Understanding the Language of Real Estate.
The real estate market can often seem like it has its own language, especially for those new to buying or selling properties. In New Zealand, certain terms and phrases are commonly used in the industry, and understanding these can significantly enhance your ability to make informed decisions. This guide will help demystify real estate vocabulary for those navigating the property market in New Zealand.
Key Real Estate Terms and Their Meanings:
Rateable Value (RV): Also known as the 'government valuation' (GV), this is the value assigned to your property by local council for the purpose of levying rates. It is not necessarily indicative of the market value but is used to calculate property taxes.
LIM Report (Land Information Memorandum): A LIM is a report prepared by the local council at the request of a property buyer. It contains important information about the property, such as zoning, council consents, rates information, and any potential issues like flooding or erosion.
Conditional Offer: An offer made on a property that is subject to certain conditions being met before the sale can proceed. Common conditions include the buyer securing financing, the results of a building inspection, or the sale of the buyer’s own home.
Unconditional Offer: An offer to buy a property that has no conditions attached. Once accepted by the seller, the deal must go ahead, and the buyer is legally committed to purchasing the property.
Tender: A method of selling property through a closed bidding process. Potential buyers submit their best offer by a specified deadline, and these offers are not disclosed to other bidders. The seller then chooses whether to accept an offer.
Auction: A public sale where the property is sold to the highest bidder. Auctions are unconditional, meaning the winning bidder is committed to purchase without any conditions.
Settlement: The process of transferring ownership of a property from the seller to the buyer. It involves finalizing all payments and legal paperwork, and it concludes with the keys being handed over to the buyer.
Equity: The difference between the value of a property and the amount still owed on its mortgage. Equity can increase as you pay off more of your mortgage or if the property’s market value rises.
Freehold: A type of property ownership where the owner has complete control over the land and the buildings on it. This is the most common form of property ownership in New Zealand.
Leasehold: A property tenure where one leases land from the freeholder for a number of years. Leaseholders own the buildings on the land but not the land itself, and they pay ground rent to the landowner.
By familiarizing yourself with these terms, you can navigate the real estate process more effectively and engage in transactions with greater confidence. Whether you’re buying or selling, a clear understanding of these terms ensures you can better communicate with agents, lawyers, and other parties involved in real estate in New Zealand.
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