If you are planning to enter a foreign country it is a good idea to learn some of the language so you have a better idea of what is going on. If you are thinking of entering the world of real estate then it is just as good an idea to learn the language of real estate.
This is the first in a series of short articles to help you "speak real estate" by a Victorian educator/real estate agent.
Who are the characters in the buying/selling story?
If you are new to the real estate 'story' you need to learn who all the people involved in the buying and selling story are so you understand who does what and what they are called.
It is very common within an industry for people to speak in acronyms or initials. They know what they mean but if you are new it is like a different language. An example in Victoria is the REIV. Agents will spell that out in the middle of a sentence expecting the listener to know exactly what that means and if they are in the industry they will but a new person? Just so you know it stands for Real Estate Institute of Victoria. Even being told that doesn't mean you actually know what the institute means or does.
Anyway let's deal with the most important players first. If you are thinking of buying you are the buyer but the industry will call you the purchaser. The person selling is really the seller but the industry will refer to them as the vendor. In most sales the vendor has someone help them with the sale, which is a selling agent. The selling agent needs to be a licensed estate agent or the representative of a licensed estate agent if they are being paid to sell the property.
In some parts of the world the buyer/purchaser always has an agent to help them with the purchase of the property. This is becoming more common in Australia and this agent also needs to be licensed if they are being paid to help the purchaser. This agent is usually called a buyer's advocate or buyer's agent.
If the purchaser does not have enough cash to pay for the property and they need to borrow money against the property they will need a mortgage. This can be tricky as they're a couple of ways to do this. Some go directly to their bank and ask them for a mortgage. The bank will tell the potential purchaser all the different loans with the costs that they have. Another way to find a loan is to use a mortgage broker. The advantage of using a broker is that the broker will have the information on all the banks' and lending institutions' loans and their costs and can then arrange for to choose.
When you take out a mortgage on a property you become a mortgagor and the bank or other lender becomes the mortgagee. So far you are a purchaser and a mortgagor who has a broker.
There is more ...you will also probably want to use a solicitor or conveyancer to help you with all the legal documentation you will need to complete the purchase and secure the mortgage. The vendor usually also uses a solicitor or conveyancer to prepare the documents they are required to provide in the sale of their property.
Some purchasers employ a qualified building inspector to check the property before the purchase. Depending on the area they may also pay for an inspection by a pest control expert.
The mortgagee will require validation of the value of the property so a qualified valuer does a 'sworn valuation'. This is not the same as a market appraisal, which may be provided by a real estate agent for free.
If the property is being purchased for an investment then the final character that needs to be introduced is the Quantity Surveyor. This person checks the whole property and prepares a depreciation schedule, which is then used to maximise taxation allowances for the investment property.
You can learn how to speak like a landlord in No. 2 of this series.
Toni Planinsek, principal of Planinsek Property Group, is happy to answer any queries through social media - Facebook and LinkedIn. She has prepared some free offers to help you on your road to becoming a successful property investor. To access yours go to www.toniplaninsek.com.au