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Glossary of Real Estate
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absorption rate
A term referring to the rate at which properties are able to be
sold (or absorbed) in an area within a given period of time, usually one
year. It tells astute REALTORS®
the supply (inventory) of houses on the current market and
how long it will take to sell all of those houses:
- Three months ― Fine,
- Six months ― Okay,
- Nine months ―Troublesome,
- Twelve-plus ― Terrible.
See: Use "Absorption Rate" To Help Sell Your Home More Quickly
abstract of
judgment, law
The summary of a court judgment that creates a lien against a property when
filed with the county recorder.
Accredited Buyer
Representative (ABR)
A REALTOR® Designation (ABR)
RE/MAX Valley REALTORS with ABR designation:
- Ken Burton, ABR
- Al Leonard, ABR
- Jack Pearce, Broker, ABR, ASP, CSP, e-PRO, GRI
- Ginny Rudolphi, ABR, GRI
- Carole Samuels, ABR, CSP, e-PRO
Accredited Staging Professional (ASP)
A REALTOR® Designation (ASP)
RE/MAX Valley REALTORS with ASP designation:
- Jack Pearce, Broker, ABR, ASP, CSP, e-PRO, GRI
- Mary Jo Sikora, ASP, CNHS, e-PRO, GRI
- StagedHomes.com
accelerated cost
recovery system
A tax calculation that provides greater depreciation in the early years
of ownership of real estate or personal property.
accelerated depreciation
A bookkeeping method that depreciates property faster in the early years of
ownership.
acceleration clause
A provision in a mortgage that gives the lender the right to demand payment
of the entire principal balance if a monthly payment is missed.
acceptance
An offeree’s consent to enter into a contract and be bound by the terms of
the offer.
Access
Any means by which a person can enter property.
Accessibility
The degree to which a building or site allows access to people with
disabilities.
Accretion
The gradual addition to the shore or bank of a waterway by deposits of sand
or silt
acre
A measurement of land equal to 43,560 square feet.
acre foot
The volume of material needed to cover an acre of land one foot deep.
active solar system
A system that utilizes electric pumps or fans to transfer solar energy for
storage or direct use.
actual age
The number of years a structure has been standing.
addendum
An addition or change to a contract.
additional principal payment
Extra money included in the monthly payment to help reduce the principal and
shorten the term of the loan.
Add-on interest
The interest a borrower pays on the principal for the duration of the loan
The American
Council for an Energy-Efficient Economy (ACEEE)
A nonprofit, 501(c)(3) organization dedicated to advancing energy efficiency
as a means of promoting both economic prosperity and environmental
protection.
http://www.aceee.org/
additional principal payment
A payment by a borrower of more than the scheduled principal amount due in
order to reduce the remaining balance on the loan.
adjustable-rate mortgage (ARM)
A mortgage that permits the lender to adjust its interest rate periodically
on the basis of changes in a specified index. Read more >>
See Also: Consumer Handbook on Adjustable Rate Mortgages," Publications and Educational Resources, The Board of Governors, Federal Reserve System.
adjusted basis
The original cost of a property plus the value of any capital expenditures
for improvements to the property minus any depreciation taken.
adjustment date
The date on which the interest rate changes for an adjustable-rate mortgage
(ARM).
adjustment period
The period that elapses between the adjustment dates for an adjustable-rate
mortgage (ARM).
administrator
A person appointed by a probate court to administer the estate of a person
who died intestate.
affordability analysis
A detailed analysis of your ability to afford the purchase of a home. An
affordability analysis takes into consideration your income, liabilities,
and available funds, along with the type of mortgage you plan to use, the
area where you want to purchase a home, and the closing costs that you might
expect to pay.
agency
An area of commercial law dealing with a contractual tripartite set of
relationships when an Agent is authorized to
act on behalf of another (called the Principal) to create
a legal relationship with a Third Party. Succinctly, it may be referred to
as the relationship between a principal and an agent whereby the principal,
expressly or impliedly, authorizes the agent to work under his control and
on his behalf. The agent is, thus, required to negotiate on behalf of the
principal or bring him and third parties into contractual relationship. This
branch of law separates and regulates the relationships between:
- Agents and Principals;
- Agents and the Third Parties with whom they deal on their Principals' behalf; and
- Principals and the Third Parties when the Agents purport to deal on their behalf.
amenity
A feature of real property that enhances its attractiveness and increases
the occupant’s or user’s satisfaction although the feature is not essential
to the property’s use. Natural amenities include a pleasant or desirable
location near water, scenic views of the surrounding area, etc. Human-made
amenities include swimming pools, tennis courts, community buildings, and
other recreational facilities.
