Glossary
Here are some of the common terms you’ll come across when buying and selling real estate.
Search for the term by clicking on the first letter of the term.
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A
Advertised price sale
Selling at an advertised price means that the seller has declared the amount they expect to sell the property for.
Agency agreement
An agency agreement (also known as a listing agreement) is a legally binding contract between the seller of the property and the agent. It sets out what the agent is required to do and the commission the agent will receive. Before the agreement is signed, the agent must recommend to the seller that they seek legal advice.
Agency agreement guide
This guide contains the essential things sellers need to know about agency agreements. A real estate agent must provide the seller with a copy of this guide before the agency agreement is signed.
Agent or real estate agent
In New Zealand, real estate agents are people who hold a salesperson, branch manager or agent licence under the Real Estate Agents Act 2008. Licences are issued by the Real Estate Authority (REA).
Amenity
A property feature that enhances its attractiveness and increases the occupant’s or user’s satisfaction, for example, scenic views, proximity to public transport and recreational facilities.
Appraisal
An assessment of a property’s likely sale price. An agent must give the seller a written appraisal that is realistic and based on market conditions and information from recent sales of similar properties.
Asking price
The asking price is the amount a vendor wants to sell their property for. The asking price may not be the final price the property sells for.
Assignment
The transfer of a mortgage or lease from one person to another.
Auction
A sale method where buyers publicly bid until the highest price is reached.
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B
BBO (buyer budget over) or BEO (buyer enquiry over)
When these terms are used to market a property, it means the price listed is the minimum the seller will accept. The seller must seriously consider any offer over the figure advertised, so it needs to be chosen carefully.
Beneficiary
A person designated to receive the income from a trust, estate, or a deed of trust.
Body corporate
An administrative body made up of all the owners within a group of units or apartments. The owners elect a committee, which handles the administration and maintenance of the site.
Boundary
The lines that define the borders of a property.
Branch manager
A branch manager is licensed under the Real Estate Agents Act 2008 to carry out real estate agency work on behalf of an agent and they may supervise salespersons carrying out real estate agency work.
Bridging loan
A short term loan (usually at a higher interest rate) taken out to cover the financial gap between buying a new property and selling an existing property.
Building report
An expert assessment of a building’s condition that identifies any current or future problems. REA recommends that potential purchasers get a building report done by a qualified building inspector who has professional indemnity insurance, understands the legal requirements and carries out their work in accordance with the New Zealand Property Inspection Standard.
Building Code
The Building Code is contained in regulations under the Building Act 2004. The Act governs the building sector and also sets out the rules for the construction, alteration, demolition and maintenance of new and existing buildings in New Zealand. All building work in New Zealand must comply with the Building Code, even if it doesn’t require a building consent. This ensures buildings are safe, healthy and durable for everyone who may use them.
Buyer’s agent
An agent who has a signed an agency agreement with the buyer. The buyer will pay their agent a commission.
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C
CAC (Complaints Assessment Committee)
The CACs are preliminary panels, each made up of three people, including a lawyer and two other members with a background in real estate or consumer affairs. CACs determine complaints about real estate agents. Determinations and orders are made under the Real Estate Agents Act 2008. CACs can also file disciplinary charges in the Real Estate Disciplinary Tribunal.
Caveat
A notice on a title that a third party might have some interest or right in the property.
CCC (code compliance certificate)
A code compliance certificate is a formal statement issued under section 95 of the Building Act 2004, that building work carried out under a building consent complies with that building consent.
Certificate of title (Title)
The Title is a legal document that identifies the owners of the property and key facts about the property.
Chattels
Chattels are moveable and removable items of personal property. In real estate transactions, chattels included in the sale include items like the stove, television aerial, carpets, blinds, curtains, drapes and light fittings. Only the chattels listed in a sale and purchase agreement are included in a property sale.
Commission
Real estate agents are usually paid a commission by the seller when a property sells. The commission is the agent's fee for selling the property, and it is detailed in the agency agreement the seller signs with the agent. Commission rates vary and can be negotiated.
