Property buying and selling guide
> Glossary
| Glossary of terms and acronyms | |
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Asking price The price being asked by the vendor. Normally a little optimistic - a lot of properties sell for a bit less than the asking price. Body Corporate The body corporate is the group that all apartment or flat owners belong to. The body corporate is responsible for the running of the building and the upkeep of all common areas and functions, including building security, etc. Body Corporate levies or fees Body corporate levies are paid by the apartment or flat owners to pay for the work done by the body corporate and upkeep of the building or complex. These levies are typically additional to rates. Body Corporate finances A body corporate is responsible for casting a budget and keeping expenditure within the budget. Body corporate finances vary. Make sure your body corporate doesn't have any debt and that the expenditure is reasonable and well-managed. You own a portion of any assets or debts of the body corporate. Body corporate rules and regulations The rules imposed by the body corporate on the tenants. May include restrictions on noise, pets, or anything else. You should review these before you buy an apartment to make sure you are happy with the rules. BBO Buyer budget over... See BEO. BEO Buyer enquiry over... A silly acronym used to confuse a first home buyer that indicates the point above which offers will be looked at by the vendor. This doesn't mean you can't offer below that, just that nothing will probably happen if you do. BRANZ Building Research Association of New Zealand. Wellington based, they also have offices in Auckland, Hamilton and Christchurch and provide a range of building services. Visit their website at: www.branz.org.nz Bridging Finance or Bridging Loan A short-term loan taken while you free-up money from the sale of your other house. Capital Value The total value of your property including land and buildings, but not the chattels. You may see this term used on your Rating Valuation (RV). Certificate of Title The ownership paper for your property. It contains a legal description of the land you own and information about the house. Chattels The items that come with the house when sold, including curtains, carpets, appliances, light fittings and other stuff generally considered part of the house. These should be listed on the Sale and Purchase agreement. Closed Tender A tender where bids must be in before a defined date. Company Title Some flats come with a company title. The company effectively owns the flat, and you own both shares in the company and a right to live in the flat (called a licence to occupy). Conditional agreement The agreement that goes alongside a conditional offer. It includes all the conditions that must be met before everything becomes final, or unconditional. Conditional offer When you make an offer, you can make it conditional on getting your finance approved, sighting the body corporate finances, getting a building inspection, or anything else you like. Be warned though - the more conditions you put into an offer, the less attractive the offer may seem to the vendor. Conveyance The legal process involved in changing ownership of the property. This includes the registration of new ownership documents. Covenant If a covenant is recorded on the title for your property it means there is some legal restriction or agreement. It may, for example, include restrictions on what you can and cannot modify on your property. Deposit The initial payment you make on your home - the mortgage pays for the difference. You are usually required to have between 5% and 20% deposit for your property before the bank will give you a mortgage. Depreciation If your property depreciates, it goes down in value. Disbursements Additional bits and pieces charged by lawyers and other professionals that relate to the costs they incur. Include photocopying, phone calls, etc. Discharge of Mortgage When you pay-off your mortgage it is discharged. From this point forward, the bank no longer owns your house, you do! Well done. Early possession When you are allowed to move into your new home before settlement. A good deal, depending on the rent the previous owner wants to charge you. Easement An easement permits someone else to use your property for some stated purpose. An example is when the neighbour needs to use your driveway to get to their place. You may have an easement on your neighbour's property for a similar reason. Equity Equity is what is left if you sell your property and pay-off all the debt. The more equity you have in your property the better. Fixtures and fittings Items considered part of the property because they are permanently attached. Examples include the stove, cupboards and shelves. Foreclosure This is what you risk if you don't make your mortgage repayments. The bank comes and takes your home away. How nice. Freehold This means you own your land and buildings with few restrictions on what you do with them. Freehold can also mean you don't owe any money on your property. General agency The opposite of exclusive agency - a property listed with multiple agents Government Value or GV See Rateable Value. Instalments Typically means the frequency of payments to your bank for the mortgage. Each payment will usually be partly for the principal and the rest is for the interest component - depending on the type of mortgage you choose. Interest rates These typically come in fixed or floating varieties. Fixed interest provides you with a defined interest rate for a certain period (e.g. 6% for 2 years on a given amount). Floating interest rates move up and down as your lender chooses - if interest rates go up elsewhere, yours will to. Joint Tenancy Most couples own their home in this way. It means you both own the property (and the mortgage) and that if one of you dies, the other party (or parties) get full ownership of the property. It supersedes whatever your Will says. Land Information Memorandum (LIM) A report from your local authority or council that outlines everything that they know about your property, including consents, rates, drainage and any problems they have on file. It is strongly recommended that you get one of these reports before finalising the purchase of a property. Land Value The value of the land without the buildings. Leasehold Means someone else owns the land under your property and that you rent it from them. The risk of leasehold is that your rent for the land could go up. You can get a Certificate of Title for your leasehold interest and will need to notify the landowner when you sell your property. Licence to occupy Common in retirement villages, a licence to occupy lets you live in the house or flat, but you don't own it. See Company Title. Market Value The likely sale price of a property. The market value is the most you can reasonably sell your property for, given the market conditions. Mortgage The legal document that gives your lender the 'security' over your property. If you are unable to make the repayments the mortgage is the document you need to be most afraid of. See Foreclosure. Mortgage Protection Insurance Insurance to help you make mortgage repayments in the event that you are unable to after losing your job or if you die. MREINZ The organisation that all real estate agents are members of. The institute provides training and does their best to keep ethics front of mind for their members. Possession This is when you have the right to move in to your new home. Also known as 'taking possession'. Power of Attorney A legal document that lets someone act (in a legal sense) on your behalf if you are unable to. Grant this carefully. Pre-approval Offered by most banks, you can get pre-approved up to a certain amount to buy a property. Factors taken into consideration include your income, your expenses, and any other debt you have. Principal The amount of money you owe your lender before the interest component is added. Private sale Selling your house without the assistance of a real estate agent. Typically saves you 4% of the value of your house in fees, if you can get the same price as the agent would have. Project Information Memorandum (PIM) A report you can get from your local authority or council that will help you if you are undertaking a building project. It will set out everything they know about the land - such as it's propensity to flood. Rateable Value The valuation that is done by your local authority to set your rates. Typically, the more your property is worth, the more rates you pay. Used to be known as the Government Valuation or GV. Sale and Purchase Agreement The legal contract between the vendor and the purchaser. Security See Mortgage. Settlement day The day when you pay for the property you have purchased. Also typically the date you get your mortgage to allow you to do this. You get the keys and the vendor gets their dosh - minus the real estate agent's fee, if applicable. Sole agency When you home is being sold by a single real estate agency. Take possession See Possession. Tender The process of buyers making offers, typically in writing, for the seller to consider. In closed tenders, bids need to be in by a certain date. Open tender means there is no particular deadline - but that the property could sell anytime. A tender bid can include conditions from the bidder. Unconditional Means there are no conditions attached to the sale of the property. An offer will often be made with conditions and then go unconditional once the buyer has checked off their conditions. Unit title Means you own your flat or apartment and that you own a portion (or unit) of the common areas, as administered by the body corporate. Vacant possession Means the buyer takes possession with no tenants living in the property. Value of improvements The difference between the Land Value and the Capital Value of the property. Essentially the value of the buildings. Vendor The owner who is selling the property. Will A legal document that sets out what to do with your assets when you die. Can save a lot of hassle for others when you die. |