Glossary

Words To The Wise



Abstract of Title

The summary of the public records relating to the ownership of a particular piece of land. It represents a short legal

history of an indivisual piece of property from the time of the first recorded transfer to present.



Acceptance

Consent to an offer to enter into contract.



Adjustments

Money credited or debited to either/both buyer and seller at closing, including real estate taxes, association fees, garbage fees, rents, etc.

Agency

A mutual-consent, legal relationship in which a seller or buyer engages a broker-agent in the sale or purchase of property.



Agent

A person acting on behalf of another, called the principal.



Agreement of Sale
Known by various names, such as "contract of purchase", "purchase agreement", "sales agreement", or "binder", according to location or jurisdiction. A contract in which a seller agrees to sell and a buyer agrees to buy, under certain specific terms and conditions spelled out in writing and signed by both parties.



Annual Percentage Rate (APR)
Includes quoted interest rate on the loan plus all additional service and finance charges associated with the loan. Includes all costs of financing; those paid at the time of closing and those paid over the term of the loan. The APR is usually slightly higher than the note rate.



Appraisal
An expert judgment or estimate of the quality or value of real estate as of a given date.



Assessed Value.
The valuation placed upon property by a public tax assessor as the basis for taxes.



Bill of Sale
An instrument which transfers title to personal property (chattels); a "Deed" transfers real property.



Broker

A person licensed to represent home buyers and sellers for a contracted fee. Brokers manage real estate offices and employ licensed agents to sell properties.



Capital Gains

The taxable profit derived from the sale of a capital asset. A gain is the difference between the sale price and the basis of the property, after making appropriate adjustments for closing costs, fix-up expenses, capital improvements, allowable depreciation, etc.



Certificate of Title
A document signed by a title examiner or attorney, stating that the seller has a good marketable and insurable title.



Closing

The final settlement at which time the title is transferred from seller to buyer, accounts are settled, new mortgages are signed, and all fees and expenses are dispersed or satisfied.



Closing Costs

All fees, taxes, charges, commissions, surveys, lender fees, inspection fees, and other costs paid by the buyer and/or seller at the closing.

Closing Statement (Settlement)
The computation of financial adjustments between the buyer and seller as of the day of closing a sale to determine the net amount of money which the buyer must pay to the seller to complete the purchase of the real estate and seller's net proceeds. Also, "Settlement Sheets", "HUD-1".

Commission
Payment to a real estate broker for services performed.



Comparables

Similar properties in type, size, price, and amenities that have sold recently, been adjusted, and are used for comparison.



Contingency

A condition that must be satisfied before a contract is binding.



Contract

An agreement to do or not to do a certain thing.

Convey
To deed or transfer title of property from one person to another.



Counteroffer

An offer made by a buyer or seller to the other party, responding to the asking price or a subsequent adjustment to that price to complete a purchase of sale.



Curb Appeal

A term used by REALTORS that encompasses all that buyer sees from the street that may induce the buyer to look more closely at the property.

Deed
A formal written instrument by which title to real property is transferred from one owner to another. Also, "conveyance".

Deed of Trust
Like a mortgage, a security instrument whereby real property is given as security for a debt. However, in a deed of trust there are three parties to the instrument: the borrower, the trustee, and the lender (or beneficiary).



Disclosure Laws

State and federal regulations that require sellers to disclose such conditions as whether a house is located in a flood plain or if there are any known defects that would affect the value of the property.

Earnest Money
The money given to the seller by the potential buyer (usually held in escrow) upon the signing of the agreement of sale to show that buyer is serious about buying the house. Also, "Deposit".

Equity
The interest or value which the owner has in real estate over and above the debts against it. (Sales Price – Mortgage Balance = Equity.)

Escrow
Funds, property, or other things of value left in trust to a third party. The escrow may be released upon the fulfillment of certain conditions or by agreement of the parties.



Firm Commitment

A lender's agreement to make a loan to a specific borrower on a specific property.

Fixture
What was formerly personal property which is now permanently attached to real property and goes with the property when it is sold.



Foreclosure

A legal procedure whereby mortgaged property is seized and sold as payment for a debt in the event of default.

Hazard Insurance
Protects against damages caused to property by fire, windstorms, and other common hazards.



Home Inspection

A formal survey of a home's structure, mechanical systems, and overall condition, generally performed by an inspector or contractor.



