Key Real Estate Terms every buyer and seller should know Real estate agents and other property professionals can sometimes seem to be speaking a different language. If you’re confused, don’t worry. We lift the lid on the property jargon to explain what these common terms actually mean.
Property appraisal
A property appraisal involves a real estate agent inspecting a home to ascertain its real market value. The agent will usually do this by comparing the features of the property to comparable homes that have recently sold in the area. They’ll also use their knowledge of the number of buyers in the market and the current level of demand for particular features and types of homes. A property appraisal is different from a valuation. A valuation is an assessment banks and other lenders often carry out when assessing a loan application. It’s an independent and analytical process that doesn’t take into account factors such as buyer depth or street appeal, but only the likely minimum value of the property if it were sold on the market today. For this reason, valuations often arrive at a property value that’s below that of an appraisal.
Sales method
When a real estate agent talks about sales methods, they’re referring to the process they’ll run to sell your home. There are two main sales methods: auction and private treaty.
In Brisbane West, the predominant method of selling homes is through private treaty. This entails listing a home for sale at a specified price, commonly denoted as "offers over" or "offers from". Unlike auctions, there's no set deadline for the sale. Prospective buyers are encouraged to submit offers and engage in negotiations with the real estate agent until a final price is agreed upon.
In an auction, the property is listed for sale on a specified date, time, and location. Before the auction begins, the seller sets a 'reserve' price, which is the minimum amount they are willing to accept. During the auction, prospective buyers publicly bid and submit their best offers. Once the reserve price is met, the property is deemed 'on the market'. The highest bidder at that stage (before the auctioneer's hammer falls) wins the auction and acquires ownership of the property.
There are other methods for sale besides these, too, including expressions of interest, where buyers are asked to submit their ‘best and final’ offer before an agreed deadline. However, these are now becoming common in the Brisbane West market as sellers are demanding the higher price.
Days on Market
(DOM) represents the average duration between listing a property and accepting an offer. It serves as a key indicator of market competitiveness, particularly in regions like is some parts of Darling Downs where private treaty sales are prevalent. In major cities, similar insights are often gauged through 'auction clearance rates. Over the past few years, Brisbane West has consistently maintained low DOM. In fact, we've consistently recorded the shortest DOM among all regional areas in Australia.
Contract for Sale
In Queensland, there exists a standard contract for sale, which both the buyer and seller will typically sign after the buyer's offer has been accepted by the seller. This offer can be communicated verbally or in writing.
The contract delineates terms such as the seller's price, the timing of the deposit payment (usually upon contract binding), and the settlement date. Typically, contracts for sale in Queensland include a five-day cooling-off period, allowing the buyer to retract from the contract within this period. However, this provision does not apply to auctions.
Conditional offer
The initial phase of the sales process typically commences when the buyer presents an offer, and the seller agrees to it. Nevertheless, there are instances where a buyer may submit a 'conditional offer', contingent upon specific conditions being fulfilled. These conditions commonly involve securing financing, obtaining a satisfactory building and pest inspection, or selling an existing property. When making a conditional offer, it's essential to ensure that these conditions are explicitly outlined in the sales contract.
Settlement
Settlement, also known as settlement day, marks the official transfer of property ownership. This process involves the buyer completing the payment for the remaining balance on the property, receiving the title, and obtaining the keys. Whether you're the buyer or seller, physical presence at settlement is not mandatory. All arrangements are typically coordinated by solicitors, real estate agents, and lenders, and executed electronically.
Settlement in most occurs four to six weeks after the sales contract becomes binding.
Buyer’s agent
In the current competitive market, many prospective buyers are opting to enlist the expertise of a buyer's agent to facilitate their property acquisition. Referred to as a buyer's advocate as well, these professionals undertake tasks such as searching for suitable properties, conducting inspections, making offers, and negotiating with real estate agents on behalf of the buyer. This approach can potentially save buyers both time and money.
There are so many more
Here are some common terms frequently used by real estate agents and professionals. If you seek further guidance regarding the Brisbane West property market, feel free to reach out to us. We're here to assist you.