Sometimes new ventures can bring about a new language and terminology… let’s face it people don’t buy real estate everyday. Some vocabulary is a little foreign if you are not working with it on a daily basis. (Please note these definitions are the most typical use and based on the State of Georgia. In some states the definitions may vary. It is wise to confirm with your agent or Broker if you have any doubts.)
Ad valorem taxes: taxes charge according to the value of a property.
Adjustable rate mortgage (ARM): a mortgage on which the interest rate rises and falls with changes in prevailing interest rates.
Adverse possession: acquisition of land through prolonged and unauthorized occupation.
Amortized loan: a loan requiring periodic payments that include both interest and partial repayment of principal.
Appraisal: the estimate of the value of something.
APR: the annual percentage rate as calculated under the federal Truth in Lending Act by combining the interest rate with other costs of the loan.
Assessed value: a value placed on a property for the purpose of taxation.
Associate broker: any person who meets the requirements of a broker but chooses to work for a broker.
Balloon loan: any loan in which the final payment is larger than the preceding payments.
Blanket mortgage: a mortgage secured by two or more properties.
Breach of contract: failure, without legal excuse, to perform as required by a contract.
Broker: one who acts as an agent for others in negotiating contracts or sales, a person who provides acts of licensure for another for compensation.
Brokerage engagement: the written agreement creating an agency.
Building codes: local and state laws that set minimum construction standards.
CC & R’s: covenants, conditions, and restrictions by which a property owner agrees to abide.
Certificate of occupancy (CO): a government-issued document that states that a structure meets local zoning and building code requirements and is ready for use.
Client: issued by the commission as a penalty instead of imposing a sanction.
Closing agent: the person placed in charge of closing a real estate transaction.
Closing: a meeting at which the buyer pays for the property and receives a deed to it and at which all other matter pertaining to the sale are concluded.
Cloud on the title: any claim, lien, or encumbrance that impairs title to property.
Comparable: properties similar to the subject property that have sold recently.
Consideration: the promise or payment of something good or valuable.
Construction loan: short-term loan for new construction or remodeling of an existing structure.
Contract: an agreement to do (or not to do) a particular thing.
Conventional loans: real estate loans that are insured by the FHA or guaranteed by the VA.
Counteroffer: an offer made in response to an offer.
Credit report: a report reflecting the creditworthiness of a borrower by showing credit history.
Customer: a person who has not entered into a brokerage engagement.
Deed: a written document that, when properly executed and delivered, conveys title to land.
Default: failure to perform a legal duty, such as failure to carry out the terms of a contract.
Deficiency judgment: a judgment against a borrower if the foreclosure sale does not bring enough to pay the balance owed.
Depreciation: loss in value due to deterioration and obsolescence.
Dual agency: representation of two or more principals in a transaction by the same agent.
Earnest money deposit: money that accompanies an offer to purchase as evidence of good faith .
Encumbrance: any impediment to a clear title, such as a lien, lease or easement.
Equitable title: the legally assured future interest in legal title.
Equity: the market value of a property less the debt against it.
Exclusive right to sell: a listing that gives the broker the right to collect a commission no matter who sells the property during the listing period.
Fannie Mae: a real estate industry nickname for the Federal National Mortgage Association.
FHA: Federal Housing Administration.
Finance charge: the total amount the credit will cost over the life of the loan.
First mortgage: the mortgage loan with highest priority for repayment in the event of foreclosure.
Foreclosure: the procedure by which a person’s property can be taken and sold to satisfy an unpaid debt.
Freddie Mac: a real estate industry nickname for the Federal Home Loan Mortgage Corporation.
General warranty deed: grantor makes full guarantee to buyer against defects of title.
Good faith estimate: the cost estimate that must be provided to a borrower no later than three days after loan application.
Grantee: the person named in a deed who acquires ownership.
Grantor: the person named in a deed who conveys ownership.
HUD-1: the settlement statement required by RESPA. (See settlement statement).
Joint tenancy: a form of property co-ownership that features the right of survivorship.
Junior mortgage: any mortgage on a property that is subordinate to the first mortgage in priority.
Lease-option: allows the tenant to buy the property at preset price and terms for a given period of time.
Lessee: the tenant.
Lessor: the landlord.
Lien: a hold or claim one person has on the property of another to secure payment of a debt or other obligation.
Loan origination fee: the expenses a lender incurs in processing a mortgage loan.
Loan-to-value ratio: a percentage reflecting what a lender will lend divided by the sale price or market value of the property, whichever is less.
Maturity: the end of the life of a loan.
Mill rate: property tax rate that is expressed in tenths of a cent per dollar of assessed valuation.
Mortgage: a document that makes property security for the repayment of a debt.
Mortgagee: the party receiving a mortgage; the lender.
Mortgagor: the party giving a mortgage; the borrower.
Multiple listing service (MLS): organization of member brokers agreeing to share listing information and share commissions.
Option contract: a person has a right but not an obligation, to perform under agreed-upon terms, price, and time period.
PMI: private mortgage insurance- a private mortgage insurance source to insure lenders against foreclosure loss.
Point: one percent of the loan amount.
Power of attorney: a document by which one person authorizes another to act on his or her behalf.
Promissory note: a written promise to repay a debt.
Quitclaim deed: a legal instrument used to convey whatever title the grantor has; it contains no covenants, warranties, or implication of the grantor’s ownership.
Ready, willing and able buyer: a buyer who is ready to buy at the seller’s price and terms and who has the financial capability to do so.
Real estate listing: a contract wherein a broker is employed to find a buyer or tenant.
Real estate: any interest in real property, freehold, or non-freehold; tangible or intangible.
Restrictive covenants: clauses placed in deeds and leases to control how future owners and lessees may or may not use the property.
Right of first refusal: the right to match or better an offer before the property is sold to someone else.
Right of survivorship: a feature of joint tenancy whereby the surviving joint tenants automatically acquire all the rights, title and interest of the deceased joint tenant.
Settlement statement: an accounting of funds to the buyer and the seller at the completion of a real estate transaction.
Special warranty deed: grantor warrants title only against defects occurring during the grantor’s ownership.
Specific performance: contract performance according to the precise terms agreed upon.
Tax certificate: a document issued at a tax sale that entitles the purchaser to a deed at a later date if the property is not redeemed.
Tax lien: a charge or hold by the government against property to insure the payment of taxes.
Tenants in common: shared ownership of a single property among two or more persons; interests need not be equal and no right of survivorship exists.
“Time is of the essence”: a phrase that means that the time limits of a contract must be faithfully observed or the contract is voidable.
Title insurance: an insurance policy against defects in title not listed in the title report or abstract.
Title: the right to or ownership of something; also the evidence of ownership, such as a deed or bill of sale.
VA: Department of Veterans Affairs.
Walk-through: a final inspection of the property just prior to settlement.