ where a set figure is agreed with the seller and buyers are encouraged to submit offers they would like to pay based on the price the seller is asking for their property.
Pre-market listing/pre-market sale: When a property is available for sale, however the Agent and Vendor have agreed on a pre-market phase of the campaign which allows the Agent to market the property to his/her database of buyers. If the property is not matched to a buyer in this phase, it will then be launched to market with a strategy to capture a wider audience through print and digital marketing platforms.
Easements: Real property in NSW can be subject to what is called “restrictions on use or title” these are noted on the Certificate of Title which is your document of proof of ownership. These restrictions usually refer to easements or the enablement of the use of part of the land by others such as rights of way, drainage, sewerage lines and other such domestic or government usages. It is always wise to check and understand the implications of such restrictions as well as covenants or limitations on use or height as they can affect the development potential of land.
Covenants: Many purchasers find when they purchase land or an existing home that their solicitor emphasises the “Restrictions on Use” or the “Covenants” on the title to the property. In essence, a property covenant can guide or restrain how you build or alter your property, or how you use the land. You can find a property covenant in a contract of sale, but most commonly within a land’s certificate of title or in a separate document referenced within the title.
Gazumping & Cooling off: Gazumping is often a misunderstood term and has been a big problem in NSW, as the law makes it compulsory for agents to ‘gazump’ in certain circumstances. It basically means an agent or seller accepting an offer from a buyer and then prior to the exchange of contracts accepting an offer from another buyer. The law states that it is an offence if an agent fails to submit all offers to a seller for consideration prior to exchange of contracts. This is why cooling off periods were put in place to enable buyers to exchange contracts immediately after an offer is accepted and then have 5 days to do their due diligence where the property cannot be sold to anyone else.
Exchange: Exchanging sale contracts is the legal part of selling a home. There will be two copies of the sale contract: one for you and one for the buyer. You each sign one copy before they are swapped or ‘exchanged’. This can be done by hand or post and is usually arranged by your solicitor, conveyancer or the agent. At the time of the exchange, the buyer will be required to pay a deposit, usually 0.25% of the purchase price for an exchange with a 5 day cool off period, or 10% for an unconditional exchange.
Settlement: Settlement is the conclusion of the sale transaction and usually takes place six weeks after contracts are exchanged, however settlement periods can differ if all parties agree.
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