Common property
The area of building, land or amenities within a unit title property that is shared by all owners, for example, a shared driveway.
Company title
A type of ownership more common when properties are grouped together. An owner automatically becomes an owner of a company that administers, manages and maintains the property in which the owner’s unit is registered. The directors of that company are elected each year at the annual general meeting (AGM) by owners involved with that company.
Conditional offer
An offer to buy a property subject to stated conditions being met.
Conjunctional agreement
A conjunctional agreement allows an agent from an agency that is not the listing agency to do real estate agency work on behalf of the seller. The most common arrangement is when an agent introduces a buyer to the listing agent, and both agents receive a share of the commission.
Continuing professional development
Verifiable and non-verifiable education which all licensees must complete each year by 31 December.
Covenant
Any terms, conditions and restrictions regarding the use of the property that are noted on the Title. A covenant may affect future plans or resale for the property.
Cross lease
This type of ownership is common where there is more than one home on a block of land. All owners own the land, and each leases their home from the owner group. The lease will usually provide for an exclusive use area for each cross-lessee. A cross lease is similar to owning a freehold property, but there are restrictions.
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D
Deadline sale
A sale method used when a property is marketed for a set period with an advertised end date. The seller isn’t obliged to accept any offers and can choose to accept an offer at any point during the listing period.
Default
Failure to make mortgage payments on time or to comply with other requirements of the mortgage.
Deposit
A percentage of the purchase price paid in advance to secure the sale of real estate.
Dux Quest plumbing
Dux Quest was a plastic piping used in houses in the late 1970s to early 1980s. The product was discontinued after reports throughout New Zealand of pipes and fittings bursting.
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E
Early resolution
The purpose of early resolution is to give the parties to a complaint the opportunity to work together to resolve the complaint. It is part of REA's complaint process and is an alternative to a complaint going to a Complaints Assessment Committee (CAC).
Easement
The right to use land belonging to another, for example, a water authority may have an access easement across part of a property.
Eligible officer
An officer of an agency who holds an agent’s class of licence. They are responsible for supervising salespersons and they enable a company to carry out real estate agency work. The eligible officer is the person REA contacts when we receive a complaint.
Encroachment
Part of a house or structure illegally overhanging a street or neighbour’s property.
Encumbrance
An impediment to the use or transfer of property in the form of an interest or right in the property.
Equity
Equity is the difference between the market value of a property and the amount owed on the mortgage. The equity is the money received after paying off the mortgage if the property is sold.
Estate
The combination of all the real estate and personal property owned by an individual at the time of death.
Executor
A person named in a will to administer an estate.
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F
Fee simple (or freehold)
The exclusive ownership of the land and any associated buildings, subject to any interests registered on the title.
Fittings
Objects that can be removed from a property without causing damage to it.
Fixtures
Fixed items that cannot be removed without damaging either the property or the fixture itself, for example, fitted cupboards.
Freehold (or fee simple)
The exclusive ownership of the land and any associated buildings, subject to any interests registered on the title.
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G-H
Government value (GV)
The is a value used to calculate local body rates and is now known as rateable value (RV). The GV is not the market value for a property, because it may be several years old and may not reflect local market changes and any recent renovations to a property.
Guarantor
A person who agrees to pay a loan or a portion of the unpaid principal balance in case of default by the borrower.
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I
Interest
A fee charged for borrowing money.
Interest-only loan
A loan where only the interest is repaid throughout the course of the loan. The original loan amount is repaid at the end of the term of the loan or is rolled over by the same bank or alternatively, the owner remortgages.
Investment property
A property that is not occupied by the owner, but provides a financial return to the owner through letting or leasing to a tenant.
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L
Leasehold
An interest in land that includes ownership of the buildings and a lease of the land for a certain time. The lessee pays rent to the lessor for the land. There may be restrictions on the lessee's use of the property.
Lender
An organisation or person that lends money.
Lessee
A person leasing a property.
