abstract of title (abstract) History of a parcel of real estate, compiled from public records, listing transfers of ownership and claims against the property acceleration clause Provision in a mortgage document stating that if a payment is missed or any other provision violated, the whole debt becomes immediately due and payable acknowledgment Formal declaration before a public official that one has signed a document acre Land measure equal to 43,560 square feet adjustable-rate mortgage (ARM) Loan with an interest rate that changes periodically to keep pace with current levels adjusted basis Original cost of property plus any later improvements and minus a figure for depreciation claimed adjusted sales price Sales price minus commissions, legal fees, and other costs of selling agent Person authorized to act on behalf of another in dealings with third parties agreement of sale (purchase agreement, sales agreement, contract to purchase) Written contract detailing terms under which buyer agrees to buy and seller agrees to sell alienation clause (due-on-sale, non-assumption) Provision in a mortgage document stating that the loan must be paid in full if ownership is transferred; sometimes contingent upon other occurrences amortization Gradual payment of a debt through regular installments that cover both principal and interest
appraisal Estimate of value of real estate, presumably by an expert
appreciation Increase in value or worth of property
“as is” Present condition of property being transferred, with no guaranty or warranty provided by the seller
assessed valuation Value placed on property as a basis for levying property taxes; not identical with appraised or market value assignment Transfer of a contract from one party to another
assumable mortgage Loan that may be passed to the next owner of the property
assumption Takeover of a loan by any qualified buyer (available for FHA and VA loans)
automatic renewal clause Provision that allows a listing contract to be renewed indefinitely unless canceled by the property owner balloon loan Mortgage in which the remaining balance becomes fully due and payable at a predetermined time balloon payment Final payment on a balloon loan bill of sale Written document transferring personal property binder Preliminary agreement of sale, usually accompanied by earnest money (term also used with property insurance)
bond Roughly the same as promissory note; a written promise to repay a loan, often with an accompanying mortgage that pledges real estate as security
broker Person licensed by the state to represent another for a fee in real estate transactions builder sales consultant Licensed (usually) agent who sells homes on behalf of new home builders
building code Regulations of local government stipulating requirements and standards for building and construction buydown The payment of additional points to a mortgage lender in return for a lower interest rate on the loan
buyer’s broker Agent who takes the buyer as client, is obligated to put the buyer’s interests above all others, and owes specific fiduciary duties to the buyer
buyers’ market Situation in which supply of homes for sale exceeds demand
cap Limit (typically about 2 percent) by which an adjustable-rate mortgage might be raised at any one time capital gain Taxable profit on the sale of an appreciated asset caveat emptor Let the buyer beware
ceiling Also known as lifetime cap; limit beyond which an adjustable-rate mortgage may never be raised
certificate of occupancy Document issued by local governmental agency stating that property meets standards for occupancy chattel Personal property
client The broker’s principal, to whom fiduciary duties are owed
closing (settlement, escrow, passing papers) Conclusion of a real estate sale, at which time title is transferred and necessary funds change hands
closing costs One-time charges paid by buyer and seller on the day property changes hands closing statement Statement prepared for buyer and seller listing debits and credits, completed by the person in charge of the closing cloud (on title) Outstanding claim or encumbrance that challenges the owner’s clear title
commission Fee paid (usually by a seller) for a broker’s services in securing a buyer for property; commonly a percentage of sales price commitment (letter) Written promise to grant a mortgage loan under the conditions stated by the lender common elements Parts of a condominium development in which each owner holds an interest (swimming pool, etc.) comparable Recently sold similar property, used to estimate market value
comparative market analysis Method of valuing homes using study of comparables, property that failed to sell, and other property currently on the market conditional commitment Lender’s promise to make a loan subject to the fulfillment of specified conditions
conditional offer Purchase offer in which the buyer proposes to purchase only after certain occurrences (sale of another home, securing of financing, etc.) condominium Type of ownership involving individual ownership of dwelling units and common owner¬ship of shared areas consideration Something of value given to induce another to enter into a contract
contingency Condition (inserted into the contract) that must be satisfied before the buyer purchases a house
contract Legally enforceable agreement to do (or not to do) a particular thing contract for deed (land contract) Method of selling whereby the buyer receives possession but the seller re¬tains title conventional mortgage A loan arranged between lender and borrower with no governmental guarantee or insurance cost basis Accounting figure that includes original cost of property plus certain expenses to purchase, money spent on permanent improvements, and other costs, minus any depreciation claimed on tax returns over the years covenants, conditions, and restrictions (CC&Rs) Specific rules drawn up by a neighborhood association governing the appearance and activities of that neighborhood. credit scoring Numeric rating system used by lenders, based on certain credit criteria, in order to review a borrower’s credit status
