Glossary

Common terms and acronyms used in Australian real estate.

Agent (Real Estate Agent/Selling Agent/Buyer’s Agent): A licensed professional who acts on behalf of the seller (selling agent) or buyer (buyer’s agent) in a property transaction. They market the property, negotiate offers, and facilitate the sale.
Appraisal: An estimate of a property’s market value, usually conducted by a real estate agent. It’s different from a formal valuation.
Auction: A public sale where the highest bidder usually buys the property. Reserve prices and auction conditions apply.
Auction Clearance Rate (ACR): The number of properties sold at auction, expressed as a percentage. A high ACR signals strong demand.
Asking Price: The price the seller is initially asking for the property. This is often a starting point for negotiations.

Body Corporate: The administrative body responsible for managing the common property and shared facilities in a strata complex (e.g., apartments, townhouses). They set levies to cover maintenance and insurance.
Bond: A security deposit paid by the tenant to the landlord, usually equivalent to four weeks’ rent. It’s held as security against damage or unpaid rent. (Relevant if considering investment properties).
Building and Pest Inspection: Professional inspections of a property’s structure and potential pest infestations. Highly recommended before purchase as part of your due diligence.
Buyer’s Agent: A real estate agent who acts exclusively for the buyer, helping them find and purchase a property.

Capital Growth: The increase in the value of a property over time.
Caveat: A legal notice registered on a property title, preventing certain actions from being taken without the caveator’s consent. It can indicate a claim on the property.
Certificate of Title: A legal document that proves ownership of a property and lists any encumbrances (e.g., mortgages).
Chattels: Items included in the sale of a property that are not permanently fixed (e.g., curtains, blinds, freestanding appliances). Distinguished from fixtures.
Conveyancing: The legal process of transferring ownership of a property from the seller to the buyer.
Cooling-off Period: A short period (varies by state) after signing a contract of sale during which the buyer can withdraw from the purchase, usually with penalties.

Days On Market (DOM): The average number of days properties are advertised before selling.
Deposit: A portion of the purchase price paid by the buyer upon signing the contract of sale, typically 5% or 10%.
Due Diligence: The process of investigating a property and its surrounding area before purchase, including inspections, legal advice, and financial checks.

Easement: A legal right allowing someone to use another’s land for a specific purpose without ownership. Examples are right of way, utility and support easements. They can significantly impact a property’s value and use.
Encumbrance: A claim or liability that is attached to a property’s title, such as a mortgage, easement, or caveat.
Equity: The difference between the current market value of a property and the amount still owed on the mortgage.

Fixtures: Items permanently attached to a property that are included in the sale (e.g., built-in cupboards, light fittings). Distinguished from chattels.
Freehold: Ownership of both the building and the land it sits on.

Gazumping: When a seller accepts an offer from one buyer but then accepts a higher offer from another buyer. (Less common with tighter regulations in some states).

Home Loan: A loan specifically for purchasing a property, secured by a mortgage over the property.

Interest Rate: The percentage of the loan amount charged by the lender as interest.
Investment Property: A property purchased with the intention of generating rental income and/or capital growth.

Land Tax: An annual tax levied on the owners of land in some states and territories.
Leasehold: Ownership of a building but not the land it sits on. Common in some retirement villages or specific areas.
Lenders Mortgage Insurance (LMI): Insurance that protects the lender if the borrower defaults on their home loan. Usually required if the deposit is less than 20%.
Listing: A property that is for sale, advertised by a real estate agent.
Loan to Value Ratio (LVR): The value of the loan or mortgage relative to the value of the property

Mortgage: A loan secured by a property. The lender can repossess the property if the borrower defaults on the loan.

Offer: A formal proposal by a buyer to purchase a property, outlining the price and terms.
Open House: A scheduled time when a property is open for potential buyers to view.

Pre-approval (Home Loan): An assessment by a lender of how much they are willing to lend to a potential borrower. Provides an indication of borrowing capacity.
Private Sale (aka Private Treaty or Sale by Treaty): A property sale where the seller negotiates directly with buyers, often through a real estate agent.
Property Management: The management of a rental property on behalf of the owner, including finding tenants, collecting rent, and arranging maintenance.

Real Estate Institute (REI): A professional body for real estate agents, providing training, resources, and a code of conduct.
Reserve Price: The minimum price a seller will accept for their property at auction.

Settlement: The final stage of the property purchase process, where ownership is transferred to the buyer and funds are exchanged.
Stamp Duty: A government tax payable on the purchase of a property. Varies by state and territory.
Strata Title: A form of ownership for multi-dwelling properties (e.g., apartments, townhouses) where owners share ownership of common property.

Title Search: A search of the property’s title to confirm ownership and identify any encumbrances.

Unconditional Offer: An offer to purchase a property that is not subject to any conditions (e.g., finance, building inspection).

Vacancy Rate: A percentage of the total number of properties that are vacant at a point in time. Used measure rental demand.
Valuation: A formal assessment of a property’s market value by a qualified valuer, often required by lenders for mortgage purposes. Different from an agent’s appraisal.
Vendor: The seller of a property.

Yield: The return on investment (ROI) for the owner’s investment property. Calculated by dividing the annual rent by the value of the property, then multiply by 100.