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Understanding real estate jargon

2 Oct 13

If you're beginning your real estate training, it's likely that some of the terminology used may not be part of your everyday vocabulary. Get up to speed with the following terminology clarifications.

Amortise

This means making regular payments that cover principal and interest fees to repay a mortgage.

Buyer's market

This is when the pressures of supply and demand make the market prices decrease to a relatively low level. This is advantageous to buyers, and is usually due to excess supply in the market.

Conditional agreement

A conditional agreement is a legally binding contract subject to certain conditions being satisfied.

The conditions will be set out in the agreement and are usually to be settled by the purchaser, however sometimes the buyer may require the seller to do something (such as a repair) by a specific date.

Fiduciary

A fiduciary is someone who holds the character of the trustee. The law considers real estate agents and salespeople to be fiduciaries, so they have a duty to act for the benefit of the person who employs them.

The penalties for failing in fiduciary duties can be severe, so it's best to get real estate advice if you require further clarification.

Freehold

Freehold ownership is the nearest the law gets to allowing a property owner to approach complete ownership of land. A freehold estate is of unlimited duration.

Negative gearing

Negative gearing occurs when the return on an investment is not enough to cover the cost of the investment. An example of this is when property maintenance and interest on mortgage repayments is more than the income received from letting or leasing the property.

Unencumbered property

This is when a property is free of any mortgages, leases, assessments and restrictive covenants.

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