are some of the words or terms used in a real estate transaction
Paying off a debt, such as a mortgage, by installments. The conventional
amortization period for a mortgage is anywhere between 15 and 25
years. The shorter the amortization period, the less interest you
have to pay.
An estimate of a property's value.
(or list) price: The price placed on the property for sale
by the seller.
payments: Payments consisting of principal and interest
components, paid during the amortization period of a mortgage.
A person licensed by the provincial or territorial government to
trade in real estate. Real estate brokers may form companies or
offices which appoint sales representatives to provide services
to the seller or buyer, or they may provide the same services themselves.
In parts of Canada, brokers are referred to as agents.
Agent (also known as "Buyer's Broker" or "Purchaser's
Agent"): A person or firm representing the buyer.
A Buyer's Agent's primary allegiance is to the buyer. The buyer
is the Buyer Agent's client.
Brokerage Agreement: A written agreement between the buyer
and the buyer's agent, outlining the agency relationship between
the two parties and the manner in which the buyer's agent will be
compensated. In some provinces, a buyer agency relationship evolves
automatically, without a written agreement.
The person being represented by an agent. The agent owes the client
the duties of utmost care, integrity, confidentiality and loyalty.
The day the legal title to the property changes hands.
Canada Mortgage and Housing Corporation. A Crown corporation providing
information services and mortgage loan insurance.
An amount agreed to by the seller and the real estate broker/agent
and stated in the listing agreement. It is payable to the broker/agent
on closing and shared, if applicable, among those salespeople involved
in the sale.
A person who receives valuable information and assistance from a
real estate broker or salesperson, but is not represented by that
Ratio: The measurement of debt payments to gross household
income which may include, in addition to the main wage earner's
salary, salaries of other wage earners, commissions, bonuses, overtime,
Agent: A real estate broker or salesperson who acts as
agent for both the seller and the buyer in the same transaction.
Both buyer and seller are the agent's clients.
difference between the value of the property and the amount owing
(if any) on the mortgage.
Institutions: Banks, credit unions, insurance or trust
Mortgage Insurance Company: GE Capital Mortgage Insurance
Company is the only private sector source of mortgage insurance
to lenders in Canada.
Debt Service: The amount of money needed to pay principal,
interest, taxes and sometimes, energy costs. If the dwelling unit
is a condominium, all or a portion of common fees are included,
depending on what expenses are covered.
Debt Service Ratio: Gross debt service divided by household
income. A rule of thumb is that GDS should not exceed 30%. It is
also referred to as PIT (Principal, Interest and Taxes) over income.
Sometimes energy costs are added to the formula, producing PITE,
which moves the rule of thumb GDS to 32%.
Agreement: The legal agreement between the listing broker
and the seller, setting out the services to be rendered, describing
the property for sale and stating the terms of payment. A commission
is generally payable to the broker upon closing.
Multiple Listing Service®: These are trademarks owned
by The Canadian Real Estate Association. They are used in conjunction
with a real estate database service, operated by local real estate
boards, under which properties may be listed, purchased or sold.
An MLS® listing means REALTORS have agreed to work together
for the marketing of a listing.
A contract providing security for the repayment of a loan, registered
against the property, with stated rights and remedies in the event
of default. Lenders consider both the property (security) and the
financial worth of the borrower (covenant) in deciding on a mortgage
Broker: A person or company having contacts with financial
institutions or individuals wishing to invest in mortgages. The
mortgagor pays the broker a fee for arranging the mortgage. Appraisal
and legal services may or may not be included in the fee.
Insurer: In Canada, high-ratio mortgages (those representing
greater than 75% of the property value) must be insured against
default by either CMHC or private insurers. The borrower must arrange
and pay for the insurance, which protects the lender against default.
The person or financial institution lending the money, secured by
The property owner borrowing the money, secured by a mortgage.
of Purchase and Sale: The document through which the prospective
buyer sets out the price and conditions under which he or she will
buy the property.
Estate Board: A non-profit organization representing local
real estate brokers/agents, salespeople, which provides services
to its members and maintains and operates a MLS® system in the
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
The actual life of a mortgage contract-- from six months to ten
years -- at the end of which the mortgage becomes due and payable
unless the lender renews the mortgage for another term (See Amortization).
Agent: The Seller's Agent represents the seller -- either
as a Listing Agent under the listing agreement with the seller or
by cooperating as a Sub-Agent, typically through the MLS® system.
In dealing with prospective buyers -- customers-- the Seller's Agent
can provide a variety of information and services to assist the
buyer in his/her decision-making. The Seller's Agent does not represent
Mortgage: A mortgage in which payments are fixed, but the
interest rate moves in response to trends. If interest rates go
up, a larger portion of your payment goes to the interest; if rates
go down, more goes to cover the principal.
©2003 The Canadian Real Estate Association. All rights