Home Warranty

A policy available to the buyer or seller as insurance against unanticipated home-repair costs.



Homeowner's Policy

A hazard insurance policy covering, at the very least, the appraised value of a house and property.



Inspection Contingency

A written stipulation contained in an "offer to buy" that makes the sales contract predicted upon the findings of a professional home inspector.

Listing Contract
Between a homeowner (as principal) and a licensed real estate broker (as agent) by which the broker is employed to market the real estate within a given time for which service the owner agrees to pay a commission. Also, "listing agreement".



Loan Commitment

A written promise by a lender to make a loan under certain terms and conditions. These include interest rate, length of loan, lender fees, annual percentage rate, mortgage and hazard insurance, and other special requirements.


Market Price

The actual amount for which a piece of property is sold. Also, "Sales Price", "Purchase Price".

Market Value
The highest price which a buyer, ready, willing and able but not compelled to buy, would pay, and the lowest price a seller, ready, willing and able but not compelled to sell, would accept. Basis for "listing price", or "asking price".



Marketable Title

Merchantable title, free and clear of objectionable liens or encumbrances.



Mold

Mold is a superficial and often woolly growth produced on damp or decaying organic matter or on living organisms. 

Mortgage

A lien or claim against real property given by the buyer to the lender as security for money borrowed.



Mortgagee

The lender of money or the receiver of the mortgage document.

Mortgage Note
A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of an indebtedness, and states the manner in which it shall be paid. Also, "Deed Of Trust Note".



Mortgagor

The borrower of money or the giver of the mortgage document.



Multiple Listing Service (MLS)

A system through which participating brokers agree to share commissions on a predetermined percentage split on the sale of properties listed on the system.



Personal Property

Any property which is not real property: e.g., money, savings accounts, appliances, cars, boats, etc.

P.I.T.I
Principal, interest, taxes, and insurance. Most residential mortgage payments include the above and are therefore referred to as P.I.T.I.

Points
Sometimes called "Discount Points", a point is one percent of the amount of the mortgage loan.

Prepayment Penalty
Penalty for the payment of a mortgage note or deed of trust note before it actually becomes due.

Principal
This word has several meanings:

to denote the most important;
a capital sum lent on interest;
one who appoints an agent to act on their behalf;
either party to a contract.

 

Property Management
The operation of real property, including the leasing of space, collection of rents, selection of tenants, and the repair and renovation of the buildings and grounds.

Prorate
To allocate between the seller and buyer their proportionate share of an obligation paid or due. For example, a prorate of real property taxes, fire insurance, or condominium fee.



Radon

A colorless, odorless gas formed by the breakdown of uranium in sub-soils. It can be enter a house through cracks in the foundation or in water and is considered to be hazard. Your REALTOR, Misook  can supply a radon brochure.



Real property

Any land and whatever by nature or artificial annexation is a part of it.



Referral

The recommendation by one agent of a potential buyer and/or seller to another agent either locally or long-distance.



Relocation Specialists

A firm or person specializing in advertising buyers or sellers on relocation to different and/or new communities. 



Return on Investment (ROI)

The profit gained as the result of money spent on an improvement or addition to a home or property.

Sales Associate
A person with a real estate license and associated with a specific real estate broker.

Survey
A map or plat made by a licensed surveyor showing the results of measuring the land with its elevations, improvements, boundaries, and its relationship to surrounding tracts of land. A survey is often required by the lender to assure a building is actually sited on the land according to its legal description.

Title
As generally used, a document that indicates rights of ownership and possession of a particular property.

Title Abstract
A summary of the public records relating to the title to a particular piece of land. An attorney or title company reviews an abstract or title to determine whether there are any title defects.

Title Insurance
Protects lenders and homeowners against loss of their interest in property due to legal defects in title.

Title Search or Examination
A check of the title records, generally at the local courthouse, to make sure the buyer is purchasing a house from the legal owner and there are no liens, overdue special assessments, or other claims.

Transfer Tax
State tax, local tax (where applicable), and tax stamps (in some areas) required by law when title passes from one owner to another.



Walk-Through Inspection

The final inspection by the buyers, usually in the company of the buyers' real estate sales agent, to ensure that all conditions noted in the offer to purchase and all seller-related contingencies have been met. This inspection is most often completed immediately prior to the closing and after the seller has vacated the premises. 

 

Real Estate Glossary

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