Glossary of common real estate terms

A

Acceptance

An agreement to the terms of an offer, thereby creating a contract between seller and purchaser.

Agreement

The written contract for the sale and purchase of property between the seller and buyer.

Appraisal

An estimated value of a property based on criteria like the condition and size of the property, comparable sales in the area, current market conditions and more.

Appreciation

The increase in the value of a property as a result of changes in market conditions.

Asking price

The price the home is listed/marketed for. This is usually subject to negotiation.

Auction

A public sale of a property or real estate that is sold to the highest bidder once the reserve is met. Read our auction guide.

B

Body Corporate

A body corporate is a collective entity made up of all the unit owners in a unit title development. If you are the owner of a unit, you'll be a member of your body corporate, as will your fellow unit owners. The body corporate has a range of functions. Read more about body corporates.

Body corporate fees

Also known as annual levies, these are fees paid to the body corporate to maintain the building or complex. They cover things like maintenance, insurance and utility charges. Read more about body corporates.

Bond

Bond is money that a landlord can ask tenants to pay as security at the beginning of a tenancy. The landlord must lodge the bond money with Tenancy Services within 23 working days of receiving it. Read more in our renting FAQs.

Boundary

The lines that define the perimeter of a property.

Builders report/inspection

An inspection by a qualified person that attempts to identify significant defects, overdue maintenance, future maintenance issues, gradual deterioration, inferior building work, and/or other areas of concern. Find out what other reports we recommend you get.

C

Capital gain

The profit you make when you sell a property for more than you paid for it. Read more on capital gain and return on investment.

Capital value (CV)

The value the council believes your land and building are worth. Read more about capital, rateable and market value.

Chattels

Any moveable item that is not permanently attached to the land or building (not a fixture) such as curtains, fridges and light fittings. Chattels included in the sale of a home are included in the Sale and Purchase agreement.

Collateral

An asset (such as a home) which provides security to the bank or lender that they will get their money back if you are unable to repay your loan.

Commission

The money received by the agent as a result of a successful sale. This is usually a percentage of the sale price. View our commission rates.

Conditional agreement

A legally binding contract that is subject to specific conditions being met, such as the purchaser selling their current home.

Conditional offer

An offer which is subject to specific conditions, such as selling an existing home. Acceptance of a conditional offer results in a conditional agreement.

Contract

A legal agreement between the seller and buyer.

Conveyance

The transfer of property from one person to another, or the granting of an encumbrance such as a mortgage.

Covenant

A condition that is detailed on the title of the property, such as a restriction on the height of a property that would prevent a second storey being built.

Crosslease

A form of title commonly used when there is more than one property on one piece of land. All owners own their property and jointly share the land, making them all responsible for the upkeep of common areas.

D

Deed

A deed conveys the transfer of ownership from the old owner to the new owner.

Deposit

A deposit can refer to a percentage of the purchase price given from the buyer to the seller to confirm the sale. It can also refer to a deposit for a mortgage which is the amount you are personally paying towards the house purchase price. It is the difference between what the bank is lending you and the purchase price of the house.

Depreciation

The decline or reduction in the value of an asset over time. In real estate, depreciation often refers to the depreciation (reduction) of the chattels and fixtures in a commercial building or rental property.

E

Easements

A right for someone other than the property owner to use the land. For example, rights for someone else to use your driveway.

Equity

Refers to your share in the value of the home. It is the difference between the market value of the property and the amount you owe on it.

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. Find out more about the types of agency agreements.

F

Fixtures

Fixed items that cannot be removed without damaging either the property or the fixture itself, like a built-in kitchen cupboard.

Freehold or fee simple

Freehold is a type of title where the owner also owns all of the land associated with the property.

G

Guarantor

Someone who promises to pay the borrowers debt if the borrower defaults on their loan repayments.

I

Interest

The amount charged, normally a percentage of the loan amount, by the lender for borrowing money.

L

Landlord

A person who rents property to others.

Leasehold

A type of property in which the homeowner owns the building and rents the land.

LIM

A comprehensive report that has all relevant information the local authority knows about a property or section. It includes:

• Any special features such as subsidence, erosion, flooding or possible contamination
• Information on private and public stormwater and sewerage drains
• Rates information
• Any consents, notices, orders or requisitions affecting the land or buildings 
• District Plan classifications that relate to the land or buildings 
• Any other classifications on the land or buildings notified to the Council by network utility
• Any other information the Council deems relevant.

Watch a video about LIMs

Listing

Refers to a property that is listed with a real estate agency for sale.

Loan

A sum of money given by a lender (like a bank) to purchase a property, section or other item.

M

Market value

The most probable price that a knowledgeable seller and a knowledgeable buyer would agree upon for a specific property. Read about market value vs rateable value.

Mortgage

This term is commonly used to refer to a loan to buy a house but is actually the security registered against a property's title.

Mortgage broker

Someone who advises buyers on the types of loans available and helps to process any subsequent applications.

Mortgagee sale

When the lender (such as a bank) attempts to recover the balance of a loan from a borrower who has stopped making payments by forcing the sale of the asset used as the collateral for the loan. Find out more about mortgagee sales.

N

Negotiation

The process by which the purchase price of a house is agreed between buyer and seller.

O

Offer

An expression of willingness to contract on a specific set of terms. In real estate, the person making the offer will generally suggest a price at which they would like to purchase the property, along with any conditions and stipulations. The seller can then accept or counter-offer. Acceptance of an offer results in a legal contract between seller and purchaser.

P

Passed In

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

POA

Price on application. The price for the property is only disclosed to you when you enquire.

Possession date

The date on which you are able to move into the property.

Pre-settlement inspection

An inspection that the purchaser is entitled to make before they settle on their new property. It allows them to check a variety of things, including that the chattels listed in the Sale and Purchase Agreement are still there and in the same condition as when they signed the contract. See more about pre-settlement inspections.

Principal

The amount borrowed or still to be repaid on a mortgage.

Private sale

The sale of property by the owner without the services of a real estate agent. Read more about private sales.

R

Rateable value (RV)

The value of the property as deemed by the local council for determining rates. Read about rateable value vs market value.

Reserve

The minimum price acceptable to the seller for sale of a house at auction. If bidding does not reach the reserve, the property is not sold (it is passed in).

S

Sale and purchase agreement

An agreed contract between the buyer and the seller for the sale of a property.

Settlement

A date, as specified on the sale and purchase agreement, when the buyer takes possession of the house. 

T

Tenant

The person who rents land or property from a landlord.

Tender

A sale process that allows multiple parties to make an offer on a house by a set date and time. All offers are confidential and can include conditions. The owner will choose the offer most acceptable to them. Read our buyers guide to tenders for more information.

Title (certificate of)

A legal document that proves ownership of land and the rights and restrictions that apply to it. It will tell you the size and general shape of the section, who owns it and whether there are mortgages, leases, rights of way or other interests registered against the title as well as whether it is freehold or leasehold.

U

Unconditional offer

An offer to buy - without any conditions attached - according to the terms set out in the contract. Watch a video about unconditional offers.

V

Valuation

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

Vendor

The owner (person or entity) legally authorised to sell a property.

Y

Yield

Yield comes from the rental money received from tenants. It is the rent a property could provide over a year, expressed as a percentage of its purchase price. Read more about yield and return on investment.