The property industry is full of terminologies, which buyers find hard to understand. The impact of the terminology has no boundaries; it affects both veterans and new buyers. When buying a home, there are some terminologies that people tend to confuse their meaning. In this post, you will go through a glossary of the most used terms by real estate agents.
Guide Price/ Offers In The Region of (OIRO)
As you search for a home to buy, you may encounter this word phrase, guide price. Guide price refers to the estimated value that the seller aims to achieve. It is a term that acts as a neutral ground between the vendor and the real estate agent when they both have different opinions.
Guide price tends to differ when the property is under auction. In auctions, it refers to the price from which bidding will start. Most buyers prefer the starting point of it over the likely final buying price. Usually, the vendors agree with the particular auction house on the property’s worth.
Offers In Excess of (OIEO)
This is what it means when you come across a property that is marketed as offers in excess of. The vendor will only accept bid offers that surpass the specified price; anything lower than the limit set is unacceptable. In the same way, properties listed with a guide price, agents will market the property with offers in excess of the asking price when it has been hard to value the property accurately. By doing this, they tend to make more profit.
Sold Subject To Contract (SSTC)
Whenever you encounter such a phrase in the real estate industry, an offer has been placed and accepted, although there is no contract agreement. It is an agreement that is not legally binding; therefore, any of the parties can pull out at their wish.
Even if the property is sold subject to contract, don’t fear to show the vendor your interest. You can register just in case the original bidder fails to buy the property.
Gazumping
The Gazumping is a situation whereby a second interested party in the property comes to the vendor with a high offer which generally exceeds the previously agreed offer from the original or first bidder, and it’s accepted. Gazumping normally suppresses the first bidder; they find it annoying since they are not allowed to make a counter bid. Although it is disadvantageous to the first bidder, the vendor is legally entitled to do so if there are no contract agreements.
Vice versa of c can also happen under the following scenario: gazundering. A time may come whereby the vendor has accepted a bid from the client, but sometimes later, the buyer reduces the offer at the last minute before the contract exchange. So this is what is likely to happen if the buyer doesn’t want to negotiate on the price.
The vendor will have to settle on the lower bid, most especially if they are in a rush to sell the property. Failure to they will have to re-do the whole process once again with a new client, which is quite annoying and a waste of time.
Loan To Value (LTV)
Immediately an individual start to look for their desired home property, they are more likely to need to look into mortgage plans to come out exactly how they are capable of spending. And it is at this point where the word loan to value will come up.
Loan to value is the percentage of the mortgage loan that one requires to take out compared to the total value of the property. A buyer can purchase a given property with a 5% deposit, but a majority of the lenders need a 10% deposit. The higher the deposit, the better the mortgage rate you will get since there are low odds of risks involved for your lender.
