Real Estate Tips 101: Understanding Property Language
Posted on 16/09/2014 by
Do you have an interest in the property market but struggle to understand all the language thrown around?
Trying to make sense of all the data and analysis can be daunting. To help you better understand the property market, REIWA has put together a guide to help demystify some of the more commonly used words and phrases. Check out REIWA's website for more helpful real estate tips on buying, selling, investing or renting properties.
Real Estate Tips: A Property Language guide
- Auction - An auction is the public sale of property where interested buyers gather and bid. The highest bidder is usually the successful buyer.
- Capital Gain - Capital gain is the difference between the purchase price and the selling price. It is used primarily for income tax calculations.
- Capital growth - The increase in the value of a property.
- Comparison rate - The comparison rate is an indicative interest rate that that helps identify the accurate costs associated with setting up a loan.
- Conveyancing - Conveyancing refers to the legal process for the transfer of ownership of real estate.
- Gross rental yield - An equation used to compare rental returns. It is calculated by dividing the annual rental return by the price of the property and then multiplying that result by 100. This can help you compare the rental yields from different properties with different values and rental returns.
- Investment return - An investment return is the combination of capital growth and the net income derived from property ownership.
- Median Price - Median Price is the mid-point for a range of property values that are ranked from the lowest to highest in price. For example, if there are five sales in a sample ranked from cheapest to most expensive, the median is sale number three.
- Private Sale/Treaty - A Private Sale or Treaty is the most common method of selling property. It has no specified closing date and is generally negotiated between a buyer and a seller with the assistance of an agent.
- R-Codes - R-Codes is the name for the residential housing density codes, which describes the average land area required for construction of a dwelling on a block of land. R-Codes are referred to by developers and local councils when considering redevelopments.
- Settlement - Settlement of a property occurs when the balance of the purchase price is paid to the seller. The buyer then receives the keys to the property and becomes its official, legal owner.
- Strata Title - Strata title is a form of ownership devised for multi-level apartment blocks and horizontal subdivisions with shared areas. 'Strata' refers to apartments being on different levels.
- Tender - Tender refers to a very formal sales process which requires interested buyers to submit an offer, bid or proposal in response to the owner’s advertised tender request.
- Title - A Title is the ownership of a property or document showing evidence of ownership. In Western Australia the most common form in the residential market is ‘Green Title’, a traditional bock of land not affected by owners of adjoining properties.
- Transfer Duty - Transfer Duty, previously known as 'Stamp Duty' is a State Government tax based on the purchase price of the property. Every state in Australia has a different set of rules and calculations. More info about WA's transfer duty HERE.
- Vacancy rate - The vacancy rate refers to the number of unoccupied rental properties in a market. A high vacancy rate is better for tenants as it provides more choice. A low vacancy rate means things are tight and generally puts upward pressure on rental prices.
For a more comprehensive list of real estate terms and definitions, check out Realestate.com.au's Glossary page.
And for more real estate tips on buying/selling a property, contact the One Agency South team today!