Real estate terms to be familiar with
Whenever you wade into the territory of a new and different industry, there’s a lot of terms unique to that industry that can leave you scratching your head and feeling uncomfortable. Read on to become familiar with some of the must-know terms for buyers and sellers in real estate.
Agreement of Sale
An Agreement of Sales is also known as a Deed of Sale or an Offer to Purchase. This is the legal document stipulating the terms of the purchase and the proposed purchase price. It is signed by both the buyer and the seller.
The assessed value of a property is the result of an official appraisal. Many other calculations, like rates, taxes, and levies, are done based on the assessed value. This number can differ from the market value of a property (the price a property sells for in a competitive market)
A home buyer can get a home loan from the bank in the form of a bond. This bond will be the legal contract stipulating the lending of capital and the terms and conditions of the repayment.
In a buyer’s market, there are more homes on the market than there are buyers to purchase them. Buyers are in a better place to negotiate, and the price of homes are in the buyer’s favour.
In a seller’s market, there are fewer homes on the market than there are buyers to purchase them. Sellers can sell at prices that benefit them more, and homes tend to be sold faster.
This is the process by which the property is legally transferred from the seller to the buyer. As there are specific laws that govern the sale and transfer of property, a lawyer will specialize in conveyancing.
After an Agreement of Sale is signed, a cooling-off period may apply in which the contract can be canceled with a specified number of days. This does not apply to all properties – residential homes sold for over R250 000 for example, do not have a cooling-off period.
When you buy a freehold property, it means you purchase the land as well as the structure(s) on it. The maintenance, management, security of the property is all up to you.
This is an account in which money can be kept safely while earning interest. If an attorney or estate agent has to hold onto money during a sale, it is paid into this account until they have to be paid out. The interest is paid to the individual that supplied the funds.
If you are married in community of property, you will effectively be reporting a joint income in your individual return to SARS. Both spouse’s income will be reported on an individual’s return and then SARS will automatically halve the income when it is filed. This joint income includes all rental income and expenses from the letting of fixed property.
This is the rent a buyer pays if he/she occupies the house before the transfer is complete. Alternately the seller pays occupational rent if he/she stays on in the house for a short time once the transfer is complete.
When you buy a sectional title, you purchase the structure/house, but not the land. You are usually subject to the rules and regulations of the Body Corporate and have to additionally pay things like levies.
The Voetstoots clause in a property purchase means the seller is not liable for any defects that become apparent after the property sale has been concluded. It does not protect a seller from omitting to disclose known defects, only those they were unaware of.