Lessor
The owner of a property that is leased to another person (the lessee).
Life estate
Also called tenancy for life. A freehold interest in property that expires upon the death of the owner or some other specified person.
LIM (land information memorandum)
A LIM is a report that contains all the relevant information the Council knows about a property or section. It includes information about issues with drainage and plumbing, erosion or permits and any unpaid rates.
Listing agent
The real estate agent licensed under the Real Estate Agents Act 2008 who is the seller’s point of contact with the agency. They act on behalf of the seller to market and sell the property.
Listing agreement
A written contract between a vendor (seller) and an agent, authorising the agent to perform services for the owner (also known as an agency agreement).
Loan
A sum of borrowed money.
LVR (loan to value ratio)
The amount of a loan financed as a proportion of the property value expressed as a percentage.
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M
Mortgage
A legal document that pledges a property to the lender as security for payment of a debt.
Mortgage broker
An individual or company that brings borrowers and lenders together. Mortgage brokers typically require a fee or a commission for their services, which is usually paid by the lender.
Mortgagee
The lender in a mortgage agreement.
Mortgagor
The borrower in a mortgage agreement.
Multi-offer process
A method of sale where prospective buyers are encouraged to submit their best offer and the seller can choose whichever one looks most attractive to them. There must be more than one offer in writing — real estate agents aren’t allowed to pretend there are competing offers if they don’t exist.
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O
Off the plan
To purchase a property before a structure or dwelling is built on the site, after having only seen the plans.
Offer
A proposal to purchase a property. To make an offer, the agent will usually draw up a sale and purchase agreement and ask the buyer to sign it. The offer can be made subject to certain conditions, such as finance, the sale of a current property or a satisfactory building report.
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P-Q
Passed in
Where the highest bid fails to meet the reserve price of a property at an auction so the property consequently does not sell.
PIM (project information memorandum)
A report that provides relevant information that a council knows about a piece of land, such as the location of underground pipes, natural hazards, soil types and other ground conditions, and whether any building project on it will be subject to any resource consents or bylaws.
POA (price on application)
A pricing method used by some agencies. Prospective buyers can enquire about the asking price for the property.
Power of attorney
A legal document that authorises a person (the attorney) to act on another person’s behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.
Principal
For a mortgage, the principal is the loan amount borrowed or still to be repaid or the part of the monthly payment that reduces the balance of the mortgage.
For real estate agency work, a principal officer is a person who controls the agency’s business activities and is a director or shareholder of the agency.
Private sale
The sale of property by the owner without the services of a real estate agent.
Private treaty sale
The sale of property through a real estate agent by negotiation.
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R
RV (rateable value)
The is a value used to calculate local body rates, formerly known as government value or GV. The RV is not the market value for a property, because it may be several years old and may not reflect local market changes and any recent renovations to a property.
Real estate agency
A company performing real estate work through its agents, branch managers and salespersons.
Real estate agent
A person licensed under the Real Estate Agents Act 2008 to negotiate and transact the sale or lease of real estate on behalf of the property owner.
Refinancing
The process of paying off one loan with the proceeds from a new loan using the same property as security.
Real Estate Agents Act 2008 (REAA 2008)
The Act that provides for the regulation of the real estate industry in New Zealand.
Real Estate Authority (REA)
The government regulator of the New Zealand real estate industry.
Real Estate Agents Disciplinary Tribunal (READT)
The READT hears and determines disciplinary and licensing cases involving licensees. The READT is part of the Ministry of Justice and is independent of REA.
Real Estate Institute of New Zealand (REINZ)
A membership organisation that represents real estate agents throughout New Zealand.
Requisitions on title
A process where the buyer requests additional information about the title of the property from the vendor.
Reserve
The reserve is the lowest price the seller is willing to sell the property for at auction.
Resource consents
A resource consent is required when a group or individual carry out an activity or development on a property that is not permitted by the district or regional plans. Resource consents relate directly to the rules set out in the district or regional plans and the Resource Management Act 1991 and are different to building consents.
