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» Friday, August 25, 2000 THE OAKVILLE BEAVER 19 HOMES Real Estate 101 -- A review of term s parts o f Canada, brokers are referred to as agents. Buyer's 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. Buyer brokerage agreement: A writ ten agreement between the buyer and the buyer's agent, outlining the agency rela tionship between the two parties and the manner in which the buyer's agent will be compensated. In some provinces, buyer agency relationship arises automatically, without a written agreement establishing the relationship. Client: The person being represented by an agent. The agent owes the client the duties o f utmost care, integrity, confiden tiality and loyalty. Closing: The day the legal title to the property changes hands. CM HC: C anada M ortgage and Housing Corporation. A Crown corpora tion providing information services and mortgage loan insurance. Commission: 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 sales people involved in the sale. CREA: The C anadian Real Estate Association. A national association repre senting the real estate industry on federal public policy matters, providing member services and education. CREA promotes adherence to a strict Code of Ethics and Standards of Business Practice. C ustom er: A person who receives valuable information and assistance from a real estate broker or salesperson, but is not represented by that individual. Debt-service ratio: The measurement o f debt paym ents to gross household income which may include, in addition to the main wage earner's salary, salaries of other wage earners, commissions, bonuses, overtime, etc. Dual agent: A real estate broker or salesperson who acts as agent for both the seller and the buyer in the same transac tion. Both buyer and seller are the agent's clients. Equity: The difference between the value o f the property and the amount owing (if any) on the mortgage. Financial institutions: Banks, credit unions, insurance or trust companies. GE C apital M ortgage Insurance Com pany: GE C apital M ortgage Insurance Company is the only private sector source of mortgage insurance to lenders in Canada. Gross 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 o f common fees are included, depending on what expenses are covered. Gross 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%. Listing agreement: The legal agree ment between the listing broker and the seller, setting out the services to be ren dered, describing the property for sale and stating the terms o f payment. A com m is sion is generally payable to the broker upon closing. M LS,® M ultiple Listing Service®: Trademarks owned by The Canadian Real Estate Association. They are used in con junction with a real estate database ser vice, operated by local real estate boards, under which properties may be listed, pur chased or sold. M LS® OnlineTM : Carries MLS® prop erty advertisements and consum er-related information supplied by individual real estate boards and associations across Canada. Mortgage: A contract providing securi ty for the repayment o f 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 w orth o f the borrow er (covenant) in deciding on a mortgage loan. M ortgage broker: A person or com pa ny having contacts with financial institu tions 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. M ortgage insurer: In Canada, highratio m ortgages (those representing greater than 75% of the property value) must be insured against default by either CMHC or private insurers. T he borrow er m ust arrange and pay for the insurance, which protects the lender against default. Mortgagee: The person or financial (Please see page 20) Am ortization: Paying off a debt, such as a m ortgage, by installm ents. The con ventional am ortization period for a m ort gage is anyw here between 15 and 25 years. The shorter the am ortization period, the less interest you have to pay. Appraisal: An estim ate of a property's value. Asking (list) price: The price placed on the property for sale by the seller. Blended paym ents: Paym ents consist ing o f principal and interest components, paid during the am ortization period o f a mortgage. Broker: A person licensed by the provincial or territorial governm ent to trade in real estate. Real estate brokers may form com panies or offices which appoint sales representatives to provide services to the seller or buyer, or they may provide the same services themselves. In 4 Day S u m m er Sale: Friday, Saturday, Sunday & M onday Only! OUR LOWEST PRICES ON LAST YEAR'S MODELS Great Savings I L NO W! MAJESTIC. r e p /t r e e s * * * * * ON BBQ o - M A N A C E R 'S Broi plus. 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