Acceptance

The consent of the selling offer to be bound by the terms and conditions of the person making the offer. Acceptance of an offer constitutes an agreement.

Appraisal

A written analysis of the estimated value of a property prepared by a qualified appraiser.

Appreciation

An increase in the value of a property due to changes in market conditions or supply and demand, etc.

Asking Price

The listed price of the property. The owner may be willing to negotiate therefore this may not be the same as the selling price.

Asset

Anything of monetary value that is owned by a person, eg: personal property, bank accounts.

Auction

A public sale of a property or real estate that is sold to the highest bidder when the owner?s reserve is reached. Sellers have the ability to set a reserve price and a suitable settlement date prior to the auction. The auctioneer is not permitted to sell the property below the reserve price without authorisation.

Body Corporate

An administrative body made up of all the owners within a group of units or apartments of a strata building. The owners elect a committee, which handles administration and upkeep of the site.

Bond

A sum of money paid by a tenant and held by the Tenancy Services to ensure against defaulting on payment and damage to the property.

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.

Business Day (Working Day)

A standard day for conducting business. 9am - 5pm. Excludes weekends and public holidays.

Buyers Market

When the demand for property is lower than the number of properties available.

Capital

Money used to create income, either as an investment in a business or an investment property.

Capital Gain

The gain on the sale of a capital asset.

Cash Flow

A measure of cash inflow and outflow from the business. Positive cash flow means more money is coming into the business than is leaving it. Negative cash flow is the opposite.

Cash Out Clause

A clause in the Sale and Purchase Agreement that allows the vendor to give notice to the purchaser that another offer has been presented. This provides a defined period for the purchaser to confirm that they are able to go unconditional. If the purchaser is unable to go unconditional within this period the vendor is legally allowed to accept the other offer.

Caveat

A warning on a title to a purchaser that a third party might have some interest or right in the property.

Certificate of Title

A description of a property with the name of the registered owner, encumbrances, ie: mortgages or easements on the property.

Chattels

Moveable and removable items of personal property. In real estate transactions, chattels included in the sale usually include the stove, television aerial, carpets, blinds, curtains, drapes and light fittings. However, unless chattels are specified in the agreement, they are not sold as part of the property.

Conditions

Terms of the contract which are required to be met before the transaction may proceed.

Collateral (Security)

An asset (such as a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract.

Commission

A proportion (usually a percentage) of the sale price of a property paid to a real estate agent for negotiating a real estate transaction. The seller pays the commission.

Common Property

Area of building, land or amenities within a strata title property that are shared by all owners, eg: a driveway.

Conditional Agreement

This is a legally binding contract, but it is subject to conditions being satisfied, usually by the purchaser. The conditions will be detailed in the agreement and may, for example, require that you are able to sell your existing home by a set date or to arrange finance by a certain date. Conditions can also be included by the purchaser that require the seller to do something by a specified date - for example, that settlement will take place only on the conditions that the house is painted, the windows repaired or that rubbish around the section is removed. Note: Purchasers' conditions usually do not prevent the sale-taking place, but may allow the purchaser to delay settlement without penalty or claim damages if the conditions are not met in time.

Construction Loan

Also called Building Loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as work progresses.

Covenant

Terms, conditions and restrictions noted on the title. A covenant may affect future plans or resale of the property.

Cover Note

A document issued by an insurance company giving temporary insurance until a formal policy is issued.

Credit Report

A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's credit worthiness.

Cross Lease

This type of ownership is common where there is more than one home on a block of land. You are all owners of the land and you each lease your home. The lease may provide for an exclusive use area for each cross-lessee. It's like owning a freehold property but there are some restrictions.

Default

Failure to make mortgage payments regularly or to comply with other requirements of the mortgage.

Deposit

1. The amount of cash paid by the purchase to the vendor as stipulated in the Sale and Purchase Agreement. The deposit is usually paid upon signing of the agreement or when all conditions on the agreement have been satisfied and the contract is deemed unconditional.
2. The amount of cash put towards the purchase of property

Depreciation

A decline in the value of property due to changes in market conditions or other clauses.

Disposable Income

Money left over after all expenses have been met.

Drawdown

The payout of the mortgage funds provided by the Bank/Lender.

Easement

A right that someone has to use the land belonging to another, eg: a water authority may have a sewerage easement across part of your property.

Equity

The amount of an asset actually owned. Equity is the difference between the market value of the property and the amount still owed on its mortgage.

Estate

The total of all the real estate and personal property owned by an individual at the time of death.

