Real Estate Terms and Terminology – What Do You Mean?

Home Buyers Edition

Real Estate terms can often be overwhelming and hard to understand for the general public.  In one of the fastest pace situations, it’s hard to know the language being used if you’re not familiar with it.

Here we will focus on real estate terms used in the home buying transaction. This is a glossary of the most commonly used real estate during the home buying process.

Multiple Offers

These two words when used together seem very simple to understand. However, when used together within a real estate transaction they become much more complex. When you hear the term multiple offers it means that there is more then one offer on the property in question. This can also be referred to as a bidding war. In this scenario, home buyers will be encouraged to come with their best offer as they are now competing for the same home and like in any competitive scenario the best will likely win.

Pre-Emptive Offer

Also known as the “bully offer”.  The pre-emptive offer is an offer sent to a seller or listing agent prior to the stated offer submission date or time. Typically, these types of offers are very strong and used to entice a seller to want to work with them prior to waiting for anyone else. However, in Ontario there are rules and obligations that must be followed once a pre-emptive offer is received. In order to offer fair and equal opportunity to all buyers notification to all interested parties must be given.  Meaning that even though a pre-emptive offer has been received multiple offers are still likely possible. To learn more about the pre-emptive offer process and the obligations required you should speak with a real estate professional about your local guidelines and processes.

Multiple Representation

Multiple representation can happen on both the buying or selling end of a real estate transaction. Representation refers to the relationship with the client and the realtor. Multiple representation typically refers to a scenario where the same realtor or real estate brokerage is representing both parties to that particular transaction. Multiple representation must be disclosed as it may cause a conflict of interest throughout the transaction. Ask you realtor about the benefits and down falls to multiple representation within a real estate transaction.

Counter Offer

When an offer is submitted to a listing agent or seller it is reviewed and can be one of three things: accepted, refused or countered. A counter offer is when the seller wishes to continue to negotiate with you. They would like to consider your offer however there may be some things they wish to change or “counter back” to you. This isn’t always the price. A counter offer can change anything within the offer. Including but not limited to; price, closing date, deposit, terms, inclusions or exclusions. As a buyer you can do the same by accepting, refusing or countering their offer. Negotiations are all a part of the game of real estate.

Clause

A clause is a stipulation within an agreement of purchase and sale. It’s states something that will be done or understood. For example, A buyer may request to have work completed prior to closing. The agreement would not be “conditional” on this particular work being done but rather it is just stated in the agreement as a clause that both parties understand. More of a statement vs a request. Within most agreements there are also pre-printed clauses that outline the details of the agreement such as closing date, legal steps and actions taken by the lawyer to close the transaction as well as condition of inclusions such as appliances or chattels.

Condition

Similar to a clause a condition is a statement or stipulation within an agreement of purchase and sale. The biggest difference with a condition though is that the offer itself is conditional upon something happening prior to the offer becoming firm and binding. For example, a common condition within an agreement of purchase and sale is financing. The buyer and seller would agree to the condition of financing within a certain time frame and if the condition was not fulfilled ( the buyer did not obtain suitable financing) then the agreement becomes null and void and the seller is free to accept new offers.

Requisition Date

This date is prescribed within every agreement of purchase and sale. It is the due date in which the buyer (or the buyers lawyer) must examine the title of the property and ensure it is free of any liens and encumbrances upon completion or closing of the transaction. This date is typically set for approximately 15 days prior to the closing date. The reason for this is that so if there are any discrepancies or issues they can be addressed or resolved prior to the closing. Therefore, nothing will hold up the deal from closing on the proper date and time.

Completion Date

Also known as closing day. The date of completion of the transaction. This is the day that the lawyer transfers title of the property and keys are exchanged. Due to a number of factors this typically takes place in the afternoon. The mortgage company will fund the the sale to the purchasers lawyer who will then send the purchase funds to the sellers lawyer in exchange for the keys. It is always advised to prepare moving around a later afternoon closing time which can sometimes prove tricky if you have back to back closings in one day.

Buyer Representation

Pre-Approval

Irrevocable