Real estate terms explained
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The sale or purchase of property could be a tricky process. What often further complicates these sales are not understanding the terms involved in this process. Let's face it, real estate agents sometimes use real estate jargon without realising how complicated it may be for the owner or seller to understand what is being said.
Mike Greeff, CEO of Greeff Christie's International Real Estate says, "Understanding the entire sales process - even something as small as the terms used to explain certain things - is an important factor to note for all parties involved, including the agent. Agents should endeavour to make terms more understandable and not make communicating with a client an unnecessary strain."
We attempt to decipher some difficult to understand terms, as well as set clients' minds at ease.
Term: OTP
Definition: Offer to purchase
Explanation: This very important document is submitted once a prospective buyer is ready to make an offer on a property. This document will include the buyer's intention to purchase, the price offered for the property as well as further information on the seller, including his or her ID number among other things. The offer to purchase is a legally binding document once all parties have signed and initialled.
Term: CMA
Definition: Comparative Market Analysis
Explanation: A Comparative Market Analysis is performed by a real estate agent, where he or she conducts a study and produces a report based on the selling price of similarly priced homes within the seller's area. This report then assists the agent in aiding the seller on choosing a realistic price at which to list their property. The report is not purely factual, and it takes into consideration the expertise of the real estate professional.
Term: Transfer fees/duties
Definition: Same as above
Explanation: Fees that are payable in order for the property to be transferred from the seller to the name of the new owner. Transfer fees often also include conveyancing fees and registration fees payable to attorneys and conveyancers involved.
Term: CGT
Definition: Capital Gains Tax
Explanation: The calculation of this tax is based upon the income (from all sources) that is received during the financial year. CGT is payable to SARS on all properties over and above R2 million. The property must by law however be used as a primary residence for the new owner.
Armed with the above terms you should be well on you way to demystifying the sometimes intimidating world of real estate lingo.
Author: Greeff
