One of the most complex transactions most consumers will ever complete is buying a home. Therefore it is very important to understand what you are getting into. The following is a list of some common real-estate terminology and their definitions to help you on your way...
Buyer's Agent vs. Listing Agent: Typically, when it comes to the sale of a home, there are two agents involved - a buyer's agent and a listing agent. The listing agent represents the seller, while the buyer's agent will work for you. Buyers do not pay their real estate agent as they will get a commission from the home seller.
Title: A title is a bundle of rights tied to a piece of property in which a party may own either a legal interest or equitable interest. The rights in the bundle may be separated and held by different parties. It may also refer to a formal document, such as a deed, that serves as evidence of ownership. in which a party may own either a legal interest or equitable interest. The rights in the bundle may be separated and held by different parties. It may also refer to a formal document, such as a deed, that serves as evidence of ownership.
Strata Title: This title allows individual ownership of part of a property (called a 'lot' and generally an apartment or townhouse), combined with shared ownership in the remainder (called 'Common Property' e.g. foyers, driveways, gardens) through a legal entity called the owners corporation — or body corporate, strata company or community association.
Amortization: In real estate, this term refers to paying off your mortgage and making regular payments until your debt to the bank or mortgage lender has been paid in full.
Offer to Purchase: This is a contract setting out the terms under which you agree to buy the home. If the seller accepts your offer to purchase, it becomes a legally binding contract and both parties must meet the terms and conditions specified in the document.
Counteroffer: When you make an offer on a home, the seller may decide not to accept it and to counteroffer instead. The counteroffer will include changes to your original offer, such as the price or the closing date, rendering your original offer no longer valid. There will also be a specified time limit within that contract which you can either accept or reject the counteroffer.
Conditional Offer: This is an offer to purchase but is subject to certain specified conditions, for example, purchase of the home if a mortgage can be arranged. There’s usually a time frame within the conditional offer which you must meet. The specified conditions will then be removed and then the offer becomes firm, and unconditional.
Subject Removal: A period, typically a week, in which all subject clauses must be satisfied in order for the contract to become firm. The deposit is most often due once subject removal has been completed.
Deposit: Money placed in trust by the purchaser when an Offer to Purchase is made. The sum is held by the real estate representative or lawyer/notary until the sale is closed and then it is paid to the vendor. In Greater Vancouver this amount is due upon or within 24 hours of subject removal. In a very hot market with subject free offers, the deposit is often presented with the Contract of Purchase and Sale at the time of offer presentations for negotiation purposes, thus proving that they are a ready and motivated buyer.
Appraisal: An appraisal is the process of determining how much a property is worth, so that a lending institution can determine the size of your loan. In Canada, appraisals can only be performed by either a member of the Appraisal Institute of Canada or the National Association of real Estate Appraisers.
Closing: This is the formal and final transfer of a home's ownership between parties.
Closing Costs: These are the additional fees that you will need to pay on the closing date. They will include legal fees, transfer fees, and disbursements, which are fees your lawyer or notary has paid on your behalf.
Equity: This term describes the difference between the market value of your home and the amount you still owe on it. If you sell the home at a profit, equity will be the money you receive after you’ve paid off your mortgage.
If you are thinking of buying a home give us a call today and let our expertise help you navigate through one of the most important events of your life!
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