{"id":23524,"date":"2024-03-26T09:52:20","date_gmt":"2024-03-26T13:52:20","guid":{"rendered":"https:\/\/www.zolo.ca\/blog\/?p=23524"},"modified":"2026-01-23T12:19:31","modified_gmt":"2026-01-23T17:19:31","slug":"real-estate-terms","status":"publish","type":"post","link":"https:\/\/www.zolo.ca\/blog\/real-estate-terms","title":{"rendered":"The 8 Real Estate Terms You Need To Know for 2024"},"content":{"rendered":"\n\n\n

Just like most industries, real estate is full of terms that can seem confusing. Imagine trying to watch the Super Bowl without any idea how football works. Well, now imagine trying to navigate through one of the craziest real estate markets in the world without even knowing or understanding some of the basic terminology and jargon.<\/p>\n\n\n\n

Some experts and commentators in the real estate industry are predicting a hot spring market<\/a>, while others say this year is set for more volatility and hardship<\/a> in the real estate and rate market. But what does this mean for you if you are planning on buying, selling, investing, or just trying to grasp what the heck is going on with our housing market?<\/p>\n\n\n\n

Related content<\/p>

What to Expect in the 2024 Real Estate Market<\/a><\/p><\/section>\n\n\n\n

To best prepare you for the spring real estate market and the changing conditions in the real estate industry and the general Canadian economy, here is a list of the terms that you need to know if you plan on buying, selling, investing, or even just keeping up with the market this year!<\/p>\n\n\n\n

Agreement of Purchase and Sale<\/h2>\n\n\n\n

An agreement of purchase and sale is the legal contract used when purchasing or selling a property.<\/p>\n\n\n\n

Why it Matters:<\/strong> You need to know what an agreement of purchase and sale (APS) is because you cannot complete a transaction without one. It’s a legal contract and is not to be taken lightly. Fortunately, there is a lot of standardization when it comes to APS documents, and with the help of real estate professionals to guide you through the process, you can enter into the agreement in good faith.<\/p>\n\n\n\n

An APS is a legally binding written contract between the buyer and seller in a real estate transaction. Essentially, it is the document the buyer submits to the seller when offering to purchase a home. This document outlines the offer price and specific conditions. The initial offer is legally binding and cannot be revoked for a specified period. The offer can only be cancelled during this time if both parties agree. If the seller accepts, the agreement can only be terminated by mutual consent or if the agreement’s terms and conditions permit it.<\/p>\n\n\n\n

\"A<\/figure>\n\n\n\n

Amortization<\/h2>\n\n\n\n

Another real estate term you will hear is amortization. The amortization period is the time it takes to pay off your mortgage in full. A common amortization period in Canada is 25 years.<\/p>\n\n\n\n

Why it matters: <\/strong>Understanding your mortgage is crucial, especially as high home prices will leave Canadians paying a substantial mortgage for decades. Your amortization will directly affect how much interest you pay over the life of your mortgage. The more you know these numbers, the better you can budget your finances.<\/p>\n\n\n\n

Amortization combines interest and principal in payments, allowing you to build home equity. It is displayed as a schedule and included in your mortgage documents so you can see how much principal and interest you\u2019re paying over the life of your mortgage.<\/p>\n\n\n\n

Simply put, the amortization period refers to the years needed to pay off your mortgage. The length of this period can impact the total interest you’ll pay throughout your mortgage term.<\/p>\n\n\n\n

The standard amortization period is traditionally 25 years, but other durations may be available depending on your down payment amount. If your down payment is under 20% of your home’s price, the maximum amortization period is 25 years.<\/p>\n\n\n\n

A shorter amortization period can save you money as it results in less interest paid. However, it requires higher regular mortgage payments since your balance is cleared quicker.<\/p>\n\n\n\n

Conversely, a longer amortization period leads to lower monthly payments but results in more interest paid over the life of your mortgage.<\/p>\n\n\n\n

Assessed Value<\/h2>\n\n\n\n

A home\u2019s assessed value is much it’s worth for property tax purposes. A tax assessor will review your home\u2019s assessed value annually. The increases to your home\u2019s assessed value may be capped at a certain percentage.<\/p>\n\n\n\n

