Here is a list of commonly used terms going back and forth in a Vancouver Real Estate transaction. It is never to late to educate your self on this topic & all of the vocabulary that goes along with it.
ALR – Agricultural Land Reserve - A provincial zone in which agriculture is recognized as the priority use, farming is encouraged and non-agricultural uses are closely controlled.
Amortization - The number of years a borrower is scheduled to repay an entire mortgage amount.
Appraisal - An estimate of a property’s market value, used by lenders in determining the credible amount of a mortgage.
Assessment - The value of a property, set by the local municipality, for the purposes of calculating its property tax amount.
Addendum - A document that is legally attached to, and made part of, an original contract as a result of making changes to or adjusting elements that have already been agreed to.
Adjustments - The financial calculations made regarding the costs for the respective parties associated with a mortgage transaction or real estate transaction at the time of a purchase / sale closing (e.g. property taxes). Also see Closing and Closing Costs.
Agency Relationship - A consensual relationship created by contract or by law where one party, the principal, grants authority for another party, the agent (Realtor), to act on behalf of and under the control of the principal to deal with a third party and where the agent (Realtor) accepts responsibility for representing the principal.
Average Price - The average price of all home sales over a given period calculated as total dollar volume divided bythe total unit sales over the same period.
Balanced Market - A market in which the sales to active listings ratio is in a range of 14 to 20 per cent. In general, a balanced market results in home prices remaining relatively stable and not leaning towards a Buyer's Market or Seller's Market.
Buyer’s Market - A housing market is typically characterized as a “buyers’ market” when there is an excess of supply over demand for homes. This is generally assumed to be when the ratio of home sales to active listings is below 14 per cent. This market provides an opportunity for Buyers to negotiate for their more desired price.
Backup Offer - A backup offer is when a buyer submits an Offer to Purchase on a property that is conditionally sold (subject offer in place). If the seller accepts the backup offer, it would be next in line if the conditions are not satisfied on the conditional offer that is already in place. Also see Conditional Offer and Conditional Sale.
Bully Offer - Offer of purchase and sale presented in advance prior to sellers desired offer date.
Builders’ Lien - A lien (money owing) for the unpaid value of work and/or materials in favour of the party who did the work on, or supplied the materials to a property, in accordance with the Builders’ Lien Act. Also see Builders’ Lien Act.
Bridge Loan - A short term loan (i.e. up to 1 year) with a higher interest rate intended to cover immediate cash requirements until permanent financing is secured. Commonly used in a transition period between selling & buying a property.
Also see Interim Financing.
Closing Costs - The total costs involved for the respective parties associated with a real estate or mortgage transaction. Closing costs are typically due on the closing date of the transaction, which is the date at which the real estate or mortgage transaction is finalized. Also see Closing Date.
Counter offer - One party’s written response to the other party’s offer during negotiation of a real estate purchase between Buyer and Seller. A counter offer can be used by either Buying or Selling party to the transaction.
Closing Date - The date when the financial adjustments are made for each party in the completion of a real estate or mortgage transaction. In real estate, it is the date when the title to the property transfers to the new owner, after which, the new owner assumes financial responsibility for the property.
Caveat - A legal notice registered against the title of a property warning that a claim or an interest has been made against the property by a third party. Caveat in Latin means ‘let him beware’ and must be in writing. The registration of a caveat is only notice of a claim and does not highlight or correspond to the validity of the claim being made.
Conveyance - The transfer of an interest in a piece of property from one person to another through written documentation to affect such a transfer.
Conveyancing - The formal process of transferring legal title of land/property/condo and recording interests in the land, using the prescribed Land Titles forms from the local Land Title Office submitted in the prescribed manner .
Down Payment - The part of the purchase price of the property that the buyer pays in cash and does not finance with a mortgage. Typically held in trust at the firming of the contract of purchase & sale until completion of the purchase.
Designated Agency - Through a written service agreement, a brokerage (eg. Oakwyn Realty), the real estate professional (Realtor) and the client (Buyer or Seller) amend the agency responsibilities owed to the client as prescribed by the common law. In essence, the agents responsibilities are transferred from the brokerage to the individual real estate professionals registered with the brokerage which results in the rebuttal of the common law presumption of attributed knowledge. Also see Attributed Knowledge.
Designated Agent - Refers to the individual real estate professional (Realtor) who carries out the designated agency responsibilities (Working with a client to Sell or Purchase Real Estate) which have been transferred from the brokerage (eg. Oakwyn Realty) and which are owed to a client of the brokerage.
Equity - The difference between the appraised market value of the property, minus the outstanding balance of the mortgage, minus any other financial obligation registered against the property.
