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Speak like a property pro

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I don’t enjoy taking my vehicle in for a service and there are few things as upsetting as waiting for a medical professional to give me an update on a loved one sick in hospital. I feel intimidated, with very little control in these situations. This is understandable as my understanding of cars or complex medical problems really is quite limited.

Buying a property, whether it is your first home or you are an old hand, should be a joyful and exciting time; not at all reminiscent of the experiences I described here. Sadly it can, however, be littered with confusion and uncertainty, making you too uncomfortable to ask questions as the agent or seller you may be dealing with rattles off sentence after sentence filled to the brim with jargon.

Sandy Geffen, Lew Geffen Sotheby’s International Realty director, says that certain terms used are easy enough to define for the every-day man on the street. She adds, however, that caution should be applied since every party to an agreement must understand the conditions applicable to that specific agreement. If not, the transaction might be delayed and plans put on hold, inconveniencing all involved.

Buying and selling a property is already a lengthy, complex transaction, and throw in industry jargon and legal terms and even the most knowledgeable may find themselves confused. We asked Geffen for this guide on “property-speak” or the basic jargon and legal terms you may come across when buying your home.

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The first step in entering the market is finding a home that suits your needs, and at least meets some of your wants. Geffen says that this process can be unnecessarily long when you do not understand the terms used by estate agents to describe a property they are selling.

Here are definitions of some of the most commonly used “watch-phrases” in property descriptions:

Compact: The home may be designed and finished beautifully but it will be a small property.

Character: A home described in this manner will most likely be best suited to a niche market buyer – the property isn’t bland or conventional in any way.

Excellent transport links: This can swing one of two ways: It may be located on a public transport route, or the property may overlook a busy freeway or railway line. Your best time-saving tip is to check the location before you go for a viewing.

In need of modernisation: The home will most likely need at least a full bathroom and kitchen overhaul; it probably has not been updated since the 1970s or 1980s.

An ideal first three-bedroom home: This typically means you should only really consider it if you need two bedrooms plus a small study.

Cute or cosy: The property is most likely just as described – cute, but also very likely to be small. This property will be more suited to a single person or couple than to a family.

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Once a buyer and seller are ready to get the ball rolling the real work begins. Attorneys, municipal authorities, and financial institutions will now get involved, each requiring their own set of paperwork containing lots of legal-speak.

“There’s no such thing as a stupid question when you’re entering into a legally binding contract, so if you’re not sure of something, ask,” advises Geffen. “It’s far better to ask a simple question ahead of time than sign something you don’t understand and end up in very costly hot water afterwards.”

Among the standard phrases home buyers and sellers are likely to encounter during the transaction process are:

Agreement of sale: This is the basic contract of sale and purchase between a willing seller and a willing buyer and it supersedes all previous verbal agreements. It is a legally binding document, signed by both parties in which they agree on a purchase price, sale conditions and date of sale.

Appraised value: A property’s fair market value which is determined by a qualified appraiser based on knowledge, experience, and analysis of the property. This is a brick and mortar valuation. A property consultant provides a market-related valuation.

Bond assurance/insurance: Also known as home loan insurance. It is taken out on the life of the borrower to cover the amount owing on the home loan in the event of death or disability.

Bridging finance: A temporary loan given to help a buyer purchase a new property before the property currently owned has sold.

Clearance certificate: A document issued by the local municipality to confirm that all rates, taxes and levies and water, electricity and sewerage services are paid up to date when a property transfer takes place. Transfer cannot take place without it.

Conditions of title: These are the restrictive conditions limiting an owner’s rights. They are recorded on the title deed to a property and cover matters such as servitudes and building limitations.

Conveyancer: A specialist attorney who has qualified as a conveyancer and can attend to deed office transactions, such as the transfer of a property from a seller to a purchaser and the registration of mortgage bonds and servitudes.

Deed of sale: A formal document and a record of the transfer of ownership of property from one person to another, outlining the terms of the agreement.

Fixtures and fittings: These are additional attachments in a home which are considered to permanently belong to it such as curtain rails, hobs and eye-level ovens, and anything that is in or on or attached and varies from province to province. These may not be removed by the seller when he or she vacates the property.

Freehold: A property where the owner has full rights to the entire property and takes on all responsibilities, like a free-standing house, whereas Sectional Title properties are units within a larger property like a block of flats which are sold individually, where an owner has full rights to his or her section and certain rights to common property.

Initiation fee: The fee charged by a bank to cover the initial costs of processing a home loan application, for example the property appraisal and a credit report.

Prior occupation: A buyer’s option to take occupation of a property before transfer takes place. An agreed rental (occupational rent) is usually payable by the buyer until registration of transfer.

Offer to purchase: The document setting out the proposed purchase price and conditions on which a buyer has signed and is prepared to purchase a property. If the seller accepts and signs it, the offer to purchase becomes a valid sale agreement.

Pre-approval: When the buyer has successfully completed a loan application by providing debt, income, and savings documentation which an underwriter has reviewed and approved. Once a property is chosen, it must also meet the underwriting guidelines of the financial institution before the actual bond is granted.

Subject-to sale: When a sale contract will only become unconditional and binding between the parties if and when the buyer sells his own property. A certain time period is stipulated which will need to be negotiated between buyer and seller.

Suspensive condition: A provision in a contract which suspends the confirmation of the sale until a specific condition, such as the approval of a mortgage loan, is fulfilled.

Title deed: Filed in a deeds office, this is legal proof of property ownership and contains all the details of the property, the sale agreement and its owner. If another person or institution has rights over the property, like a bank which holds a mortgage bond over the land, it will be included in the title deed. The bank has the right to hold the original title deed while a mortgage is in place.

It is really simple. If you are working with an industry professional all of this should be easy to understand and navigate, with experts and respected brands involved and partnering with your realtor on all levels. If, for whatever reason, you are not getting this level of service, take your business elsewhere.


Mariette Steynberg is a qualified economist with a post-graduate diploma in financial planning. She has enjoyed working on holistic financial plans for clients in various stages of life, as well as a development economist assessing the socioeconomic impacts of new developments. When she is not working, Mariette enjoys parenting her quirky, delightful toddler girl. Cloth diapering, Eskimo kisses and the importance of reading to your child are all causes close to her heart. Mariette is passionate about financial education and hopes to use the experience she has gained to share knowledge with HomeTimes’ readership. Her goal is to provide information that is implementable by everyone.

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