Selling Your Home? Key Real Estate Terms You Need to Know!
As a homeowner, whether you own a condo, townhome or detached home, chances are you’re pretty familiar with a lot of the language used in real estate. Still, when we’re speaking to friends and family about our own home purchases or about the market at large, it’s easy to slide into more relaxed uses of the terminology that aren’t actually very helpful when it comes time to sell.
Since real estate is an industry that doesn’t allow for creative interpretations of language (it involves selling what’s likely your biggest asset, after all), it’s wise to brush up on the terminology before you dive into your sale.
We’ve compiled some of the most important terms Canadian home sellers are likely to encounter so you can sell with confidence.
Balanced Market: A real estate market in which there is a fair balance of supply (houses for sale) and demand (active buyers), which keeps home prices stable.
Buyer’s Market: A real estate market in which there are more homes for sale than buyers, which can lead to lower prices (as sellers compete for buyer interest) and homes taking longer to sell. The scarcity of buyers gives them greater leverage through the negotiations.
Seller’s Market: A real estate market in which there are more buyers than homes for sale, which generally leads to higher prices, multiple offers, and faster sales as buyers compete for property. High buyer demand also gives sellers more leverage through the negotiations. Discover how seller’s markets are measured in Canada.
Comparative Market Analysis (CMA): An estimate of a home’s fair value in the current market, given in a range rather than a specific figure, based on comparable properties in the seller’s local area that are currently listed and have recently sold. CMA reports are usually prepared by licensed real estate agents using market data not available to the public – data such as a detailed price history, listed price vs. sold price, whether the home was listed but didn’t sell, and previous interior photos. Some of the information considered in the analysis includes the size and location of the home, its age, number of bedrooms, recent upgrades, how well it shows, and the size of the lot. Learn more about how local Purplebricks REALTORS® can help you set the right price for your market through a personalized CMA.
Dual Agency: Also known as Multiple representation or Dual Representation, this is when the one real estate agent or brokerage represents both the buyer and seller on each side of the transaction. In provinces where dual agency is allowed, strict protocols ensure that such transactions are fair, though agents are also expected to conduct themselves ethically and without bias toward either party.
Home Appraisal: An estimate of a home’s current market value given in a specific figure, based on information such as comparable sold properties, tax records, sales trends, as well as individual property characteristics and features. While comparative market analyses (CMAs) are usually done by licenced real estate agents, home appraisals must be performed by licensed appraisers with specialized training, typically acting at the request of the buyer’s mortgage lender to secure the loan.
Virtual Showings / Virtual Home Tours: A video “tour” of the seller’s home that allows potential buyers to experience it without being physically present. Virtual tours can be anything from high-quality, pre-recorded videos to real-time tours in which sellers and buyers communicate using livestreaming apps such as FaceTime.
MLS®: The Multiple Listing Service, which is a system used by real estate professionals to share information about listings; its database of listings is populated by participating brokerages. “MLS®” is often used synonymously with “REALTOR.ca,” since the website publishes listings entered into the MLS® system. However, not all information available to agents through the MLS® system is available to the public on REALTOR.ca. Find out how Purplebricks gives listings the best online exposure using the MLS® system.
REALTOR®: A licensed or registered real estate salesperson or broker who is a member of the Canadian Real Estate Association (CREA). Put more simply, a REALTOR® is an accredited professional who can help you buy or sell a property, who is governed by the regulations and standards of CREA, and who has access to their real estate boards’ MLS® System. Read about how to choose a REALTOR® when you’re buying or selling a home.
Asking Price: The advertised price for the home, agreed upon by the listing agent and seller. The asking price may differ from the selling price.
Chattels: Moveable property and personal possessions that can be removed from the property without causing damage. Chattels are normally deemed to be excluded from the purchase price unless they are specifically noted in the agreement of purchase and sale, but because some possessions are difficult to define as either “chattels” or “fixtures” (see the definition of “fixtures,” below), it's best to discuss the details early on with your REALTOR®.
