Real Estate Jargon

Interpretation of clauses and other Real Estate terminology

It is generally accepted there are two types of contracts, or agreements, made by a purchaser to be presented to a vendor.
They are a conditional agreement or an unconditional agreement.

A conditional agreement means exactly that. It is an offer written and signed on paper that contains certain conditions that must be met by either the purchaser or the vendor prior to the agreement becoming unconditional.

An unconditional offer is in effect a cash offer made by the purchaser to the vendor and is condition free. In other words a purchaser is offering a cash cheque to the vendor.

On terms of desirability for vendors (sellers) an unconditional offer is more likely to be accepted by a vendor as they realise once accepted and signed their property is unconditionally sold.

Other brief Real Estate terms related to contracts or agreements.

The Offer
This is written on paper and is your initial offer (agreement or contract) that is presented to the vendor.

Cash Offer
This is the very best and strongest offer you can give a vendor. It means there are no clauses/conditions and if accepted by the vendor then you have purchased the property and must complete the sale.

Conditional Offer
This is an offer presented to the vendor with one or more clauses included.

Auction
Where a property is for sale by Auction then your offer must be unconditional with no clauses. Be aware there are two methods at auction. One method is where the vendor may consider an offer prior to the auction. The second method is where the vendor will take the property to auction and will not consider prior offers.

Vendor
The vendor is the seller or legal owner of the property.

Purchaser
The purchaser is the legal person making the offer on paper.

Sales and Purchase Agreement
This is the legal Auckland Law Society form that all written agreements are written on.

Chattels
Chattels are fixtures and other stipulated items that are written and initialled in the agreement that stay with the property upon possession and transfer of title.

Possession Date
This is the date the property becomes the possession of the purchaser.

Deposit
This is a cash amount you pay to the Real Estate company upon acceptance of your offer by the vendor. If the agreement has conditions then it is usual practise to not pay the deposit until those conditions have been met and the agreement is unconditional. The deposit amount is usually 10% of the agreed purchase price. The deposit is held in a non interest bearing trust account for 10 days and then upon no dispute is released to the vendor’s solicitor. A receipt is issued to the purchaser upon the Real Estate company receiving the deposit.

Multiple Offer Situations
In this situation there will be more than one offer being presented to the vendor at the same time. It is in the purchasers interest to give their agent the very best offer in a multiple offer situation as they may not get a second chance.
Another point to consider when faced with a multiple offer situation is to eliminate as many clauses as possible and make your agreement unconditional which gives your offer more strength in the eyes of the seller.

GV
This refers to the Government Valuation. The Government Valuation (GV) can often be half the actual purchase price. The GV is a rating guide, the lower the GV the lower the rates.

LV
This refers to the Land Valuation. All properties have a Land Valuation and a value of improvements which combined make up the actual GV.

Land Area
This is the total land area associated with the property.