Exclusive Listing/Sole Listing

A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time.

Fair Credit Reporting Act

A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one?s credit record.

Fee Simple

An estate in fee simple which continues for an indefinite period of time. Freehold estates may be inheritable or non-inheritable. Inheritable estates include the fee simple absolute, the qualified fee, and the fee tail. Non-inheritable estates include various life estates which are created by acts of parties, such as an ordinary life estate, or by operation of law.

First Mortgage

A mortgage that is the primary lien against a property.

Fittings

A mortgage that is the primary lien against a property.

First Instalment

The payment due on a mortgage loan.

Fixed Rate Mortgage

A mortgage in which the interest rate does not change during the term of the loan.

Fixtures

Fixed items that cannot be removed without damaging either the property or the fixture itself, eg: cupboards.

Foreclosure

The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually results in the selling of the property by auction and the proceeds being used to service the mortgage debt.

Freehold

An estate in fee simple which continues for an indefinite period of time.

Gearing

The ratio of your own money and borrowed funds for investment.

Gross Income

Income before taxes are deducted.

GST

Goods & Services Tax. A consumer tax levied at a flat rate of 12.5% on all goods and services supplied by a registered person. As a general rule, GST is not generally payable on residential sales but could be payable on lifestyle blocks, farms, commercial property and businesses.

Guarantor

A person who agrees to indemnify the holder of a loan all or a portion of the unpaid principal balance in case of default by the borrower.

Home Inspection

A thorough inspection that evaluates the structural and mechanical condition of a property.l or a portion of the unpaid principal balance in case of default by the borrower.

Interest

The fee charged for borrowing money.

Interest Only Loan

A loan where only the interest is repaid throughout the course of the loan. The original amount is repaid at the end of the term of the loan, rolled over by the same bank or the owner re-mortgages.

Interest Rate

The rate of interest in effect for the monthly payment due.

Investment Property

A property that is not occupied by the owner, but provides a return to the owner through renting to a tenant.

Landlord

A person who rents property to another, a lessor. A property owner who surrenders the right to use property for a specific time in exchange for the receipt of rent.

Leasehold

You buy the right to own the home and lease the land for a certain time. You pay rent to the landlord for the land. You can sell the lease if you want to move on. There may be restrictions on your use of the property.

Lessee

A person leasing a property.

Lessor

The owner of a property that is leased to another person.

Liabilities

A list of debts owned.

Lien

A legal claim against a property that must be paid off when the property is sold.

LIM Report (Land Information Memorandum)

A LIM is a report prepared by the local Council at your request. It provides a summary of property information held by the Council as at the day the LIM was produced.

Line of Credit

An agreement by a lender to extend credit up to a specified amount for a specified time for a specified purpose.

Listing

1. A written contract between an owner and a real estate agency, authorizing the agent to perform services for the principal involving the owner's property. 
2. The property so listed.

Loan

A sum of borrowed money that is generally repaid with interest.

Loan Application Fee

Also called Establishment Fee. A fee paid to a lender for processing a loan.

Loan to Valuation Ratio (LVR)

The amount of the loan financed as a proportion of the property value, expressed as a percentage.

Low Equity Margin (LEM)

The loading of an interest rate that is charged by the lender when the loan is above a certain percentage of the value of the property offered as security.

Low Equity Premium (LEP)

A one off fee that allows purchasers who have a minimum deposit to apply for and potentially be granted a home loan. It is included in the cost of borrowing.

Market Value

The price at which a seller is happy to sell and a buyer is willing to buy.

Mortgage

A legal document that pledges a property to the lender as security for payment of a debit.

Mortgage Broker

An individual or company that brings borrowers and lenders together for the purpose of loan origination. Mortgage brokers typically require a fee or a commission for their services. Usually paid by the Lender.

Mortgage Discharge Fee

A fee charged by some lending institutions when the mortgage is discharged.

Mortgagee

The lender (eg bank) in a mortgage agreement.

Mortgagor

The borrower in a mortgage agreement.

Negative Gearing

Where the return on an investment is not sufficient to cover the costs on the investment, eg: property maintenance and interest on the loan against income from renting.

Negotiation

The process of reaching an agreement between the buyer and seller regarding the terms and conditions of the contract.

Net Income

Income after taxes are deducted.

Nominee

A person who, in a limited sense, acts for or represents another.

Off the Plan

To purchase a property before it is completed after having only seen the plans.

Offer

Conveyed intent by one party to form a contract, which may have conditions and stipulations, with another party.

Offers

A process of calling for offers on the property, usually required by a certain date.

