In every industry, business sector or organised body of people, a language tends to form specific to those groups that individuals within the group can identify with and readily understand, allowing clear and concise communication within the group.
Many of us may know this as jargon.
The Real Estate Industry is certainly one of the groups that has its share of ‘terms’ or ‘Jargon’ to describe people, events and situations that is unique to itself.
You may know all or some of the terms I am about to share, however if you are selling your own home hearing, understanding or using these terms may not be so foreign to you during the marketing and sale process.
The Market:
This term describes all of the parts that go into the ‘space’ that is so often called the ‘Real Estate’ or ‘Property’ Market – Houses, land, units, buyers, sellers, agents, prices, yields…
However, the term, ‘The Market’, is predominantly referring to buyers.
The sentiment of buyers; their greed, fear, indifference, beliefs… is what really drives ‘The Market’. They are ‘it’! Without buyers there is basically nothing.
So, when you hear anyone say, “The market is hot.” “The market is active.” The market is sluggish.” They are actually referring to the sentiment, behaviour and actions of buyers.
Listing:
This describes a piece of real estate actually being offered to the open market, for sale. ‘Listed’ for sale.
Value:
“Beauty is in the eye of the beholder – and so is value!”
Value: The regard that something is held to deserve: the importance, worth or usefulness of something.
I have always said that sellers set the price, buyers determine the value.
The value of a property is what another party is willing to pay so you can transfer the ownership.
Price:
There are three types of price: The vendors expectational price; the list price and the sale price.
The price that matters most is the ‘sale price’. The best number that ‘The Market’ is willing to pay for your property.
Auction:
This is where a property is offered for sale with an ‘end date’, whereby a ceremony will take place publicly, at the property or in an auction room, conducted by a licenced auctioneer calling for ‘bids’ from interested buyers – and the highest bid, acceptable to the seller, deems that buyer as the new owner.
Private Treaty:
Listing a property for sale with a price, price guide or price range and calling for interested buyers to inspect and make direct offers, usually resulting in a negotiation process.
Objection:
When it comes to dealing with buyer objections it can be a tough experience to hear someone ‘knock’ your property – bring up things they don’t like about it.
Very early on I learned that an ‘objection’ was an indication the other party wanted more information or a solution to their doubt.
Most objections are around value, yet buyers express them in other ways, “The 3rd bedroom is too small.” “The back fence is not high enough.” “The driveway is a bit steep.”
An objection is a great indicator to ask a question and engage the buyer further.
Offer:
The action of a buyer interested in a property for sale, whereby they put forward a price (written or verbal) to the owner in a hope of immediate acceptance to purchase the property.
Counter Offer:
The price response from a home seller to the initial offer from the prospective buyer.
Negotiation:
The process of ongoing offer/counter offer between a buyer and seller to determine a price acceptable to both parties that will commence the transaction of completing the sale.
Terms/Conditions:
Terms refer to the ‘rules of law’ that are required to be observed by both buyer and seller to complete a property transaction. Each State in Australia has differing terms and when buying or selling a property it is HIGHLY advisable to engage a lawyer, conveyancer or settlement agent to assist in this regard.
Conditions refer to the satisfaction of the requirements of the buyer that will ensure the transaction can be completed.
The most common conditions are: Finance approval from the buyer’s lending institution and the buyer employing the services of a qualified building inspection to check for possible faults within or around the property. These conditions must be met/completed by a certain date for the transaction to proceed.
Contract:
The legally binding document(s) that encompasses, indicates and stipulates the agree price, amount of deposit held, all the terms and conditions and dates for conditions and settlement.
All parties (Buyers and Sellers) must sign and initial where necessary, and the contractual process and time frames are monitored by legal representatives for both parties.
*Always be in communication with legal representatives during this time to make sure conditions are being met and dates adhered to.
I hope this sheds some light on not only the terms used in Real Estate, but also the processes that make up the marketing/sale/transaction process.
