Assets – A major item you own that has value, for example a home, car, boat, or investment.
Capital Gains - A capital gain is the money you make when you sell an asset (like your home) that has increased in value. For example, if you buy a house for $900,000 and sell it for $1,000,000, the capital gain is $100,000. A capital gain is not the total amount you receive but the profit. Capital gains is how a lot of Kiwis have built their wealth of the years and saved for their retirements.
Conditional Agreement - A sale and purchase agreement with conditions that must be satisfied before everything becomes unconditional. Both the buyer and the seller can put conditions in the agreement. Buyers often ask for conditions about getting finance or a solicitor’s approval.
Unconditional Agreement - Means a sale and purchase agreement made on a property once all conditions have been satisfied. An unconditional agreement is legally binding on both the buyer and seller.
Deposit - There are two types of deposits; the bank deposit and the purchase deposit.
1. The bank deposit relates to the amount of money you are contributing to purchase the property (the cash over and beyond the portion paid by the bank loan). This deposit might include your savings, money from your KiwiSaver first-home withdrawal or money gifted by a family member.
2. Purchase deposit is an amount of money paid to the vendor of the property to secure your offer to purchase (usually into a Trust Account) the land or property. This deposit is usually paid to the vendor when the sales and purchase agreement has been signed and the deposit size is usually 10%.
Equity - Equity is the difference between the current value of your house and how much you owe on it. For example, if your house is worth $500,000 and you owe $300,000 on your mortgage, you have $200,000 in equity. You build up equity as you pay down your mortgage or if your house rises in value.
LIM – A report you can get from your local council which sets out everything they know about the property – things like consents, rates owing, drainage and problems with flooding or erosion.
Sales & Purchase Agreement (S&P) - A sales and purchase agreement is a legally binding contract used to buy and sell a property or piece of land. It sets out all the details, terms and conditions of the sale. This includes things such as the price, any chattels being sold with the property and the settlement date. A sales and purchase agreement is signed once the buyer and vendor have agreed on the terms, with the guidance of a lawyer.
Settlement Date – this is the date when the transaction is made for a home purchase and that money is transferred from the purchaser, upon the lawyer's instruction, to the vendor. Once the transaction takes place settlement happens and the keys are handed over.
Title – is a document that shows legal ownership to a property or asset. A property title records show a property's owners, legal description and the rights and restrictions registered against the property title - for example, a mortgage, easement or covenant. The new purchaser's details are added to title on the date of settlement.
Valuation - There are a range of house valuations you might encounter:
1. Market valuation is the price a property is likely to sell for in the current market
2. Desktop valuation: A valuation report completed remotely or online without an in-person inspection of the home, e.g. QV reports.
3. AVM (Automated value mode): An automated estimate of the home’s value, based on online algorithms and market data, for example Homes.co.nz.
4. Registered valuation – Valuation of a property undertaken by a Registered Valuer who will generally inspect the property in person, so it generally costs more than an estimated valuation. Some banks require a registered property valuation to determine the value of a newly built house for lending purposes.
Code of Compliance (CCC) – A code compliance certificate (also known as a CCC) is the evidence that building work meets the Building Code and matches the building consent. You may need a CCC when you're applying for loans or other financing. The building contractor must provide the code compliance certificates to the client before the building contractor submits its final payment claim under the contract.
Contract Plan – A contract plan is a set of architectural drawings for one of our standard house plans, which is included in the sales and purchase agreement.
Colours and Variation – Once the design of the home is completed, a discussion with the client will take place about the colour scheme. This will include interior and exterior paint, cladding or brick colours along with carpet, tiles, floor coverings etc. Variations refer to changes to standard specifications, plans or materials and normally carry additional cost for the client. We will provide the appropriate documentation with an updated quote with changes for the client to approve.
Exclusions - These are the items NOT included in your contract. Make sure these are clear and detailed, and if you are comparing two builders' prices, make sure these lists match!
Fixed Price Contract - A fixed price or lump sum contract sets a total fixed price to be paid for the construction. The owner agrees to pay a fixed price and the contractor agrees to complete the project for the fixed price.
House & Land Package – A house-and-land package is pretty much what the name suggests – rather than the customer buying a section and then building on it themselves, they buy a package that includes the section, and a new house-build together.
List of Inclusions - Inclusions refer to the scope of work to be completed outlined in your sales and purchase agreement. For example, an amount of decking, wardrobe fit-out, etc.
Progress Payments (PP) - As a build progresses, there are certain milestones during the build. These milestones are outlined and agreed in the S&P Agreement for when a sum of money is to be paid. An example of this would be “ready to roof”. You may hear or see this referred to as PP1, PP2, PP3, etc.
Custom Plan – a plan that is not one of our standard house plans but has been designed specifically for a customer, for a site/lot, or development. Generation Homes will still offer fixed price contracts on these custom plans.
Standard Plans – Standard Plans are plans that have been collated over the lifetime of Generation Homes and can be used to price a build. Included with each Standard Plan is the Contract Plan, Schedule of Quantities, Floor plan and Architectural Renders. This can be a cheaper way to build as you’re not paying for the one-off cost associated with designing new house plans.
Turnkey – TURNKEY has two meanings:
a) ‘TURNKEY’ in relation to a new home build means exactly what the name suggests. It’s a house-and-land or build only package where the house is fully completed and move-in ready. All you have to worry about is turning the key and walking in the front door.
b) ‘TURNKEY’ can also relate to finance – TURNKEY FINANCE. This is where the purchaser does not pay any progress payments during the build but pays a deposit at unconditional stage then the balance at the build’s completion. TURNKEY FINANCE will often incur an additional fee for the use of the finance facility provided by the building company.
PC Sum - A Prime Cost (PC) Sum or Provisional Sum is a monetary allowance (or best estimate) included in a fixed price construction contract for an item of work that is not yet defined in enough detail and cannot be priced by the contractor at the time of entering the contract. Things like tiles, kitchen or bathroom vanities that can vary in price based on what the client selects are often listed as PC sums and allows flexibility for these items to be altered to suit the selected colours. Or if the extent of works is unknown, for example excavation and early site works.
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