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REAL ESTATE GLOSSARY
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ABSORPTION RATE
The ratio of the number of properties in an area that have been sold against the number available. Used to show the volatility of a market.
ABSTRACTION METHOD
This method of estimating the value of property uses similar properties available in the same market to extract the value of a parcel of land.
ABSTRACT OF TITLE
A historical summary of all the recorded transactions that affect the title to the property. An attorney or a title company will review an abstract of title to determine if there are any problems affecting the title to the property. All such problems must be cleared before the buyer can be issued a clear and insurable title.
ACCELERATION CLAUSE
A loan provision giving the lender the power to declare all sums owing lender immediately due and payable upon the violation of a specific loan provision, such as the sale of the property, or the failure to make loan payments on time.
ACCEPTANCE
An offeree's consent to enter into a contract and be bound by the terms of the offer.
ACCESSORY BUILDING
A building separate from the main structure on a property. Often used for a specific purpose, such as a workshop, storage shed or garage.
ACCRETION
The addition to land through natural forces like wind or water.
ACKNOWLEDGEMENT
Formal declaration before a public official ( a Notary Public ) that one has signed a document. Required before recording real estate legal documents, such as a deeds of trust.
ACRE
43,560 square feet. A measurement of area.
ACTUAL AGE
The amount of time that has passed since a building or other structure was built. See also: EFFECTIVE AGE
ACQUISITION COST
Under an FHA loan, the purchase price or appraised value of the property plus the estimated closing costs.
ADDENDUM
A supplement to any document that contains additional information pertinent to the subject. Appraisers use an addendum to further explain items for which there was inadequate space on the standard appraisal form.
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.
ADJUSTMENT DATE
The date the interest rate changes on an ARM (adjustable-rate mortgage).
ADJUSTABLE-RATE MORTGAGE (ARM)
A mortgage that permits the lender to adjust the mortgage's interest rate periodically on the basis of changes in a specified index. Interest rates may move up or down, as market conditions change.
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 the interest rate changes on an ARM ( adjustable-rate mortgage ).
ADJUSTMENT PEROID
The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM).
ADJUSTED SALES PRICE
An opinion of a property's sales price, after adjustments have been made to account for differences between it and another comparable property.
ADMINISTRATOR
A person appointed by a probate court to administer the estate of a person who died intestate.
AD VAL OREM TAX
Taxes assessed based on the value of the land and improvements
AESTHETIC VALUE
The additional value a property enjoys based on subjective criteria such as look or appeal.
AFFIRMATION
A declaration that a certain set of facts are truthful.
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.
AGENT
A person who has been appointed to act on behalf of another for a particular transaction.
AGREEMENT OF SALE
A written signed agreement between the seller and the purchaser in which the purchaser agrees to buy certain real estate and the seller agrees to sell upon terms of the agreement. Also known as contract of purchase, purchase agreement, offer and acceptance, earnest money contract or sales agreement.
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 SOCIETY OF APPRAISERS
An organization of appraisal professionals and others interested in the appraisal profession.
AMORTIZATION
The repayment of a loan through regular periodic payment.
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.
ANNUAL PERCENTAGE RATE (APR)
The effective rate of interest for a loan per year. This rate is typically higher than the note rate because it takes into account closing costs. This is one way to compare loan programs offered by different lenders. Caution : the APR is sometimes computed differently by different lenders and can be misleading.
ANNUITY
A sum of money paid at regular intervals, often annually.
APPLICATION
A form used to apply for a mortgage loan that details a potential borrower's income, debt, savings and other information used to determine credit worthiness.
APPRAISAL
A written analysis of the estimated value of a property prepared by a qualified appraiser. Contrast with home inspection.
APPRAISAL FOUNDATION
A not-for-profit educational organization established by the appraisal profession in the United States in 1987. It is dedicated to the advancement of professional valuation and responsible for establishing, improving, and promoting the Uniform Standards of Professional Appraisal Practice (USPAP).
APPRAISAL INSTITUTE
A world-wide organization dedicated to real estate appraisal education, publication and advocacy.
APPRAISAL PRINCIPLES
The basic building blocks of the property valuation process, including property inspection, market analysis and basic economics.
APPRAISAL REPORT
The end result of the appraisal process, usually consists of one major, standardized form such as the Uniform Residential Appraisal Report form 1004, as well as all supporting documentation and additional detail information. The purpose of the report is to convey the opinion of value of the subject property and support that opinion with corroborating information.
APPRAISAL STANDARDS BOARD (ASB)
An independent board of the APPRAISAL FOUNDATION, which writes, amends, and interprets USPAP. The ASB is composed of up to seven appraisers appointed by the Foundation's Board of Trustees. The ASB holds public meetings throughout the year to interpret and amend USPAP.
APPRAISED VALUE
An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property.
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.
ARMS LENGTH TRANSACTION
A transaction among parties each of who acts in his or her own best interest.
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 RATIO
The comparative relationship of a property's assessed value to its market value.
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
The transfer of a mortgage from one person to another.
ASSUMABLE MORTGAGE
A mortgage that can be taken over by the buyer when a home is sold.
ASSUMPTION
Taking over a loan and becoming personally liable for the repayment.
ASSUMMPTION 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.
ATTACHED HOUSING
Any number of houses or other dwellings which are physically attached to one another, but are occupied by a number of different people. The individual houses may or may not be owned by separate people as well.
ATTORNEY IN FACT
One who holds a power of attorney from another to execute documents on behalf of the grantor of the power.
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