Selwyn Times: April 18, 2018

10
REAA - Understanding real estate jargon
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’s a handy guide to some
of the most common terms you’ll 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’s 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 actually
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 haven’t
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’s
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.
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