Have you ever browsed property websites and wondered what terms like “under contract” mean? Then you’re not alone. Understanding the terminology used in the real estate market, whether you are a first-time property seller or a seasoned investor, is critical. Read on to learn more about some important property-related terms.
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What Does It Mean If A Property Is ‘Under Contract?’
When a buyer makes an offer on a home and the seller accepts the offer, the property is said to be ‘under contract’. At this point, the two parties have agreed to the terms of a sale (including the sale price, terms and conditions), but as this is an early part of the process, there is the possibility the sale will not proceed to completion.
What Is A ‘Cooling-off Period’ In Real Estate?
The cooling-off period is the very last stage that a property buyer can withdraw from the sale without major financial or legal consequences.
If the sale conditions negotiated include a cooling-off period buyers have this time to complete and investigations and finalise their enquiries. If a buyer changes their mind, they will have the option to withdraw from the sale contract, but will pay the vendor 0.25 percent of the purchase price.
Many sales proceed without a cooling-off period. In this instance the purchaser provides a waiver by issuing a ‘66W certificate’.
What Are ‘Conditional Offers’ In Real Estate?
The buyer might request that the seller subject the purchase to certain terms.
A loan approval (‘subject to finance’), the sale of an existing home, the successful completion of a property pest inspection, and other factors might be included in the terms and conditions. In the event that all of these requirements are satisfied, the transaction is declared unconditional and the property is ‘sold.’ However, if any of these requirements are not satisfied, the buyer has the right to withdraw without penalty.
‘Under Contract’ Vs. ‘Under Offer’
It is possible to have an offer on a home accepted without the sale being complete – hence the phrase used is under offer. A conditional contract indicates that there are conditions that must be met before documents are exchanged, at which point the property is said to be under contract.
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