curtesy In some states, rights a widower obtains to a portion of his deceased wife’s real property customer Typically, the buyer, as opposed to the principal (seller) days on market (DOM) Number of days between the time a house is put on the market and the date of a firm sales contract
deed Formal written document transferring title to real estate; a new deed is used for each transfer deed of trust Document by which title to property is held by a neutral third party until a debt is paid; used instead of a mortgage in some states
deed restriction (restrictive covenant) Provision placed in a deed to control use and occupancy of the property by future owners default Failure to make mortgage payment deferred maintenance Needed repairs that have been put off
deficiency judgment Personal claim against the debtor when foreclosed property does not yield enough at sale to pay off loans against it
delivery Legal transfer of a deed to the new property owner; the moment at which transfer of title occurs
depreciation Decrease in value of property because of deterioration or obsolescence; sometimes, an artificial bookkeeping concept valuable as a tax shelter desktop underwriting Lender’s electronic evaluation of buyer-verified qualification data to gain loan approval, subject to review by an underwriter direct endorsement Complete processing of an FHA mortgage application by an authorized local lender discretionary income Amount of money left over in a given period not earmarked for mortgage or bill payments, use of which is wholly in the hands of the earner documentary tax stamp Charge levied by state or local governments when real estate is transferred or mortgaged dower In some states, the rights of a widow to a portion of her deceased husband’s property
down payment Cash to be paid by the buyer at closing
dual agent Agent who represents and negotiates on behalf of both buyer and seller in the same transaction
earnest money Buyer’s good faith deposit accompanying purchase offer
easement A permanent right to use another’s property (telephone lines, common driveway, footpath, etc.)
elevations Builder’s varied selection of exterior styles of the same floor plan
encroachment Unauthorized intrusion of a building or improvement onto another’s land encumbrance Claim against another’s real estate (unpaid tax, mortgage, easement, etc.)
equity The money realized when property is sold and all the claims against it are paid; commonly, sales price minus present mortgage
escrow Funds given to a third party to be held pending some occurrence; may refer to earnest money; funds collected by a lender for the payment of taxes and insurance charges; funds withheld at closing to ensure uncompleted repairs; or, in some states the entire process of closing escrow company Neutral third party location and depository for both buyer and seller that interprets and presents contractual agreements for final endorsements and closing (not common in all states) exclusive agency Listing agreement under which only the listing office can sell the property and keep the commission, except if the owner sells the house, in which case no commission is paid exclusive right-to-sell Listing agreement under which the owner promises to pay a commission if the property is sold during the listing period by anyone, even the owner facilitator One who offers real estate services without owing special fiduciary duties to either seller or buyer (see transaction broker) fair market value see market value
Federal Fair Housing Act The Fair Housing Act, enforced by the U.S. Department of Housing and Urban Development, bars discriminatory practices in housing related to race, color, national origin, religion, sex, handicap, or familial status fee simple (absolute) Highest possible degree of ownership of land FHA Federal Housing Administration (HUD), which insures mortgages to protect the lending institution in case of default
FHA mortgage Loan made by a local lending institution and insured by the FHA, with the borrower paying the premium
fiduciary A person in a position of trust or responsibility with specific duties to act in the best interest of the client
first mortgage Mortgage holding priority over the claims of subsequent lenders against the same property fixture Personal property that has become part of the real estate foreclosure Legal procedure for enforcing payment of a debt by seizing and selling the mortgaged property front foot Measurement of land along a street or waterfront—each front foot is one foot wide and extends to the depth of the lot
grantee The buyer, who receives a deed
grantor The seller, who gives a deed
guaranteed sale Promise by the listing broker that if the property can¬not be sold by a specific date, the broker will buy it, usually at a sharply discounted price hazard insurance Insurance on a property against fire and similar risks homeowners policy Policy that puts many kinds of insurance together into one package
impound account Trust account from which a specified amount of monthly principal, interest, taxes, and insurance (PITI) are paid on behalf of the buyer improvements Permanent additions that increase the value of a home
incentives Monetary bonus or credit offered by home builders to encourage buyers to make a particular decision when buying a home index Benchmark measure of current interest levels, used to calculate periodic changes in rates charged on adjustable-rate mortgages in-house lender Lender owned by the same corporation or entity that owns the builder, to provide new home financing for the builder’s buyers
inventory home New home that is considered complete but unsold joint tenancy Ownership by two or more persons, each with an undivided ownership—if one dies, the property goes automatically to the survivor junior mortgage A mortgage subordinate to another land contract Type of layaway installment plan for buying a house; sought by a buyer who does not have enough down payment to qualify for a bank loan or to persuade the seller to turn over title lien A claim against property for the payment of a debt: mechanic’s lien, mortgage, unpaid taxes, judgments
lis pendens Notice that litigation is pending on property
