An A-Z of Common Estate Agency Words And Their Definitions

If you're buying or selling a house there may be all sorts of terms you come across you've never heard before, or have heard of but aren't quite sure what they entail. Here's a list of basic definitions of words that crop up in your house sale/purchase.

APPRAISAL. This is when an agent comes round to your property and gives their advice on what price to market your property at and how to maximise its potential. It's typically a free service.

AGENCY AGREEMENT. This is the contract between the persons selling a property and the agent. It will contain basic information such as the address of the property being marketed, as well as all the terms and conditions such as the length of the contract, how to end the contract, any fees and what is expected of both parties.

ASKING PRICE. This is just that - the price that the vendor has asked for their property. It does not mean its actual value or that offering that price will guarantee an offer is accepted.

BUILDING REGULATIONS. There are certain works carried out on a property which must meet with building regulations and have building regulations approval. You should get certificates for any major work that has been carried out. A buyer's solicitors may ask for them. One common issue we come across is when the attic space of a bungalow has been converted into a bedroom, but the homeowner hasn't had the work signed off by Building Control. Legally, this space cannot be used as a bedroom, or indeed as a liveable space.

CHAINS . A property chain is made up of all the buyers and vendors who are relying on other property sales/purchases to complete in order for them to be able to move themselves. For example, if our client has sold their property to a first time buyer, and our client themselves is moving into rented accommodation, there is no chain as only one property is involved. However, if the buyer were buying a property from our client who was also purchasing a property to move into, there are now 2 houses in the chain - the one our client is selling and the one they are purchasing.

COMPLETION. This is the final stage in the house sale process, where the deeds (see below) are transferred from the previous owner to the new one, and the funds are deposited into the vendor's account.

CONVEYANCING. Nearly all house sales and purchases will require the services of a conveyancer, also known as a solicitor who specialises in property transactions. The buyer and vendor will each have their own conveyancer who will liaise with each other, handling things like the searches (see below) and enquiries (see below) and the transfer of funds and deeds.

DEEDS. This is a certificate held by the owner of a property which shows that they are legally the owner of that property.

DEPOSIT. If a buyer requires a mortgage to purchase a property, they will need to have saved up a sum of money, known as the deposit, which is usually 25% of the purchase price. The mortgage makes up the remaining 75%.

ENERGY PERFORMANCE CERTIFICATE. Legally every property that is marketed for sale must have an Energy Performance Certificate (EPC), or the vendor should have applied for one within 30 days of the property being marketed. It tells any prospective buyer how energy efficient the property is, how expensive it is likely to be to run, and recommendations for how to make the property more energy efficient. An EPC lasts for 10 years.

ENQUIRIES. The buyer's solicitor will normally raise pre-contract enquiries, relating to the property or the purchase, early on in the process which are sent to the vendor's solicitor. Additional enquiries may be raised after the initial enquires throughout the process up to exchange of contracts (see below). To name a few examples, there could be enquiries relating to boundaries, party walls, utilities and services, access to and from the property, or planning permissions and building regulations.

EQUITY. If a homeowner has paid, say, 25% of the purchase price of a property worth £100,000 at the time of purchase, with the remaining 75% made up by the mortgage, they are said to have equity of 25% in that property, or £25,000 of equity. Over time, if the value of the house rises say to £120,000, the loan amount will still be £75,000 (or actually less if the owner is making monthly capital repayments on the loan, not just on the interest), so the owner's equity in the property is now £45,000 - their initial £25,000 plus the extra £20,000 of the property's new value.

EXCHANGE OF CONTRACTS. This is the stage just before the completion stage, where the agreed terms of the house sale become legally binding for both parties i.e. they have entered into a contract. These days exchange most often happens on the same day as completion or within a few days of each other.

EXECUTOR. When the owner of a property has died, there is a legally appointed person who will handle that person's estate called the Executor. If the deceased person has made a Will, they name their own Executor of the Will. The Executor has the legal right to sell the property, no other person can do this. In many cases the Executor is a member of the family, or a solicitor.

FIXTURES AND FITTINGS. Fixtures are items in the property which are fixed to the walls, ceiling or floor. For example, the kitchen units, bathroom suite, plugs and sockets, radiators. Fittings are 'free standing' items, things like curtains, hung paintings, carpets, sofas. What is left in the property and what the vendor removes before completion is usually agreed via the solicitors.

GAZUMPING AND GAZUNDERING. Gazumping is when a new buyer puts in a higher offer than an existing offer from another buyer, whose offer has already been accepted. Gazundering is when a buyer, whose offer has been accepted by the vendor, suddenly drops their offer just before the property is due to exchange, forcing the seller to accept the new offer or restart the whole process of looking for a new buyer.

