Real Estate Terms & Definitions
(Gold Text is additional information that applies to the most common forms of real estate transactions.)
ADVANCE FEE - A fee charged by a broker to a seller to cover all or a portion of the broker's costs of promoting the property. (I never charge upfront fees for marketing your property!)
AMORTIZED LOAN - A loan that is completely paid off, interest and principal, by a series of regular payments that are equal or nearly equal. Also called a Level Payments Loan.
APPRAISAL - An estimate of value based upon a factual analysis of a property or home. (Appraisals when used to obtain financing, are not necessarily accurate appraisals of a property's true value. This type of appraisal only insures the lender that the property value is at least as much as the loan at the time of disbursement)
APPRECIATION - An increase in value of real estate.
ASSUMPTION OF MORTGAGE - The taking of title to property by a grantee, wherein he or she assumes liability for payment of an existing note secured by a mortgage or deed of trust against the property; becoming a co-guarantor for the payment of a mortgage or deed of trust note. (Sellers-allowing a buyer to assume your loan does not relieve you of the liability for timely payments of that loan.)
CLOSING - The date on which a property legally changes hands from seller to buyer. (It does not necessarily have to be the same date as "possession" of the property. The possession date is an agreed upon date between buyer and seller before a closing occurs.)
CONVENTIONAL MORTGAGE - A mortgage securing a loan made by investors without governmental underwriting, i.e., which is not FHA insured or VA guaranteed. (It is also the type of mortgage with the least amount of qualifying requirements.)
COUNTER-OFFER - A rejection of an offer by a seller along with an agreement to sell the property to the potential buyer on terms differing from the original offer.
DEED - Written instrument which, when properly executed and delivered, conveys title. ("Title" is simply another way of saying "ownership." Unlike an automobile document, there is no document called the "Title." The "Deed" serves this purpose.)
EARNEST MONEY DEPOSIT - Deposit made by a purchaser of real estate as evidence of good faith.
EASEMENT - The right or privilege to use another individual's property.
ENCROACHMENT - A structure or portion of a structure built on another individual's property.
EQUITY - The interest or value which an owner has in real estate over and above the liens against real property. (The liens include the first and any additional mortgages.)
ESCROW - The deposit of instruments and funds with instructions to a third neutral party to carry out the provisions of an agreement or contract. (The escrow account is usually managed by either the listing broker or the title company.)
EXPOSURE - The degree to which a property for sale is made noticeable to potential buyers, through advertising, multiple listing services, etc.
FHA LOAN - A loan which has been insured by the federal government guaranteeing its payment in case of default by the borrower. (FHA loans require a strict inspection of the property, additional mortgage insurance, and additional costs to the seller which are usually the buyer's responsibility.)
FEE APPRAISAL - The act or process of estimating values of real estate or any interest therein for a fee.
HOME INSPECTION - A review of the physical condition of a home by an experienced individual.
LAND CONTRACT - A contract ordinarily used in connection with the sale of property in cases where the seller does not wish to convey title until all or a certain part of the purchase price is paid by the buyer.
LIEN - A legal claim against a property used to secure the payment of debt related to the property.
LOAN RATIO - The ratio, expressed as a percentage, of the amount of a loan to the value or purchase price of real property.
MARKETABLE TITLE - Merchantable title; title free and clear of objectionable liens or encumbrances.
MULTIPLE LISTING - Multiple Listing is the name given a service performed by the Local Board of Realtors (Multiple Listing Service). MLS provides necessary information to aid in the sale of listings. It is a marketing tool used by members of the Service to expose properties to a wider market base.
PERSONAL PROPERTY - Any property which is not real property (i.e. money, savings accounts, appliances, boats, etc.).
PROMISSORY NOTE - Following a loan commitment from the lender, the borrower signs a note promising to repay the loan under stipulated terms. The promissory note establishes personal liability for its repayment.
PURCHASE AGREEMENT - An agreement between a buyer and seller for the purchase of real estate.
REAL PROPERTY - Land and whatever by nature or artificial annexation is a part of it.
SPECIAL ASSESSMENT - Legal charge against real estate by a public authority to pay cost of public improvements such as: street lights, sidewalks, street improvements, etc. (A special assessment can also be approved and collected by a related Home Owners Association.)
TRUST ACCOUNT - An account separate and apart and physically segregated from broker's own funds, in which broker is required by law to deposit all funds collected for clients. (The most common deposit is that of earnest monies.)
VA LOAN - A loan guaranteed by the Veteran's Administration insuring payment in case of default by the borrower. Available to qualified veterans.
VAPOR BARRIER - The material used to prevent moisture from penetrating walls or floors. (Also called viscuine.)
WARRANTY DEED - A deed used to convey real property which contains warranties of title and quiet possession, and the grantor agrees to defend the premises against the lawful claims of third persons.
For a more comprehensive glossary Click Here
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Copyright © 2000-2006 Allan VanInwegen, Broker
Associate, Home Real Estate
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