Glossary of terms

Want to know what we mean when we say things like ‘absorption rate’? Find a list of terms and definitions here.

Absorption Rate

The rate at which available homes are sold in Ottawa during a given time period. It is calculated by dividing the average number of sales per month by the total number of available homes

Agreement of Purchase and Sale

The form used to offer and create agreement between Buyer and Seller of a home. This usually refers to OREA form 100 (residential freehold resale purchase) or OREA form 101 (resale condominium purchase).

Appraisal

A formal valuation of a property, usually done by a Certified Property Appraiser. These are an opinion of a property’s value at a point in time, and are often used by banks and lenders as part of a mortgage approval.

Appreciation

The amount of positive change in the price or a property over a period of time, usually expressed as a percentage.

“B” Lender

A lender/bank who typically works with more difficult borrowers, such as those with little credit history or poor credit. Rates at these lenders tend to be less favourable and often are a borrower’s “Plan B.”

Balanced Market

A situation in which homes for sale are available in a fair proportion to the amount of buyers looking for them.

BRRR

“Buy, Renovate, Rent, Refinance.” An investment strategy to buy and (typically) hold property by adding value through renovation or rehabilitating a property, renting it to generate income, and then refinancing to make the equity available for further BRRR projects.

Bully Offer

Slang for a pre-emptive offer.

Buyers’ Market

A situation in which homes for sale are available in abundance relative to the amount of buyers looking for them. Homes in a Buyers’ market tend to be on the market longer and sell for a lower percentage of their list price. Prolonged Buyers’ markets have a downward pressure on home prices.

Buyer Representation Agreement

A form binding a client and agent together during a home search, creating a client representation situation. This sets out the responsibilities of each party, the scope and time, as well as how commission will be paid.

Closing Cost

All of the costs of purchasing a home that are not the purchase price of the home itself.

CMHC

Canada Mortgage and Housing Corporation – This organization provides many useful resources to the public and Real Estate Professionals, including statistics, calculators and useful guides. Many of these are available for free.

Conditional Offer

An offer that has terms that must be fulfilled before it is considered a firm offer. Usually these are conditions that the buyer must fulfill, but sometimes they are ones that the seller must fulfill.

Deposit

Money that is given by the Buyer to the Listing Brokerage, to be held in trust until a home purchase closes. This amount is applied to the purchase price and forms part of the down payment. Deposits may be refundable depending upon how the Agreement of Purchase and Sale has been written.

Easement

The right by one property or entity over another. Common easements are by utility companies to have the right to access transformer boxes or wires on a property to repair them.

Equity

The amount of value that an owner “owns” in a property. This is calculated as Asset Value – Debt = Equity. In other words, if a Seller is selling a home, this is the amount of money she would have after selling the home for market value and paying off the mortgage and any other debts against the house or in the cost of sale.

Escrow

Not a term typically used in Canada, but you may have heard it on HGTV as it’s common in the US. Describes funds held in trust by a third party while waiting for a home to close.

Fast Market

A situation in which homes are selling quickly relative to the historical averages. This typically describes a Sellers’ market.

Final Walkthrough

A visit by the buyers to the property that they have secured a firm offer on, but not closed yet. Typically, the Buyer’s agent coordinates this to occur in the last week prior to closing. This is generally done for measurement of the home and is not the same as a home inspection.

Flip

To buy a property for a lower price, add value through renovation and sell at a higher price.

FSBO

Abbreviation for “For Sale By Owner.”

GeoOttawa

A resource website where one can view many details about a property. These include measurements, flood plains, zoning, locations of schools and fire stations, and many, many more.

Holdback

Money held back by a Buyer’s lawyer on closing until a particular action by the Seller (often a repair) is completed. Relatively uncommon, but one method of protecting the Buyer in a purchase.

Home Inspection

A review of a home by an inspector, as part of preparing a home for sale or as part of the purchase process. The home inspector generally creates a report listing all of the flaws that he was able to uncover about the property during the inspection.

