Words To
The Wise
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.
Certificate of Title. A document
signed by a title examiner or attorney, stating that the seller has good
marketable and insurable title.
Closing Statement (Settlement).
The computation of financial adjustments between buyer and seller as of
the day of closing a sale to determine the net amount of money which buyer
must pay to seller to complete 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.
Convey. To deed or transfer
title of property from one person to another.
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).
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 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.
Fixture. What was formerly personal
property which is now permanently attached to real property and goes with
the property when it is sold.
Hazard Insurance. Protects against
damages caused to property by fire, windstorms, and other common hazards.
Listing Contract. Between a
home owner (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".
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."
Market Price. The actual amount
for which a piece of property is sold. Also, "sales price," "purchase price".
Mortgage. A lien or claim against
real property given by the buyer to the lender as security for money borrowed.
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."
P.l.T.I. Principal, interest,
taxes, and insurance. Most residential mortgage payments include the above
and are therefore referred to as P.l.T.I. Also, "carrying charges".
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:
(A) to denote the most important;
(B) a capital sum lent on interest;
(C) one who appoints an agent to act
on their behalf;
(D) 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
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.
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 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 home owners 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.
