Real Estate Terminology 101
Alberta Real Estate Association - An association of real estate industry members who belong to real estate boards in Alberta.
Addendum and Amendment - is a written change of a listing contract or purchase agreement agreed upon by either a buyer or a seller or both.
Amenities - In real estate, amenities are something considered to benefit the property and thereby increase the value of a property. Condominium amenities can include items such as elevators, underground parking, party rooms and swimming pools. Public amenities include banks, retail buildings, local buses and LRT stations, medical facilities, parks, schools, walking trails, golf courses and other community facilities.
Amortization - is the time period during which home buyers will have to pay back their mortgage to their lender — both the principal and interest accrued.
Appraisal — An estimate of a property’s value performed by a professional Appraiser.
As-Is - Common term used with the purchase of a foreclosed property. It is also used when chattels may not be in working order.
Asking Price — The price placed on the property for sale by the seller. This may or may not be the price the seller is willing to accept from a qualified buyer.
Assessed Value — The value of a property, set and used by each municipality for the purposes of calculating property tax.
Assessment - A certified real estate appraiser assigns a certain value to one’s property based on their statistical findings and general industry acumen.
Agent — A real estate professional registered in Alberta to facilitate the sale, lease or exchange of a property.
Assumable Mortgage - A mortgage held on a property by the seller that can be taken over by the buyer, who then accepts responsibility for making the mortgage payments. Speak with your Edmonton Realtor or lawyer prior to assumption of mortgages.
Attached Goods — Also known as chattels are an item which is attached to real property so as to form, in law, part of the land. Attached goods belong to the buyer and are also known as fixtures.
Breach of Contract - Where one party (buyer or seller) has not held up to the terms of the agreement such as getting cold feet about purchasing a residence after conditions have been removed. These instances can lead to the length of legal proceedings.
Broker — A person licensed by the provincial or territorial government to trade in real estate. Real estate brokers may form companies or offices which appoint sales representatives to provide services to the seller or buyer, or they may provide the same services themselves. In parts of Canada, brokers are referred to as Associates or Agents.
Built-Ins - Permanent structures or items which are physically built into the structure of a home such as an entertainment centre.
Buyer Brokerage Agreement — A written agreement between the buyer and the buyer's associate, outlining the agency relationship between the two parties and the manner in which the buyer's associate will be compensated. In Alberta, a buyer agency relationship arises automatically without a written agreement establishing the relationship.
Buy-Down - Commonly used by our DND members. It is a mortgage financing technique where the buyer obtains a lower interest rate for at least the first few years of the mortgage and is typically done for a period of about one to five years.
Buyer’s Associate — also known as Buyer’s Realtor or Broker — A person or firm representing the buyer. A buyer’s associate's primary allegiance is to the buyer. The buyer is the buyer associate's client.
Buyer’s Market - A surplus of homes for sale in a municipality which usually leads sellers to lower prices to compete with nearby homes making favourable conditions for home buyers.
Certificate of Compliance — A stamp issued by the municipality which states the improvements comply with the local building bylaws and requirements.
Client — The person being represented by an associate. The associate owes the client fiduciary duties including utmost care, integrity, confidentiality and loyalty.
Closing - Is the "move-in" date written on your purchase agreement or the date in which the title of your property is legally in your name.
Closing Costs — Expenses in addition to the purchase price for buying and selling a property such as legal fees and title transfer costs.
CMHC — Canada Mortgage and Housing Corporation. A Crown corporation providing information services and mortgage loan insurance.
Commission — An amount agreed to by the seller and the real estate broker/associate and stated in the listing agreement. It is payable to the brokerage on closing and shared, if applicable, among those Associates involved in the sale. It is the remuneration for services provided, normally paid at the time of closing in the province of Alberta.
Comparative Market Analysis (CMA) — The most widely used technique for REALTORS® in establishing the value of residential properties. It uses sales, competitive listings and expired listings to try to determine a probable selling price for the subject property. Used synonymously with Competitive Market Analysis.
Common Area - Homebuyers who purchase residences in multifamily complexes and condominiums often have to share common areas such as the complexes amenities. This may also include parking lots and complex green spaces.
Completion Day — The day from which all calculations of interest, tax adjustments, utility bill adjustments (if applicable), etc. are made to the credit of either the buyer or the seller. All legal and financial obligations are met on that day and the title to the property is transferred from the seller to the buyer. Completion day is usually (but not always) the same as the possession date.
Condition Precedent — A statement of a condition to be fulfilled before the contract will become firm and binding; must include a specific deadline for removal. May also be called a “subject to” clause.
Condominium Ownership — Shared ownership in a strata-titled property. Owners have a title (ownership) to individual units and a proportionate share in the common property.
Contingencies - Sometimes there are unforeseen property issues, like structural damages to a listing only unearthed after an inspection or failure of home financing to come through. In these cases, contingencies are placed into home purchase agreements so buyers have the right to back out of a deal or demand certain items be amended, removed, or added to a contract.
Conventional Mortgage — A mortgage loan which is 75 per cent or less of the loan-to-value ratio; and does not require insurance by CMHC or other private insurers.
Conveyance — The term used to describe the process of transferring the seller's title to the buyer and indicates all the necessary steps to complete the transfer. A conveyance lawyer is a lawyer responsible for the conveyance process.
Counter Offer — An offer made by the seller back to the buyer altering one or several terms and/or conditions of the offer as originally written. It is the rejection and change of the original offer. It allows the original party to accept, reject or add an additional counter. This is the art of negotiation is something every top-producing Edmonton real estate agent lives for.
CREA — The Canadian Real Estate Association. A national association representing the real estate industry on federal public policy matters, providing member services and education. CREA promotes adherence to a strict REALTOR® Code. CREA Code of Ethics — Rules of behaviour or conduct which provide a standard of fair, moral practice and a guide by which a REALTOR®'s behaviour or conduct is evaluated. Most Edmonton Realtors belong to CREA.
Customer — A person who receives information or assistance from a real estate broker or associate, but is not represented by that individual. A customer is NOT a Realtors client.
Debt Service Ratio — The percentage of a borrower's income that can be used for housing costs.
Down Payment — The difference between a property's purchase price and the amount financed. Most Edmonton buyers fall in the 5-20% range. The general rule is the more a buyer is willing to put down on a home, the lower their mortgage interest rate will be.
Disclosure - It’s considered highly unethical for a home seller and their representation to not disclose any defects or problems with their property when they list it. Disclosing all issues with a home for sale is an absolute must for sellers. Failing to do so could lead to not only withdrawn offers from or legal issues with potential buyers, but also a damaged reputation on the part of the agent who works with that seller.
Dual Agency — A real estate brokerage which acts as an associate for both the seller and the buyer in the same transaction. Both buyer and seller are the brokerage's clients.