Real Estate Jargon Explained: What Buyers Need to Know

Entering the real estate market can be daunting, especially with all the industry-specific terminology that gets thrown around. At Webb & Co. Buyers Agency, we believe that an informed buyer is a confident buyer. To help you navigate the real estate landscape in Sydney’s North Shore, we’ve compiled a list of common real estate jargon and what they mean.

1. Auction

An auction is a public sale where properties are sold to the highest bidder. Auctions are common in Sydney’s competitive market. Understanding the auction process, including registration, bidding, and settlement, is crucial for potential buyers.

2. Appraisal

An appraisal is an estimate of a property’s market value, typically conducted by a real estate agent. This helps sellers set a price and buyers determine whether a property is worth its asking price.

3. Conveyancing

Conveyancing refers to the legal process of transferring property ownership from the seller to the buyer. It involves preparing, verifying, and lodging various documents to ensure the transaction is legally binding.

4. Contract of Sale

The Contract of Sale is a legal document outlining the terms and conditions agreed upon by the buyer and seller. It includes details about the property, price, deposit amount, and settlement date. Reviewing this contract thoroughly is essential.

5. Deposit

A deposit is a sum of money paid by the buyer to the seller (or their agent) as a show of good faith when entering into a contract. It is usually a percentage of the purchase price and is held in trust until settlement.

6. Equity

Equity refers to the difference between the market value of a property and the amount owed on it (such as a mortgage). As you pay off your mortgage, your equity in the property increases.

7. LVR (Loan-to-Value Ratio)

The Loan-to-Value Ratio (LVR) is the percentage of the property’s value that is financed through a loan. For example, an 80% LVR means that 80% of the property’s value is borrowed, with the remaining 20% covered by the buyer’s deposit.

8. Off-the-Plan

Buying off-the-plan means purchasing a property before it has been built, based on architectural plans and designs. This can be advantageous as properties are often sold at a lower price compared to the market value once completed.

9. Pre-Approval

Pre-approval is a preliminary assessment by a lender indicating how much they are willing to lend you. It’s beneficial to have pre-approval before house hunting, as it shows sellers you are a serious and capable buyer.

10. Settlement

Settlement is the final stage in the property purchase process, where the balance of the purchase price is paid, and ownership is transferred from the seller to the buyer. The settlement date is agreed upon in the Contract of Sale.

11. Stamp Duty

Stamp duty is a government tax on property transactions. The amount varies based on the property’s value and is typically paid by the buyer at settlement. There are concessions available for first-time buyers and certain other categories.

12. Strata Title

Strata title is a form of property ownership commonly used for apartments and townhouses. It involves individual ownership of a unit and shared ownership of common areas like gardens and hallways. Strata fees cover the maintenance of these shared areas.

13. Valuation

A valuation is a formal assessment of a property’s market value conducted by a licensed valuer. This is often required by lenders to ensure the property is worth the loan amount requested by the buyer.

14. Yield

Yield refers to the return on investment for a rental property, calculated as a percentage of the property's purchase price or current market value. It helps investors understand the potential income compared to the property's cost.

15. Zoning

Zoning laws dictate how a property can be used, whether for residential, commercial, or industrial purposes. Understanding zoning regulations is crucial when purchasing property to ensure it aligns with your intended use.

Conclusion

Familiarizing yourself with these key real estate terms will empower you to make more informed decisions when buying property in Sydney’s North Shore. At Webb & Co. Buyers Agency, we are here to guide you through every step of the buying process, ensuring you feel confident and well-informed. If you have any questions or need further clarification, don’t hesitate to reach out to our expert team.