listing agreement (listing) Written employment agreement between a property owner and a real estate broker, authorizing the broker to find a buyer listing presentation Proposal submitted orally or in writing by an agent who seeks to put a prospective seller’s property on the market loan servicing Handling paperwork of collecting loan payments, checking property tax and insurance coverage, handling delinquencies lock-in Guarantee that the borrower will receive the rate in effect at the time of loan application
maintenance fees Payments made by the unit owner of a condominium to the homeowners association for expenses incurred in upkeep of the common areas margin Percentage (typically about 2.5 percent) added to index to calculate mortgage rate adjustment marketable title Title free of liens, clouds, and defects; a title that will be freely accepted by a buyer
market value The most likely price a given property will bring if widely exposed on the market, assuming fully informed buyer and seller
mechanic’s lien Claim placed against a property by unpaid workers or suppliers
meeting of the minds Agreement by buyer and seller on the provisions of a contract
mortgage A lien or claim against real property given as security for a loan; the homeowner gives the mortgage; the lender takes it
mortgagee The lender mortgagor The borrower Multiple Listing Service (MLS) An arrangement by which brokers work together on the sale of each others’ listed homes, with shared commissions negative amortization Arrangement under which the shortfall in a mortgage payment is added to the amount borrowed; gradual raising of a debt net listing An arrangement under which the seller receives a specific sum from the sales price and the agent keeps the rest as sales commission (open to abuses, illegal in most states) non–owner-occupied Property not occupied by its principal owners
note see bond
PITI Abbreviation for principal, interest, taxes, and insurance, often lumped together in a monthly mortgage payment plat Map or chart of a lot, subdivision, or community, showing boundary lines, buildings, and easements PMI Private mortgage insurance
point (discount point) 1 percent of a new mortgage being placed, paid in a one-time lump sum to the lender
portfolio loans Loans made by a bank that keeps its mortgages as assets in its own portfolio (also called non-conforming loans) preapproval Formal, preliminarily (conditionally) underwritten loan approval, using a borrower’s entire financial picture and credit check at the time of application; usually states the highest loan amount for which the borrower will qualify prepayment Payment of a mortgage loan before its due date
prepayment penalty Charge levied by the lender for paying off a mortgage before its maturity date prequalification Cursory examination of a buyer’s income, assets, and creditworthiness without benefit of a formal loan application review principal Party (typically the seller) who hires and pays an agent procuring cause Actions by a broker that bring about the desired results prorations Expenses that are fairly divided between buyer and seller at closing
purchase-money mortgage Mortgage for the purchase of real property, commonly a mortgage taken back by the seller quitclaim deed Deed that completely transfers whatever ownership the grantor may have had, but makes no claim of ownership in the first place
real property Land and the improvements on it Realtist Member of the National Association of Real Estate Brokers REALTOR® Registered name for a member of the National Association of REALTORS® REALTOR-ASSOCIATE® Salesperson associated with a broker who is a member of a Board of REALTORS® redlining Practice of refusing to provide loans or insurance in certain neighborhoods RESPA Real Estate Settlement Procedures Act, requiring advance disclosure to the borrower of information pertinent to the loan restrictive covenant See deed restriction reverse mortgage Arrangement under which an elderly homeowner, who does not need to meet income or credit requirements, can draw against the equity in the home with no immediate repayment salesperson Holder of an entry-level license who is allowed to assist a broker who is legally responsible for the salesperson’s activities (synonymous in some areas with agent) seller’s broker Agent who takes the seller as a client, is legally obligated to a set of fiduciary duties, and is required to put the seller’s interests above all others’ sellers’ market Situation in which demand for homes exceeds the supply offered for sale settlement See closing
specific performance Lawsuit requesting that a contract be exactly carried out, usually asking that the seller be ordered to convey the property as previously agreed subagency Legal process by which the seller who lists property for sale with a broker takes on the broker’s associates and cooperating firms in a Multiple Listing System as agents
supplemental property tax bill Tax bill sent out by the tax assessor’s office after closing, adding the value of the dwelling to the land value to make a total sum of assessed value
survey Map made by a licensed surveyor who measures the land and charts its boundaries, improvements, and relationship to the property surrounding it time is of the essence Legal phrase in a contract, requiring punctual performance of all obligations title Rights of ownership, control, and possession of property
title insurance Policy protecting the insured against loss or damage due to defects in title: the owner’s policy protects the buyer, the mortgagee’s policy protects the lender; paid with a one-time premium title search A check of the public records, usually at the local courthouse, to make sure that no adverse claims affect the value of the title transaction broker A broker who offers services without owing fiduciary duties to either party, as defined by law in various states VA Department of Veterans Affairs (formerly Veterans Administration), which guarantees a veteran’s mortgage so that a lender is willing to make the loan with little or no down payment vendee The buyer
vendor The seller
warranty deed Most valuable type of deed, in which the grantor makes formal assurance of title
zoning Laws of local government establishing building codes and regulations on usage of property |