Why it matters:<\/strong> Knowing a property’s assessed value is crucial for anyone planning to buy or sell. This real estate term is often mistaken for market value, but the two terms differ entirely. Market value estimates a home’s worth based on current market conditions. Essentially, it represents the price a qualified buyer would be willing to pay for a specific home today. In contrast, the assessed value is often much less than the purchase or sale price.<\/p>\n\n\n\n

\n \n \n \n \n <\/colgroup>\n \n\n \n\n \n
Assessed Value<\/th>Market Value<\/th><\/tr>\n<\/thead>\n
The value of your property for property tax purposes.<\/td>The price a qualified buyer would be willing to pay for your home.<\/td> <\/tr>\n <\/tbody>\n <\/table>\n \n \n \n<\/div>\n\n\n\n\n

Tax rates are location-dependent. In a rising housing market like Guelph<\/a>, the assessed value can sometimes be 50% less than the purchase price. Some municipalities have higher tax rates, and there have been numerous recent changes to taxes.<\/p>\n\n\n\n

Related content<\/p>

How Do Property Taxes Work in Canada?<\/a><\/p><\/section>\n\n\n\n

While property taxes aren’t usually deal-breakers, they are an additional expense for homeowners. Knowing the assessed value helps determine your property taxes, aiding your housing budget planning. Typically, the higher your home’s assessed value, the more property taxes you will pay.<\/p>\n\n\n\n

Closing Costs<\/h2>\n\n\n\n

The one-time fees you will experience when closing on a home. Closing costs usually amount to 3% to 5% of the home\u2019s purchase price.<\/p>\n\n\n\n

Why it Matters:<\/strong> Whether you\u2019ve purchased one home or ten, you will need to budget for closing costs. Closing costs are the one-time fees you will pay when finalizing your home purchase. You don\u2019t want to be caught surprised when making the biggest purchase of your life, so preparing adequately for these costs is the smart thing to do.<\/p>\n\n\n\n

Closing costs include land transfer tax<\/a>, legal fees, and home inspection fees. Depending on the type of property, you might have to pay extra fees, so it\u2019s smart to budget 3% to 5% of the purchase price of the home for closing costs.<\/p>\n\n\n\n

For example, if you buy a house for $600,000 (just below the average Canadian home price<\/a> of $659,395 in January 2024), you should budget between $12,000 and $24,000 in closing costs. These extra fees would include $10,000 in land transfer taxes, $2,000 in legal fees, as well as any costs associated with connecting utilities, moving, and minor renovations.<\/p>\n\n\n\n

\"A<\/figure>\n\n\n\n

Deposit<\/h2>\n\n\n\n

A deposit is a small percentage of the purchase price due within 24 hours of the accepted offer.<\/p>\n\n\n\n

Why it Matters:<\/strong> Along with closing costs, you must be prepared to pay a deposit when submitting your purchase offer. The deposit serves as security for the seller, demonstrating the buyer’s financial commitment to the agreement in good faith. Unless otherwise agreed to, it usually is due within 24 hours of an Agreement of Purchase and Sale (APS) being accepted. You will need this money on hand when you plan to make an offer on a home.<\/strong><\/p>\n\n\n\n

You’ll pay your deposit when you (the buyer) and the seller sign the APS. The deposit provides security to the seller and demonstrates that you have a financial stake in the agreement. The deposit forms part of the agreement and is applied against your down payment at closing. A deal is not firm and binding without a deposit cheque, so this is an integral part of the negotiation process. The real estate brokerage holds the money in trust until the property closes.<\/p>\n\n\n\n

If you find yourself in a multiple-offer situation, a larger deposit can help you stand out from the competition. A typical deposit is between 1% and  5% of the purchase price. Using our example above, if you were to purchase a $600,000 home, you would need a deposit between $6,000 and $30,000.<\/p>\n\n\n\n

Home Inspection<\/h2>\n\n\n\n

A home inspection is a thorough walkthrough of a home by a professional conducted before the purchase.<\/p>\n\n\n\n

Why it Matters:<\/strong> Getting a proper inspection is all about knowing what you are buying and can help you avoid nasty and expensive surprises related to your home’s structural integrity and essential systems.<\/p>\n\n\n\n

Related content<\/p>

What is a Home Inspection?<\/a><\/p><\/section>\n\n\n\n

A home inspection is typically performed at the buyer’s request and is the buyer\u2019s financial responsibility. If you get a home inspection, expect to pay between $200 and $600. A thorough home inspection will examine all aspects of the home\u2019s structure, including:<\/p>\n\n\n\n