American Center For
Credit Education (ACCE)
The American Center for Credit Education (ACCE) is a non-profit accredited
organization, whose mission is to make available to all consumers, through
various community resources, national standardized credit and financial
education. The financial
education programs offered by ACCE may be taken online. Visit
http://www.acce-online.com/.
amortization
The gradual repayment of a mortgage loan by installments.
amortization schedule
A timetable for payment of a mortgage loan. An amortization schedule shows
the amount of each payment applied to interest and principal and shows the
remaining balance after each payment is made.
amortization term
The amount of time required to amortize the mortgage loan. The amortization
term is expressed as a number of months. For example, for a 30-year
fixed-rate mortgage, the amortization term is 360 months.
amortize
To repay a mortgage with regular payments that cover both principal and
interest.
annual mortgagor statement
A report sent to the mortgagor each year. The report shows how much was paid
in taxes and interest during the year, as well as the remaining mortgage
loan balance at the end of the year.
annual percentage rate (APR)
The cost of a mortgage stated as a yearly rate; includes such items as
interest, mortgage insurance, and loan origination fee (points).
annuity
An amount paid yearly or at other regular intervals, often on a guaranteed
dollar basis.
application
A form used to apply for a mortgage loan and to record pertinent information
concerning a prospective mortgagor and the proposed security.
application fee
This charge imposed by your lender covers the initial costs of
processing your loan request and checking your credit report. It is not the
same as an origination fee which is usually charged as
well.
appraisal
A real estate appraisal
is a service performed by a licensed or certified appraiser, who develops an
opinion of value based upon the highest and best
use of real property. The highest and best use is
that use which produces the highest value for the land, as if vacant. This
use is based on 4 parts; physically possible, appropriate, legal, and
economically feasible. Also of importance is the definition of the type of
value being developed and this must be included in the appraisal, i.e.
market value, condemnation value, quick sale value, etc. For mortgage
valuations of improved residential property, this value is most often
reported on a standardized form, the
Uniform Residential Appraisal Report.
(Full discussion.) (Contrast with
home inspection.)
appraised value
An opinion of a property's fair market value, based on an appraiser's
knowledge, experience, and analysis of the property. See Appraisal Institute
appraiser
A person qualified by education, training, and experience to estimate the
value of real property and personal property.
appreciation
An increase in the value of a property due to changes in market conditions
or other causes. The opposite of depreciation.
"arm's length" transaction
A colloquial description of a transaction where none of the parties are
related to each other or have common interests -- they are at
"arm's length". An arms-length transaction is generally at fair market
value In a transaction" that is non-arm's-length" , the relationship between the
parties may cause one or the other to accept less than they are entitled or
pay more than fair market value.
assessed value
The valuation placed on property by a public tax assessor for purposes of
taxation.
assessment
The process of placing a value on property for the strict purpose of
taxation. May also refer to a levy against property for a special purpose,
such as a sewer assessment.
assessment rolls
The public record of taxable property.
assessor
A public official who establishes the value of a property for taxation
purposes.
asset
Anything of monetary value that is owned by a person. Assets include real
property, personal property, and enforceable claims against others
(including bank accounts, stocks, mutual funds, and so on).
assignment (of mortgage)
A written document serving as evidence of a transfer of a loan obligation
from the original borrower to a third party. Not to be confused with a
release of mortgage.
assumable mortgage or loan
A mortgage that can be taken over ("assumed") by the buyer when a home is
sold.
assumption
The transfer of the homeowner’s (mortgagor's) existing mortgage to a buyer. In an
Assumption of Mortgage, the buyer "steps into the shoes" of the
homeowner and accepts any liability of debt remaining on the existing mortgage instrument.
The assumption must be approved by the existing lender or loan service
provider (mortgagee)
and a written legal instrument called an assignment of mortgage
given by the lender is necessary in order for the homeowner to be fully free
from any further liability of debt under the assumption.
For example, a homeowner owes a 30-year mortgage loan of $250,000 against his house. A prospective buyer wants to purchase the house and keep the same mortgage. The buyer pays $50,000 cash for the equity in the home and assumes the remaining mortgage, becoming legally liable for the debt. However, the original owner is formally released from the note with the lender's assignment of mortgage, that transfers total liability to the buyer.
Do not confuse an "Assumption of Mortgage" with the so called "purchase subject to mortgage."
When a buyer purchases property "subject to mortgage", the buyer agrees to assume the remaining debt on an existing mortgage, but the original homeowner remains on the loan and, therefore, remains personally liable for the debt should the buyer default on making the monthly payments.
assumption clause
A provision in an assumable mortgage that allows a buyer to assume
responsibility for the mortgage from the seller. The loan does not need to
be paid in full by the original borrower upon sale or transfer of the
property.
assumption fee
The fee paid to a lender (usually by the purchaser of real property)
resulting from the assumption of an existing mortgage.
attorney-in-fact
One who holds a power of attorney from another to execute documents on
behalf of the grantor of the power.