Agency: The relationship between the REALTOR® and the principal whereby the REALTOR® represents the principal in transactions with a third party. This is now referred to as Representation ( previously and still sometimes referred to as agency)

Agent: The one authorized to represent the principal in transactions with a third party. In Real Estate, that would be the Broker.

Agreement of Purchase and Sale: The contract between a Seller and a Buyer for the purchase of real property.

Amortization: The retirement or paying off of a debt, such as a mortgage, by means of partial payments in regularly timed installments. The amortization period can vary and is based on the agreement that you negotiate with your financial institution. The shorter the amortization period the larger the payments but the amount of interest paid over the entire period will be less.

Appraisal: Is the process used to estimate property value.

Assessed Value: Is the value that the municipal taxation office places on property for the purpose of assessing property tax.

Assuming a Mortgage: When a property is sold, the Buyer may assume the mortgage payments, under the same terms as the Seller had, provided the financial institution that holds the mortgage deems the mortgage to be assumable. In this case; however, the original mortgage holder is still liable should the Buyer default.

Balance due on Completion: The total amount of money, after adjustments that the Buyer will be required to pay to the Seller to complete the transaction.

Blended Payments: Payments comprised of principal & interest, paid during the amortization period of the mortgage.

Brokerage: The company licensed by the Provincial Government to trade in Real Estate. Brokers may form companies and have offices, which have licensed sales representatives who perform services to both Buyers and Sellers.

Buyer: The purchaser of real property.

Client: The person being represented by a REALTOR®. The REALTOR® owes the client the duties of utmost care, integrity, confidentiality and loyalty.

Closed Mortgage: A mortgage that the financial institution, will not permit to be paid off, refinanced or renegotiated during its' term.

Closing: When financial obligations have been met, all legalities met and the deed can be transferred to the Buyer from the Seller.

CMHC: Canadian Mortgage and Housing Corporation. For a more in-depth description see the Buying Section of this website.

Closed Mortgage: A Mortgage that has a fixed interest rate (usually lower than an open mortgage rate) and a set, unchangeable term. You are not able to pay off a closed mortgage before the agreed end date without paying a penalty.

Closing Costs: All the costs associated with either a purchase or a sale that are accrued in addition to the actual purchase price.

Commission: A percentage or an amount agreed to by the Seller and the REALTOR® and outlined in the listing agreement. It is payable to the Brokerage on closing and the amount of the commission is shared between the Broker/Salespeople Representing the Seller and the Buyer.

Conventional Mortgage: Is a first mortgage that is for up to 80% of the lower of the property's purchase price or appraised value.

Convertible Mortgage: A Mortgage that you can change from short-term to long-term, depending on your financial needs.

Customer: A person who chooses not to enter into a Buyer Representation agreement but who receives valuable information and assistance from a Real Estate Broker or Salesperson.

Debt - Service Ratio: The ratio of debt to total household income. For a more in-depth description see the Mortgage Section of this website.

Default: When an obligation is not fulfilled it is said to be in default.

Deposit: Is the amount that is submitted with or at acceptance of an offer of purchase and sale.

Down payment: Purchase price less deposit less the amount of the mortgage equals the amount that would be considered to be the down payment.

Dual Representation: A REALTOR® who represents both the Seller and the Buyer in the same Real Estate transaction.

Easement: The right of one property owner over the land of another. An easement is usually registered on title.

Equity:The interest in the value of the property after any encumbrances, claims or mortgage is deducted. 

Gross Debt Service: The amount of money required to cover the principal, interest, taxes and often energy costs. If the property is a condominium, 1 /2 of the common expenses is to be included, depending of course on what expenses are covered.

Gross Debt Service Ratio: Gross debt service divided by household income. The basic rule of thumb is that GDS should not exceed 30%. (32% if heating costs are included). Simplified it is PIT (Principal, Interest and Taxes) divided by income.

High Ratio Mortgage: The mortgage you obtain when you have less than 20% of the total purchase price to use as a down payment. This type of mortgage must be insured (through sources such as CMHC or Genworth).

Joint Tenancy: Is the ownership of property by two or more persons who took title at the same time, in the same manner, in equal portions and on the death of one the survivor(s) retain ownership.

Listing Agreement: A legal agreement between the listing Brokerage and the property owner, setting out the services to be rendered, authorizing the Broker to offer the owner's property for sale or lease and stating the terms of payment. The commission is paid to the Brokerage upon closing.

List (asking) Price: The price that the Seller places on the property based on the information gathered (from statistics & history) and presented by the REALTOR®.

Market Price: Is the price at which real estate sells.  It does not require the same criteria as outlined in Market Value.  A price results from every sale while value results from many sales.

Market Value: Is the price which a property will command, from a willing and informed Buyer for property offered on the open market allowing for reasonable exposure, while not acting under duress or unusual circumstances.

Mill: Is a measure used to indicate the property tax rate, one tenth of one cent. For example a mill rate of one mill per dollar would be the same as 0.1 per cent of assessed value.

Mortgage: A mortgage is a conveyance of the property to a lender, which serves as security for the payment of the debt with upon payment of the debt allows for the right of redemption.

Mortgage Broker (Agent): A person or company working with financial institutions or individuals wishing to invest in mortgages. Usually the mortgagor pays the Broker a fee for arranging the mortgage. There are other fees such as appraisal and legal services, which may or may not be included in the fee.

Mortgage Insurer: High-ratio mortgages, those for which the Buyer has less than a 20% down payment, must be insured against default by CMHC or Genworth . The borrower must arrange and pay for the insurance, which protects the lender against default. Based on the amount borrowed there is a sliding scale that calculates the fees due.

Mortgagee: The individual or financial institution to which the property was conveyed as security for the debt...the creditor.

Mortgagor: The person or persons who give the mortgage...the debtor.

Multiple Listing: Brokers who are real estate board members agree to share information regarding their listings in order to negotiate transactions.

Offer of Purchase and Sale: The document prepared on the buyer's behalf outlining the terms, conditions and price that the buyer dictates in regards to the purchase of the Real Property in question.

Open Mortgage: A Mortgage that you can pay off, renew or refinance at any time. The interest rate for an open mortgage is usually higher than a closed mortgage rate.

Power of Sale: Should default occur it is the right of the mortgagee to force the sale of the property without judicial proceedings.

REALTOR®: Trademark identifying Real Estate Professionals in Canada who are members of The Canadian Real Estate Association, and as such, subscribe to a high standard of professional service and to a strict Code of Ethics.

Seller: The Seller of real property.

Tenancy-in-common: Is the ownership of property by one or more people, which is not passed on as a right of survivorship...but rather is an asset and can be willed.

Term: As it relates to a mortgage... is the actual length of time for which the money is loaned. Should there be money still owed at the end of the term another mortgage can be arranged for another term.

Variable Rate Mortgage: A mortgage where the payments made are fixed. The interest rate moves in response to the dollar and other market trends. When interest rates rise a greater portion of the payment covers interest. When interest rates fall the greater portion of the payment goes to principal.

Should you want further explanation of any of these Real Estate Terms please Click Here to e-mail me with your request.  

  Deborah Gilmore...Your Trusted Source For Anything Real Estate!