Helpful Information
Real Estate
Glossary of Terms
1st Loan to Current Value (1LTV)
Total of the first loan to the value of the property.
Absentee Owner
An individual or corporation that legally owns a particular property without occupying it or actively managing it. This does not always mean the property is deemed vacant since the property owner could have tenants currently living on the premises. The term absentee owner is intended to distinguish between property owners that are hands-on with their investment versus those who are largely hands-off.
Active
An active status means the property is currently available for sale.
Active Contingent
“Active contingent” is a status provided to a property listing when the seller has accepted an offer from a buyer, given that certain circumstances are met before completing the sale.
Addendum
An addendum is an additional document that can modify an original lease or purchase agreement.
Adjustable-Rate Mortgage (ARM)
An adjustable-rate mortgage is a type of home loan with an interest rate that is subject to change over time based on the market. There is usually a lower interest rate, to begin with, compared to fixed-rate loans.
After Repair Value (ARV)
After Repair Value (ARV) is an estimate of a property’s value after it’s repaired. This serves as a proxy for the market value of the price. The most common use of ARV is in house flipping, when an investor buys a distressed house, fixes it up, and sells it. Many investors follow the 70% Rule, which states the purchase price should be 70% (or less) than the total of the ARV, minus the cost of repairs.
Amortization
Amortization is a way to schedule mortgage payments in equal installments. The schedule is a fixed table that breaks down how each monthly payment contributes to the interest and principal for the loan’s full term.
Appraisal
An appraisal is required to gather the estimated value of a piece of real estate. During the home sale, the mortgage lender sends out an appraiser to get a professional opinion of the value of the property. This helps the lender decide if the property is worth the amount of the loan the potential buyer is seeking.
Arm’s Length Transaction
A transaction in which the buyers and sellers of a product act independently and have no relationship to each other. The concept of an arms-length transaction is to ensure that both parties in the deal are acting in their own self-interest and are not subject to any pressure or duress from the other party.
Assessor Parcel Number (APN)
A unique number assigned to each parcel of land by a county tax assessor. The APN is based on formatting codes depending on the home’s location. The local government uses APNs to identify and keep track of land ownership for property tax purposes.
‘As Is’ or ‘Where Is’
This term means the property is sold in its current condition. The homeowner has no responsibility to repair the property before the sale. The homeowner must still disclose any known problems with the property, and a buyer can still negotiate an offer before the final sale. However, those requests may just be limited.
Automated Valuation Model (AVM)
An automated valuation model (AVM) is a term for a service that combines mathematical or statistical modeling with databases of existing properties and transactions to calculate real estate values. The majority of AVMs compare the values of similar properties at the same point in time.
Many appraisers, and even Wall Street institutions, use these AVMs to value residential properties. Consumer-ready AVMs also exist on property listing sites like Zillow and Trulia.
Automated valuation models (AVMs) are software-based pricing models used in the real estate market to value properties. AVM providers include commercial platforms like CoreLogic, Freddie Mac, and Equifax, as well as free consumer sites like Trulia and Zillow.
Back Office
The “back office” typically refers to the accounting, financial, and legal departments within a business. While they do not directly interact with the customer, these aspects of a business help support essential functions within a real estate business.
Backup Offer
When a buyer is interested in purchasing a property that is already under contract with someone else, that buyer has an opportunity to submit a “backup offer”, in case the first transaction falls apart. A backup offer must still be negotiated, and any monies submitted, such as earnest money (a deposit), confirm it is the next offer in line. There can only be one backup offer legally.
Bank-Owned Property
A bank-owned property is acquired by a financial institution when a homeowner defaults on their mortgage. These properties then sell at a discounted price, much lower than current home prices, as buyers are wary of the costs of potential repairs that might be needed.
Bankruptcy
A court proceeding in which a judge and court trustee examine the assets and liabilities of individuals and businesses who can’t pay their bills. The court decides whether to discharge the debts and those who are no longer legally required to pay them.
Bankruptcy Dismissed
If the court enters a dismissal order, it ends a bankruptcy case with the debt being discharged or eliminated. A case that has been dismissed means that it is like a bankruptcy was never filed. When a case is dismissed, it also terminates the automatic stay. This means that collectors can pursue collection efforts again, including lawsuits, garnishments, foreclosure and asset seizures.
Bankruptcy Discharged
When a court grants a discharge order, it cancels your obligation to repay the discharged debt. As a result, your credit card bills, medical bills and other types of debt included in your bankruptcy filing may be eliminated.
Blind Offer
When a buyer makes an offer on a property they haven’t seen, even when it was possible to see it, that offer is considered a “blind offer”. It is most used in a highly competitive area and/or circumstance and used as an attempt to be first and win quickly.
