When it comes to real estate, at times, it can be difficult to decode the jargon.
From complex-sounding terms such as owner’s corporation and conveyancing, disbursement, and stamp duty, as well as certificate of title, mortgage, and settlement – real estate lingo can be intimidating at first encounter, and especially hard to understand if you’re new to the world of property buying and selling.
So, for our comprehensive guide to the key real estate terms every property buyer should know, just keep reading!
Owners’ Corporation
Also commonly referred to as a body corporate, an owners’ corporation is primarily responsible for managing the common areas of multi-residential properties. To successfully operate an owner’s corporation or body corporate, building management is required. This is also known as title strata management.
Importantly, if your home or investment property n is part of a larger complex – such as an apartment building, or block of units, for instance – it is usually mandatory for you to be part of the owner’s corporation. You will also be required to pay body corporate fees. The cost of these fees will predominantly go towards the maintenance of the building.
Conveyancing
So, what is conveyancing? And what does it involve, exactly?
In simple terms, conveyancing is the process of transferring ownership of a property from one person to another. However, it is much more than that! It also involves crucial steps such as:
Placing a Property on the Market
Putting a property up for sale is quite an involved process. As such, it is recommended to leave it up to the experts! Engaging the services of a real estate agent can assist with this. They can help list your property, evaluate how much it is worth, and even negotiate with potential buyers for you.
Coming to a Selling Agreement
Once the sellers have negotiated a buying price for their property, they need to come to a selling agreement with the buyers. This means signing legal documents to officiate the property sale.
Legally Transferring Property Ownership
Once sold, the property needs to be legally transferred to the new owner. This is the final and arguably most important step of the conveyancing process and often requires the assistance of lawyers to legalise the property ownership transfer.
Disbursement
Disbursements are fees associated with conveyancing, and will usually be charged to the lawyer or solicitors who have been employed to perform the process of conveyancing on behalf of their client.
These fees will include the costs associated with obtaining the relevant documentation that is required to enable the conveyancing process, as well as registration and agent fees.
Stamp Duty
Stamp duty is a tax imposed by the government when buying a home. It is usually made up of a percentage of the property value. For this reason, it follows that the greater the value of the property, the higher the amount of stamp duty that needs to be paid to the government upon purchase.
Mortgage
Admittedly, not many of us can afford to purchase a property outright. For this reason, home buyers will often seek to obtain a large sum of money as a loan from a bank or other financial lender. This is commonly known as a mortgage.
Crucially, a mortgage gives the lender the prerogative to repossess your property if you default on your loan repayments. As such, it is critical to stay on top of these repayments at all times, as well as, most importantly, only borrowing within your means. To assist with this, there are several online mortgage calculators you can use to assess your ability to meet repayments based on your total income. These calculators can also help you understand your borrowing power – that is to say, the total sum you will be eligible to loan from the bank.
Certificate of Title
A certificate of title refers to an official document which serves as supporting evidence of property ownership. To obtain a certificate of title, a property buyer must follow a certain process. This includes applying for the title and paying the relevant fees that are associated with obtaining it.
Settlement
Finally, settlement. This is most often the very last step in your home-buying journey! Of course, it can only happen once conveyancing and transfer of ownership have been performed, and a certificate of title for the property has been obtained. Further, the settlement period can sometimes take up to 90 days.
The good news? Once you have settled, your new property will finally be yours!
For aspiring property owners, it can be a challenge to navigate the world of real estate, and the jargon that comes with it. From obscure legal terms to complicated concepts, knowing exactly what your realtor is talking about is not always as easy as it sounds.
Hopefully, however, this guide has helped shed some light on the key terms to look out for when buying a property.
