Lucy Corry –
Every industry is full of jargon and buzzwords that make no sense to anyone who’s not part of the club.
Real estate is no different, which means it can be hard to get up to speed.
Here is a handy guide to some of the most common terms you will come across when buying or selling property.
Agency agreement: If you are using a licensed real estate agent to sell your property, you’ll need to sign one of these agreements – it sets out what the agent will do and what they will be paid. Remember you can negotiate the conditions, such as who pays for marketing and how much the commission is. Make sure you get legal advice before you sign, because it is a binding document.
BEO or BBO: This stands for ‘Buyer Enquiry Over’ or ‘Buyer Budget Over,’ which means that price listed on the advertisement indicates the minimum that the seller will accept. The seller needs to give serious consideration to any offer over the BEO, so this figure needs to be selected carefully.
Deadline Sale or Deadline Private Treaty: In this kind of sale, a property is marketed for a set period (with an advertised end date). The seller can choose to accept an offer at any stage during the listing period though it may be stated in the advertising that ‘no offer will be accepted prior’. Check the fine print.
LIM: This stands for Land Information Memorandum, which contains everything that the local council knows about the property, such as any issues with drainage and plumbing, erosion or permits. It will help you identify if any additions have not got the right consent. A LIM will also record any unpaid rates.
Sale and purchase agreement: This is a legally binding contract between the buyer and seller for the purchase/sale of a property. It provides certainty to both parties and it sets out in writing all the agreed terms and conditions. It is essential to get legal advice before you sign an agreement – and that you read and understand what it means.
Settlement: This is the end goal in a property transaction, when the sale and purchase is completed by the exchange of property and payment. Settlement occurs when the seller receives the money for the sale – the buyer will not receive the keys until this happens.
RV: This stands for ‘Rateable Value’ – this is a value used to calculate local body rates. It should not be assumed to be a market value for a property when it is for sale as the rating valuation may be a number of years old. It is also not responsive to local market fluctuations and may not reflect any recent renovations to a property. This was formerly known as ‘Government Value,’ or GV.
Tender: If a property is for sale by tender, prospective buyers must submit confidential written offers by a set date. Usually there is 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 are allowed to negotiate with any one or more of the tenderers received after tenders close.
For more advice about buying a property, check out the REAA’s free guide at buyingahome.reaa.govt.nz.
Lucy Corry is Media Communications Manager at the Real Estate Agents Authority based in Wellington. For more free and independent advice on buying a property, please access the Home Buyers’ Guide at buyingahome.reaa.govt.nz.
If you still have questions, call the Real Estate Agents Authority (REAA) on 0800-3677322 or 04-4718930 from a mobile phone.