Official Cash Rate (OCR)

The Official Cash Rate is the interest rate set by the Reserve Bank to meet the inflation target specified in the Poly Targets Agreement. This is reviewed every six weeks.

Passed In

The highest bid fails to meet the reserve price of a property at an auction and consequently does not sell.

Price on Application (POA)

A pricing method used by some Real Estate companies, meaning Price On Application.

Power-of-Attorney

The person who has authority to execute documents on behalf of the grantor of the power. Also a legal document which authorises another person to act on one?s behalf.

Pre Approval

A buyer who has satisfied a lender that he or she is financially able to qualify for a loan. Qualifying the buyer is one of the primary steps taken by the lender as part of the loan process.

Pre Qualification

The process of determining how much money a prospective home buyer will be eligible to borrow before he or she applies for a loan.

Principal

The amount borrowed or still to be repaid.

Private Sale

The sale of property by the owner without the services of a real estate agent. The homeowner takes on all the responsibility for selling their property.

Real Estate Agent

A person or Company licensed to negotiate and transact the sale or lease of real estate on behalf of the property owner.

Refinance

The process of paying off one loan with the proceeds from a new loan using the same property as security.

REINZ

Real Estate Institute of New Zealand. National representation body of real estate agents.

Reserve Price

The minimum price which a seller will accept at auction.

Resource Consent

Resource consents are necessary when a group or individual wishes to carry out an activity or development that may have some effect on the environment. Resource consents relate directly to the rules set out in the District or Regional Plans and the Resource Management Act and are different to Building Consents.

Revolving Credit

A home loan and transactional account in one. This allows for salary crediting and utilising all excess cash to reduce the mortgage principal. Having the ability to redraw up to the loans limit at any time, like an overdraft, without going through a separate application and approval process.

Sale & Purchase Agreement

An agreement in writing setting out the terms and conditions relating to the sale or purchase of a property.  It is the purchase document signed at auction.

Second Mortgage

A mortgage that, on the sale of a property, is paid off only when the first mortgage is paid.

Security

The property that is pledged as collateral.

Sellers Market

When demand for property is greater than supply.

Service (the loan)

The repayment of mortgage interest and principal repayment and other related expenses, such as property taxes and property insurance.

Settlement

Sole/Exclusive Agency

A sole or exclusive agency prevents all other agents from working on the disposal of the property, although another agent may approach the sole agent if the former has a suitable client. But even then the sole agent would finalise the deal.

Stamp Duty

Stamp Duty is a tax payable in respect to the transfer of commercial land and buildings. Stamp Duty is not payable on the purchase of residential property in New Zealand.

Strata Title

A 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.

Subdivision

A tract of land divided into individual lots for a housing development.

Survey

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.

Tenancy

The right to occupy a property under agreed terms and conditions.

Tender

A process of selling, calling for purchasers to make their best offers in writing for that property by a given date.  Buyers offers are collected confidentially and the seller choses which offer is the most favourable.   A price is not advertised, allowing the market to decide the value of the home.

Title

A legal document evidencing a person's right to or ownership of a property.

Title Search

A check of the title records to ensure that the seller is the legal owner of the property and that there are no other claims or outstanding permits.

Top Up

An increase in existing borrowings from the borrower's existing lender/bank.

Transfer

A document registered at the Land Titles Office and noted on the Certificate of Title which verifies the change of ownership of a property.

Trustee

A person who holds or controls property for the benefit of another.

Unconditional Agreement

The legal contract that binds both the purchaser and the seller to settle on the agreed date at the agreed price.  It is either not subject to any conditions or those conditions have already been satisfied. You should only consider entering an unconditional agreement if and when you are absolutely sure you want to buy a particular property and you already have the full purchase price or 'pre-approved' loan finance from a lender.  You should also be confident that there are no other issues or requirements that must be satisfied before you are committed to purchase the property.  An unconditional agreement commits you to purchasing the property.

Unsecured Loan

A loan that is not backed up by assets or guarantee.

Utilities

The 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

A written analysis of the estimated value of a property prepared by a qualified valuer.

Valuer

A person qualified by education, training, and experience to estimate the value of real property and personal property. You can tell someone is accredited in NZ with the ANZIV and/or SPINZ after their name.

Variable

The interest rate will change as market rates rise and fall as influenced by the reserved bank of New Zealand.

Vendor

The person or entity legally authorised to sell a property.

Yield

The interest earned or return by an investor on an investment, stated as a percentage of the amount invested.

Zoning

Local authority guidelines for the permitted use of land