Home Inspection - A visual & non penetrating examination of readily accessible interior and exterior aspects of a property in order to provide an opinion of the property's condition as of the date of the inspection. The purpose of a property inspection is to look for signs that there maybe problems with the property and to suggest any areas that should be looked at further by an expert. Home inspections should be performed by licensed property (home) inspectors. Also see Property Inspector.
Grow Op - Any property having taken part in and been used for the illegal drug trade which has been turned into an indoor growing environment for marijuana plants.
Inflation - A rise in the prices of goods and services in an economy over a period of time.
Interest - The cost of borrowing money.
Lien - Any legal claim against a property, filed to ensure payment of a debt.
Joint Tenancy - A form of land/property ownership that involves two or more owners, with each owner having the right of survivorship. Therefore, each owner’s interest in the land/property will automatically pass to the surviving owner(s) and cannot be willed to another party.
Multiple Offers - A situation when multiple buyers submit an Offer to Purchase on the same property, at the same time.
Mortgage Prepayment Penalty - Is a fee paid by the borrower to the lender in exchange for being permitted to break a contract (a mortgage agreement); usually three months’ interest, but it can be a higher or it can be the equivalent of the loss of interest to the lender.
Mortgage Term - The length of time a lender will loan mortgage funds to a borrower. Most mortgage terms run from six months to five years, after which the borrower can either repay the balance (remaining principal) of the mortgage, or renegotiate the mortgage for another term.
Multiple Listing Service® (MLS®) - A co-operative selling system for relaying information to REALTORS® about properties for sale.
New Home Buyer Protection Act - The New Home Buyer Protection Act applies to new homes constructed with a building permit applied for after February 1, 2014. The legislation covers single family homes, duplexes, multi-family homes, condominiums, manufactured homes (including ready to move homes), and recreational properties. The legislation does not cover dorms, work camps, hotels and rental apartments. under the warranty periods. The minimum required warranty coverage terms are: 1 year labour and materials 2 years for defects in labour and material related to delivery and distribution systems 10 years for major structural 5 years on building envelope, with a requirement for the warranty provider to offer the option to purchase additonal years of coverage
Occupancy Rate - Refers to the number of units or space occupied in a building to the total number of units or space available.
Prime Rate - The lowest rate of interest at which money may be borrowed commercially.
Principal - The mortgage amount initially borrowed, or the portion still owing on the mortgage. Interest is calculated
PTT – Property Transfer Tax - A land registration tax that must be paid when an application for a taxable transaction is made at anyLand Title Office in BC to register changes to a certificate of title. For more information, visit www.bcrea.bc.ca/government-relations/shelter-taxes.
Pre-Approval - An approval for a mortgage based on a borrower’s qualifications made in advance of a real estate purchase. A written pre-approval protects the borrower by specifying the mortgage term, interest rate and maximum amount of the loan. If mortgage rates rise, the borrower receives the pre-approved rate. If rates drop, the borrower receives the lower rate. However, the borrower must take possession of a property before the pre-approval expires. They typically are 60 or 90 days, but may be as long as 120 days for new construction. Once a property has been purchased, the pre-approval is subject to the borrower submitting any final supporting documentation, providing his or her financial position has not changed. It is also subject to the property meeting the lender’s underwriting requirements.
Refinancing - The process by which a borrower seeks to discharge an existing mortgage in order to establish a new one. The new mortgage maybe with the same lender or a different lender. The process typically involves the borrower paying out the existing mortgage, along with any legal claims against the property and any applicable payout penalties as a result of the early discharge. Some reasons that a borrower may consider refinancing a mortgage include obtaining a better rate, benefitting from different mortgage privileges, or experiencing better service or greater convenience.
Remuneration - The compensation (e.g. commission, gifts, other benefits) received by the brokerage for services rendered to a party (e.g. customer, client). Also see Compensation.
Seller’s Market - A real estate market condition where buyer demand is strong and property supply is weak.
Term Mortgage - A non-amortizing mortgage under which the principal is paid in its entirety upon the maturity date. Sometimes called a straight loan.
Term - The length of time a lender will loan mortgage funds to a borrower. Most mortgage terms run from six months to five years, after which the borrower can either repay the balance (remaining principal) of the mortgage, or renegotiate the mortgage for another term.
Title - The legal evidence of ownership of a property.
Title Search - A detailed examination of the ownership documents to ensure there are no liens or other encumbrances on the property, and no questions regarding the seller’s ownership claim.
Variable-Rate Mortgage - A mortgage for which payments are fixed, but whose interest rate changes in relationship to fluctuating market interest rates. If market rates go up, a larger portion of the payment goes to interest. If rates go down, a large portion of the payment is applied to the principal.
Vendor Take-Back Mortgage - A mortgage that a seller of a property takes back or carries for the buyer as part of the purchase price for that property. Also see Mortgage.
Zoning - General rules applicable to all land use classifications in a municipality (e.g. Residential, Commercial, Industrial and Special district classifications).