Right of first refusal
A provision in an agreement that gives a party the first opportunity to purchase or lease a property before it is offered for sale or lease to others.
Right of way
The legal right to access or cross another property by a specific route.
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S
Sale and purchase agreement
A legally binding contract between the buyer and seller for the sale and purchase of a property. The agreement sets out all the agreed terms and conditions in writing.
Sale and purchase agreement approved guide
This guide contains the key things that buyers and sellers should know about sale and purchase agreements. If there is a licensed real estate agent involved in a sale, they must give this guide to the seller and prospective buyers before a sale and purchase agreement is signed.
Salesperson
A person who is licensed to carry out real estate agency work on behalf of an agent.
Second mortgage
A mortgage that is paid off when a property is sold and after the first mortgage is paid.
Selling agent
A licensed agent who is working on behalf of the seller but is not always the listing agent. A selling agent may have introduced a buyer and could be working with the listing agent to sell the property.
Semi-detached
A type of construction where two homes are joined together by a common wall.
Settlement
The end goal in a property transaction when the sale and purchase is completed by the exchange of property and payment.
Settlement statement
A breakdown of the payments involved in the property transaction prepared by a lawyer or conveyancer. The settlement statement will include payments such as the deposit, agent’s commission, outstanding rates and loan payments.
Sole or exclusive agency
A sole or exclusive agency precludes all other agents from working on the sale of the property, although another agent may approach the sole agent if they have a client who is interested in the property.
Subdivision
A tract of land divided into individual lots for a housing development.
Survey plan
A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features. When a subdivision is completed, a survey plan will become a deposited plan and will become part of the certificate of title for the property.
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T
Tenants in common
A type of joint ownership in a property where two or more purchasers own a property separately in specified shares. If one dies, their share of the property forms part of their estate. Shares can be sold without consulting the other owner(s).
Tender
A sale method where prospective buyers submit confidential written offers by a specified deadline. There is usually no minimum price, but properties are often listed with a BEO or BBO price. The seller can then choose the offer that is most acceptable to them, based on the price and any attached conditions. The most attractive tender is likely to be one that combines a good price with few conditions. Sellers can negotiate with any one or more of the tenderers after tenders close.
Title
A title provides information about a property’s ownership, boundary and access. This information is held by Land Information New Zealand (LINZ).
Townhouse
A dwelling unit which generally has two or more floors and is attached to other similar units by party walls.
Trust account
A bank account administered by a law firm or real estate agency to hold funds on behalf of others. When a buyer pays a deposit, it is held in a trust account by the real estate agent until the sale and purchase agreement becomes unconditional.
Trustee
A person who holds or controls property for the benefit of another.
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U-Z
Unconditional agreement
Where a buyer and seller agree to buy and sell a property without including any conditions. A conditional sale becomes unconditional when all conditions are met.
Unconditional offer
When a buyer offers to buy a property without attaching any conditions to the sale.
Unit title (stratum estate)
The title to a unit or lot on a plan of subdivision associated with townhouses, units and blocks of flats and based on the horizontal and vertical subdivision of air space. Owners have a certificate of title, are absolute owners of a freehold flat and have an undivided share of the common property.
Utilities
Private or public service facilities such as gas, electricity, telephone, water and sewer that are provided as part of the development of the land.
Valuation report
An estimate of a property’s worth on the current market, which can be provided by a registered valuer.
Valuer
A person qualified by education, training, and experience to estimate the value of a property.
Vendor
The person or entity legally authorised to sell a property.
Verifiable
Licensees have to complete 10 hours of verifiable continuing professional development each year (as well as 10 hours of non-verifiable continuing professional development). Verifiable training is delivered by training providers approved by REA.
Non-verifiable training
Licensees have to complete 10 hours of non-verifiable continuing professional development each year (as well as 10 hours of verifiable continuing professional development). Non-verifiable continuing professional development is structured professional development, for example, training courses.
Zoning
Local authority guidelines that indicate the permitted use of land.
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