A Glossary or How to Speak Fluent Real Estate-ese

Abstract title: The condensed history of a title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate.

Agent: One who acts or has the power to act for another. A fiduciary relationship is created under the law of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed real estate broker to be his or her agent.

Amenity: An aspect of a property that enhances its value, such as nearby good public transportation, schools or a recreation center.

Amortized loan: A loan in which the principal as well as the interest is payable in monthly or other periodic installments over the term of the loan.

Annual percentage rate (APR): A term used in related legislation to represent the percentage relationship of the total finance charge to the amount of the loan.

Appreciation: An increase in the worth or value of a property due to economic or related causes, which may prove to be either temporary or permanent; opposite of depreciation.

Appurtenance: Anything tangible or abstract attached to the land and thus part of the property (such as water rights, a boat ramp, a fence or an easement).

Balloon payment: A final payment of a mortgage loan that is considerable larger than the required periodic payments, because the loan amount was not fully amortized.

Building code: An ordinance that specifies minimum standards of construction for buildings in order to protect public safety and health.

Closing costs: Money paid by borrowers and sellers to effect the closing of a mortgage loan. This normally includes an origination fee, discount points, title insurance, survey, attorney's fees and such prepaid items as taxes and insurance escrow payments.

Commission: Payment to a broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.

Comparables: Properties listed in an appraisal report that are substantially equivalent to the subject property.

Competitive market analysis: A comparison of the prices of recently sold homes that are similar to a listing seller's home in terms of location, style, size, condition, age, and amenities. Based on this analysis, a broker or salesperson can help the seller determine a listing price.

Contingency or conditional sale contract: A contract for the sale of property which becomes binding only after a specific condition or set of conditions has been met. In many cases, the contingency is that the prospective buyer be able to sell his home before being obligated to purchase the property in question.

Contract: A legally enforceable promise or set of promises that must be performed and for which, if a breach of the promise occurs, the law provides a remedy.

Conventional loan: A loan that is not insured or guaranteed by a government or private source.

Counteroffer: A new offer made as a reply to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror's repeating it.

Deed: A written instrument that, when executed and delivered, conveys title to or an interest in real estate.

Deed restrictions: Clauses in a deed limited the future uses of the property. Deed restrictions may impost a vast variety of limitation and conditions, for example, they may limit the density of buildings, dictate the types of structures that can be erected, or prevent buildings from being used for specific purposes or ever from being used at all.

Discount points: An amount of money equal to 1% of the principal amount of an investment or note. Loan discount points are a one-time charge assessed at closing by the lender to increase the yield on the mortgage loan to a competitive position with other types of investments.

Earnest money: A sum of money a purchaser places on deposit under terms of a contract, that is to be forfeited if the buyer defaults, but is applied on the purchase price if the sale is consummated.

Encumbrance: Any lien or restriction (a mortgage, tax, judgment, lease, easement, etc.) that may diminish the value of a property.

Equity: The interest or value that an owner has in his or her property over and above any mortgage indebtedness.

Fair market value: The price at which property is transferred between a willing buyer and a willing seller, each of whom has a reasonable knowledge of all pertinent facts and neither being under any compulsion to buy or to sell.

FHA loan: A loan insured by the Federal Housing Administration and made by an approved lender in accordance with the FHA's regulations.

Homeowner's insurance policy: A standardized package insurance policy that covers a residential real estate owner against financial loss from fire, theft, public liability, and other common risks.

Joint tenancy: Ownership of real estate between two or more parties who have been named in one conveyance as joint tenants. If the instrument creating the joint tenancy specifically provides for survivorship, upon the death of a joint tenant, his or her interest passes to the surviving joint tenant or tenants by the right of survivorship.

Lien: A charge or claim against a property that provides security for the property owner's debt or obligation.

Listing agreement: A contract between a landowner (as principal) and a licensed real estate broker (as agent) by which the broker is employed as agent to sell real estate on the owner's terms within a given time, for which service the landowner agrees to pay a commission.

Loan origination fee: A fee charged by the lender to process and service a loan.

Marketable title: Good or clear title reasonably free from the risk of litigation over possible defect.

Multiple listing: A listing granted by a seller to a broker with the authority and obligation on the part of the listing agent to distribute the listing to other real estate companies in the multiple listing network (in our area this is TReND).

PITI ratio: The principal/interest/taxes/insurance payment to income ratio; used in mortgage lending decisions.

Prorations: Division of financial responsibility between buyer and seller for such items as loan interest, taxes, rents and utility bills.

Real estate: Land; a portion of the earth's surface extending downward to the center of the earth and upward into space, including all things permanently attached thereto, whether by nature or by a person; any and every interest in land.

Real estate broker: Any person, partnership, association, or corporation who sells (or offers to sell), buys (or offers to buy), or negotiates the purchase, sale, or exchange of real estate or who leases (or offer to lease) or rents (or offers to rent) any real estate or the improvements thereon for others for a compensation or valuable consideration. A real estate broker may not conduct business without a real estate broker's license.

Realtor®: A registered trademark term reserved for the sole use of active members of local Realtor® boards affiliated with the National Association of Realtors®.

Survey: The process by which boundaries are measured and land areas are determined; the on site measurements of lot lines, dimensions, and position of a house on a lot, including the determination of any existing encroachments or easements.

Tenancy in common: A form of coownership by which each owner holds an undivided interest in real property as if each were the sole owner. Each has the right to partition, but neither holds the right of survivorship (as contrasted to a joint tenancy form of ownership).

Title: 1. The right to or ownership of land 2. The evidence of ownership of land.

Title insurance: A policy insuring the owner and or the mortgagee against loss by reason of defects in the title to a parcel of real estate, other than encumbrance defects, and matters specifically excluded by the policy.

Valid contact: A contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it.

VA loan: A mortgage loan on approved property made to a qualified veteran by an authorized lender and guaranteed by the Veterans Administration in order to limit the lender's possible loss.