Conditional Offer: An offer to purchase a property, provided the specified conditions are met by a certain date. If the conditions aren’t met in the allotted time, the offer is deemed ‘null and void’; otherwise, the conditions can be deemed ‘fulfilled’ and the purchase can move forward. A few of the most common conditions are for the buyer to secure financing, have a home inspection, and sell their current home (known as a “condition of sale”), but conditions can also require action from the seller, bank, or municipality.
Counter Offer: Also known as a “sign back,” this is a formal negotiation between seller and buyer when the seller wishes to accept some of the terms of the original offer and modify others. Changes are written on the offer form and must be initialled by all parties before the offer can be signed and officially accepted.
Deposit: An amount paid by the buyer to the seller at the time of the offer being accepted, which shows that the buyer is serious about the purchase and is financially secure. The deposit is held in trust by the listing brokerage or lawyer until the closing date, at which point it is put toward the purchase price.
Escape Clause: Most often, this is a provision in the agreement of purchase and sale that allows the seller to entertain other offers and potentially back out of an accepted conditional offer before the conditions expire (typically, the seller would add an escape clause in their counteroffer). If the seller wishes to accept another offer, they must give the original buyer a specified amount of time (usually 48 hours) to either fulfill or waive the condition(s), otherwise the first deal will be deemed ‘null and void’ and the seller can accept the new offer.
Fixtures: Personal property that is permanently affixed to the home or land, which is normally deemed to be included in the purchase price unless specifically noted in the agreement of purchase and sale. Sometimes it is difficult to determine whether an item is considered a “fixture” or “chattel” (see the definition of “chattels,” above), so it's best to discuss the details early on with your REALTOR®.
Offer to Purchase: Commonly called “the offer,” this is a written statement of the buyer’s desire to purchase the property and to negotiate the terms of the sale. The offer is submitted using an official form called an Agreement of Purchase and Sale, a Purchase Contract, or some variation of that title, depending on the province – this is why you may hear these terms being used interchangeably with the Offer to Purchase. In the offer, the buyer outlines the fair price they wish to pay for the property, the deposit amount, the conditions, any requested inclusions (e.g., appliances), as well as the proposed closing date. Once accepted and signed by all parties, the offer to purchase becomes a contract between the buyer and seller.
Bridge Financing: A short-term financial arrangement that allows homeowners to buy a new home before the sale of their current house has closed, meaning they will need to carry two mortgages for a short time. Upon closing on the current home, the proceeds will be applied to the newly purchased home, and the homeowner will be left with only one mortgage.
Closing: The final step of the purchase, whereby a real estate lawyer officially transfers ownership of the home to the buyer and the keys are exchanged. The closing date is specified in the offer and occurs after all conditions have been fulfilled or waived.
Commission: The payment made to the real estate agent(s) for their services after the home sale is complete, which is traditionally a percentage of the purchase price. Typically, the seller pays their agent, who then shares the commission amount with the buyer’s agent so that both parties get paid for their work. Percentage-style commissions are negotiable and can vary from agent to agent, but they often represent thousands of dollars off the selling price of the home, making fixed-fee brokerages, such as Purplebricks, an attractive alternative for some sellers. Learn more about how our Purplebricks’ fair fixed fees can save sellers thousands in commission!
E-signatures: Electronic signatures used on digital contracts, which are viewed in Canada as binding provided certain criteria are met. The Canadian Real Estate Association (CREA) and Purplebricks Canada are partnered with DocuSign® to provide safe e-signature technology to home buyers and sellers.
Porting: The process of transferring the mortgage terms and rates from your current home to the one you want to buy. If your mortgage is portable (not all mortgages are), you may be able to avoid stiff penalties from your lender for breaking the mortgage agreement before the term is up.
If you need to sell or buy a home, a Purplebricks REALTOR® can help you navigate the market.
Purplebricks is here to support Canadian home sellers by providing a full-service real estate experience for a fair and square fee. We're also here for buyers, providing $2,000 with our Fair and Square Cash Back program* when you buy a home with us! To find out how we can help you in your real estate journey, call today!Call 1-855-999-9740