LAND REGISTRY. The Land Registry was created to register the ownership of land and property and contains the information found in the paper title deeds. Anyone can view the register online for a small fee.

LEASEHOLD. Leasehold is a type of ownership title. Generally a property is sold freehold or leasehold. If leasehold the property will have a lease for a set number of years, generally 125, 500 or 1000. The freeholder retains responsibility over the site and in exchange a leaseholder pays a freeholder a ground rent to compensate.

LISTED BUILDING. A building that is on the Statutory List of Buildings of Special Architectural or Historic Interest is one which will need special permission from the local planning department for any alterations to it and sometimes the owner has certain obligations to maintain it. There are three types of listed building in England: Grade I, Grade II* and Grade II, Grade I being the rarest level of listing.

MORTGAGE AGREEMENT IN PRINCIPLE. There is a big difference between a mortgage agreement in principle and a mortgage offer. A mortgage agreement in principle is an initial decision from a lender that "on paper"" they would be happy to lend for purchasing a property. The lender does a few background checks to calculate how much they would be happy to lend you. It is useful for a buyer to have an agreement in principle when they are searching for properties as it shows they are serious.

MORTGAGE OFFER. This is when the lender formally approves the lending to the buyer against the property they are buying.

NEGATIVE EQUITY. A person is in negative equity if the value of their house falls after they buy it. If a homeowner has paid, say, 10% of the purchase price of a property worth £100,000 at the time of purchase, with the remaining 90% made up by the mortgage, they are said to have equity of 10% in that property, or £10,000 of equity. Over time, if the value of the house falls say to £85,000, the loan amount will still be £90,000 (or actually less if the owner has been making monthly capital repayments, not just paying off the interest), so the owner's equity in the property is now -£5,000 (their initial £10,000 minus the £15,000 fall in the property's new value).

NEGOTIATION. There are usually two stages for negotiation. First is when an offer is placed and the agent goes back and forth between the buyer and seller to negotiate a mutually agreeable figure. The second is after the buyer's survey has come back. Sometimes there is no need to negotiate at this stage if the survey doesn't throw up any issues. If it does, the buyer will sometimes try to negotiate some money off the original offer price.

PARTICULARS. When selling a property the estate agent will usually put together a leaflet or brochure containing certain information such as room dimensions, photographs, property description, asking price, and the agent's branch details. Collectively these are known as the 'particulars'.

PLANNING PERMISSION. Not to be confused with Building Regulations. When making certain alterations to a property, such as building an extension, in some circumstances the owner must seek planning permission before carrying out the work. That is, they will need to submit detailed plans for the proposed work (for which there is a fee) to a member of the local council's planning department. Someone from the council will then visit the property and decide whether to approve the plans.

REMORTGAGE. If someone already owns a property but wants to release some equity, they would need to do what's called a remortgage. If they have 100% equity they would be looking to take out a mortgage on the property. If they currently have a mortgage on the property and want to switch to one with more favourable terms, they would need to remortgage. If the new mortgage is greater than the previous one, they would use funds from the new mortgage to pay off the existing one. The difference between the two mortgages is the amount of equity the owner will then have released.

STAMP DUTY. SDLT, or Stamp Duty Land Tax to give it its full name, is a tax that the buyer has to pay on any property purchased for more than £125,000. The rules for how much SDLT you have to pay were changed on 4th December 2014, the new rules can be found here: New Stamp Duty Land Tax Reforms

SEARCHES. The buyer's solicitor will usually need to carry out searches relating to the property, including information held by the local authority and the Land Registry. These can take anything from a few days to a month to be returned. Examples of common searches include environmental, flooding, drainage and water, and local land charges.

SOLD SUBJECT TO CONTRACT. This is when an offer has been accepted on a property, but exchange of contracts has not yet taken place. A property is usually shown as Sold Subject To Contract from when the offer has been accepted, through the survey phase, and right up to Exchange.

SURVEY. There are two main types of survey - the one the mortgage company's valuer does, which is to judge whether the property is worth what the buyer has offered. The mortgage company offer a basic valuation survey or a more thorough Homebuyers Report. They are protecting their own interests to make sure their loan is secure. The other type of survey is one which the buyer organises and is optional. It's usually a full structural survey highlighting any issues such as damp or subsidence and can give the buyer an idea of the costs for correcting any issues.

VALUATION. This can mean either the valuation of a property that an estate agent gives (see APPRAISAL), or the valuation by the mortgage company. Basically it means how much has the property been judged to be worth in the current market.

VENDOR. A legal word for the seller.

Published on 21 February 2015

Source Trinity Sales Wakefield

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