The Real Estate industry is full of jargon which can be quite confusing for aspiring agents. We have prepared a comprehensive glossary to help you get started and sound like an expert!
Understanding these terms is key for effective communication with clients, colleagues and industry professionals working in real estate, whatever Australian state or territory you work in. Let’s dive in!
Appraisal
An objective estimate of what a property is worth. This is typically based on your own experience and market research into comparable properties. An appraisal is not the same as a valuation – this is a process qualified valuer undertakes, typically for a bank when preparing a loan.
Appreciation
An increase in value over time. Also known as capital growth.
Capital Gains Tax
A levy payable on the profits when selling an asset – in this case an investment property. This tax is calculated as income tax and can be reduced by holding an asset for more than 12 months.
Commission
The fee or payment made to an agent for services rendered, such as the sale of property. This may be a fixed number or a percentage of the final sale price, typically ranging from 1-5% depending on a range of factors.
Contract of Sale
An agreement related to the sale of property which includes all applicable terms and conditions of sale.
Conveyancer
The person (often a solicitor) responsible for preparing and lodging the sales contract, memorandum of transfer and other related documents.
Cooling off period
A short statutory period after the contract is signed during which the purchaser may cancel the contract unconditionally. Cancelling may incur a small fee and typically does not apply to auctions.
Deposit (Holding)
A small percentage (typically 0.25%) of the total sale price paid on exchange of contract for purchase of a property.
Deposit (Mortgage)
The initial capital offered on commencement of a mortgage. This may be anywhere from 2% with some Government and Bank schemes to 20% in some circumstances.
Depreciation
A decrease in the value over time. Investors will often use depreciation to offset their taxable income in a practice known as ‘negative gearing’.
Exclusive Agency Agreement
A contract between a vendor and an agent establishing them as the single agent entitled to commission from the sale of the property. This agreement is typically valid for several months.
Foreclosure
A legal process where a lender is able to transfer the title of the property from the homeowner to the institution to help recoup the cost of an outstanding loan. This is typically done when a borrower is unable to make payments for an extended period of time.
Gazumping
Where a vendor agrees to sell a property (usually verbal agreement) but then sells it to another party on more favourable terms.
Guarantor
A person responsible for paying back a loan should the borrower default. A guarantor may be required if a lender doesn’t want to lend money to a borrower on their own.
Interest Rate
The rate of return charged by a lender, typically expressed in the form of a percentage per annum.
Landlord
The owner of a leased property.
Listing
A property an agent has been engaged to market and sell.
Management Agreement
A written contract between a landlord and an agency outlining the terms of the property management services.
Median Price
Derived from arranging property prices in ascending order and then selecting the middle price. It is not the average price.
Negative Gearing
Where the expenses associated with the property are greater than the income received. Negative gearing is typically used to offset an investor’s taxable income.
Open Listing
When a vendor grants selling or leasing rights over a property to any number of agents on a non-exclusive basis. The first agent to source a buyer with acceptable terms will receive the specified commission.
Pre-approval
The process of receiving approval for a loan amount before submitting an offer on a home. A pre-approval signals a qualified buyer.
Property Management
The service relating to the management of a leased property.
Rent Roll
A group of rental properties managed by a Property Manager or Real Estate agency.
Rental Return
The annual rental income for a given property as a percentage of the property value, also referred to as rental yield.
Settlement
The final stage of a sale where the purchaser completes the payment of the contract price and takes possession of the property.
Stamp Duty
Tax imposed by state governments on certain contracts – typically contracts of sale. Typically calculated as a percentage of the contract value and dependent on state legislation.
Stock and Station agent
A certified broker capable of transactions that involve livestock, rural property and agricultural products on behalf of their clients.
Title
The form of ownership of a property – this may be in the form of a Torrens, strata or community title.
Trust Account
A legally required bank account where funds are held by an agent on behalf of their client. Trust accounts are subject to a range of audit requirements to ensure compliance and consumer protections.
Valuation
Different to an appraisal, a valuation is conducted by a qualified valuer, typically during the process of securing a loan.
Vendor
The person(s) listing the property with an agent.
Congratulations! You’ve now gained a solid understanding of some core terms used in the industry. Real Estate can be a rewarding career and preparation is key to success. Looking to learn more? Check out the other blogs we have or enrol in one of our nationally recognised courses here.