Inflation

A general increase in prices, such as in appreciation, but without a relative increase in a Buyer’s purchasing power.

“Land Survey

See Survey, below.

Land Transfer Tax

Tax paid by a buyer when purchasing a home. Currently, first-time homebuyers are exempt from some or all of this tax, depending upon the purchase price. This is calculated using a standard formula.

Listing Agreement

The forms used to list a home exclusively or on the MLS. This is an agreement between a Seller and the listing brokerage.

Listing Brokerage

The Brokerage that has a contract to market a home for sale with the Seller.

Matrix

The site by which Realtors and their clients in Ottawa are able to access the MLS in real-time. This is different than brokerage or agent websites, which often have a lag of up to 24 hours.

Monoline Lender

A lender which specializes in mortgages. This is in contrast to a bank, which offers a variety of financial products for its clients

Mortgage Broker

A mortgage professional which works independently of any one bank, and is part of a mortgage brokerage. A mortgage broker is employed by the purchaser and is generally paid as a percentage of the mortgage loan amount.

Mortgage Default Insurance

Insurance that is paid by the purchaser that pays the balance of the mortgage amount if the purchaser dies before it is paid. It is a specialized form of life insurance.

Mortgage Pre-Approval

This is an opinion by the lender or mortgage broker as to whether a purchaser qualifies for a mortgage at a certain size and rate, independent of a purchase agreement. This is not a binding contract, merely a calculation and opinion, but is useful in the early stages of searching for a home.

Notice of Fulfillment of Conditions

A real estate form typically used by the Buyer to notify the Seller that they have fulfilled some or all of the conditions in a conditional sale. If all of the conditions are fulfilled, this creates a firm sale. Fulfilling conditions is not the same as waiving them.

Offer

An attempt made to purchase a home, usually using an agreement of purchase and sale.

Pocket Listing

Property that an agent is aware of that is unlisted, but would likely be willing to sell to the right Buyer.

Pre-emptive Offer

An offer submitted by a buyer in advance of the delayed offer date, in hopes of avoiding multiple offers. In order to be successful, a pre-emptive offer is usually at or above asking price with few or no conditions.

Preview

A service provided by the Buyer’s Realtor. The Realtor may visit homes on his own to narrow down the list of potential properties to show his client later, or visit a property when the client is unavailable. This helps the Buyer use her time efficiently by seeing only suitable properties.

Realtor.ca

A popular website where one can view publicly-listed properties for sale. Sold prices are not usually available on this site.

Staging

Organizing a home so that it shows well in person and in photos and videos. This usually involves de-cluttering and de-personalizing the home

Seller’s Market

A situation in which homes for sale are scarce relative to the number of buyers looking for them. This puts negotiating power in the hands of the Sellers listing their homes. Prolonged Sellers’ markets place upward pressure on home prices.

Status Certificate

A legal document describing the land that your home is located upon, and the location of key objects, such as buildings and fences that exist at the time the survey is created.

Survey

A legal document describing the land that your home is located upon, and the location of key objects, such as buildings and fences that exist at the time the survey is created.

Tarion

A company most associated with newly built homes. Tarion governs the warranties on new homes.

Title Insurance

An insurance paid by a buyer to protect against unforseen or unforseeable legal problems with a home purchase. This insurance may replace the need for a new survey on a purchase and is often the most cost-effective way of protecting the purchaser.

Turn-Key

A home that is pristine and move-in-ready with no renovations or repairs required.

Vendor Take-Back

A situation where the seller of the home becomes the lender to the new owner, in place of or in addition to a conventional mortgage. Rare, and typically only seen in times of rising interest rates or special circumstances.

Virtual Open House

An open house where potential buyers are not present in the home. This usually involves an agent walking through the property and linking to potential buyers via video call. It is like a virtual showing, but made available to the public.

Virtual Showing

A property showing where a buyer is not present at the property, usually connected by video call to the agent who is touring the property.

Virtual Staging

Furniture or features are added or removed in listing photography in post-production. This is most often used to show what a vacant room would look like with furniture

Glossary of terms

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