Buying a new home is stressful enough without getting lost in real estate jargon. A great real estate agent can help guide you through the maze of leaseholds and due diligence phases, but if you’re looking for a head start, we have you covered.
The real estate terms every buyer needs to know.
Subject Removal
The process whereby a buyer removes the conditions or contingencies that were included in the purchase offer. These contingencies are typically in place to protect the buyer and may include conditions such as securing financing, satisfactory home inspection, or the sale of the buyer's current home.
Underwriter
The underwriter is typically employed by a lending institution, such as a bank or mortgage company, and is responsible for evaluating and assessing the risk associated with lending money to a borrower for the purchase of a property.
Deposit
Often referred to as an earnest money deposit or good faith deposit, this is a sum of money that a buyer provides to show their serious intent to purchase a property.
Possession Day
The date on which the buyer is entitled to take physical possession of the property they have purchased. This is the day when the buyer can move in and start using the property as their own. It is a critical part of the real estate transaction process and is typically outlined in the purchase agreement.
Due diligence phase
A period during which the buyer thoroughly investigates the property before finalizing the purchase. This phase allows the buyer to ensure that the property meets their expectations and that there are no hidden issues or problems that could affect their decision to proceed with the transaction.
Leasehold vs freehold ownership
Leasehold:
A situation where an individual or entity (the leaseholder or tenant) has the right to use and occupy a property for a specified period, as per the terms of a lease agreement with the freeholder (landlord or property owner).
Freehold:
The outright ownership of a property and the land on which it stands. The freeholder (owner) has perpetual ownership with no time limit.
Strata
A form of ownership and management structure commonly used for multi-unit residential and commercial properties, such as condominiums, townhouses, and sometimes office buildings. Strata ownership allows individuals to own their individual units while sharing ownership and responsibility for common areas and facilities.
Walkthrough
A final inspection of a property conducted by the buyer shortly before the closing of the sale. It is an essential step in the home-buying process, allowing the buyer to ensure that the property is in the agreed-upon condition and that any negotiated repairs or alterations have been completed satisfactorily.
Closing costs
The various fees and expenses associated with the finalization of a property sale or purchase. These costs are incurred by both the buyer and the seller and typically include expenses related to the transfer of ownership, loan processing, and other services required to complete the transaction. Closing costs can vary depending on factors such as the property's location, purchase price, and local regulations.