Buyer’s Agent/Listing Agent
A buyer’s agent, also known as a selling agent, is a licensed real estate professional whose job is to locate a buyer’s next property, represent their interests by negotiating on behalf of that buyer to obtain the best price and purchasing scenario for that buyer as possible. This agent is a fiduciary for the buyer.
Buyer Concessions
Buyers can request concessions to help sweeten a deal in their favor. These benefits or discounts can compensate for any repairs or closing costs which help reduce the amount of cash needed when finalizing a sale.
Cancellation of Contract
The buyer or seller of a property can decide to cancel their agreement. This could occur due to an inability to finance the purchase if the inspection results in known/unknown issues or some other stated topic related to the transaction. Typically, the buyer has more opportunities than the seller to cancel a purchase, but there is a chance of earnest money or other fees being lost in the process.
Cash Buyer
When a home buyer offers a seller the entire cost of the house, with no mortgage or any other type of financing involved. These offers are often more attractive to sellers, as they mean no buyer financing fall-through risk and, usually, a faster closing time.
Child Support Lien
If child support is owed, the custodial parent can place a lien on property. A lien is a notice that tells the world that there are claims against an individual for money.
Closing
Closing is when the home sale is considered final, which typically includes all parties’ signatures on all required documents, all monies conveyed and when a lender is involved, with full lender’s approval. For some markets, recording the deed with the country clerk’s office is the final step of closing. Once all these items are completed, then a buyer’s access to the property is then provided and the buyer is considered the new homeowner.
Closing Costs
Closing costs are an assortment of fees, including fees charged by a lender, the title company, attorneys, insurance companies, taxing authorities, homeowner’s associations, real estate agents and other closing settlement related companies. Closing costs are typically paid at the time of closing a real estate transaction.
Commercial Loan
Commercial loans refer to financing provided to companies to purchase or refinance business-related properties.
Comparative Market Analysis (CMA)
An evaluation of a home’s value based on similar, recently sold homes (called comparables) in the same neighborhood. A CMA is not the same as an appraisal, which is performed by a licensed appraiser. A CMA is performed by a real estate agent.
Condo Owners Association (COA)
Manages structures with multiple units, much like apartments and townhomes. COAs are responsible for all the general common elements (GCEs), such as lobbies, common hallways, sidewalks, roofs, elevators, swimming pools and parking lots. Since it’s a community-based association, COAs typically outline their services to those things that are in common areas. Condo association fees typically include maintenance and insurance for the exterior of the building and all common areas, water, sewer, trash, basic cable and internet, if that’s offered.
Construction Loan
A builder or home buyer can use a construction loan to finance a home project or build to cover the cost until long-term funding is available. Construction loans are short-term and can be considered risky which typically leads to a higher interest rate.
Contingent
Contingent means the seller of the home has accepted an offer – one that comes with contingencies or a condition that must be met for the sale to go through. Examples of contingencies are: Pass a home inspection, confirm buyer’s financing and complete sale of buyer’s current home.
Conventional Loan
This type of loan is not offered or secured by a government entity. Conventional loans are available through private lenders, such as banks, credit unions, and mortgage companies.
Conversion
“Conversion” refers to a lead converting into a client, making conversion rate a critical metric when evaluating success. To increase conversion rates, marketing tools such as skip tracing, emails, and postcard campaigns are all forms of lead generation that can be leveraged, often in a funnel.
Counteroffer
A counteroffer serves as a rejection from the seller who feels the buyer’s offer was not acceptable. This puts the offer at risk and allows the buyer to exit without entering into the contract. The seller ultimately creates a new offer, which both parties must agree to before entering a revised contract.
Credit Line Loan
A credit line can be used to borrow a specific amount needed using the equity on a home. The amount borrowed can then be repaid and borrowed again. This allows for a more flexible loan, similar to a credit card.
Deed
A deed is a legal document (signed on closing day) that transfers property ownership from one person to another. Deeds are commonly referred to as “titles,” however, the two differ as the deed is the physical written document declaring ownership, whereas the title is the concept of ownership rights.
Days on Market (DOM)
DOM is defined as the number of days from the date on which the property is listed for sale on the local real estate brokers’ multiple listing service (MLS) to the date when the seller has signed a contract for the sale of the property with the buyer. A related metric is the average DOM for homes sold in a market during a specified period. A low average DOM indicates a strong market that favors sellers. A high average DOM signals a weak market that favors buyers. Seasonality can be a factor. Homes generally appear to sell faster in Spring than Winter, since you often have more people looking to purchase and sell during the more pleasant weather months rather than the colder more uncomfortable weather months.
Default Amount
The unpaid principal balance of a loan as of the date of default, excluding any Negative Amortization.
Depreciation
When the value of a property decreases over time, it depreciates. Depreciation can occur for various reasons, such as usual wear and tear on the home and outside factors like changes in the neighborhood or a downturn in home prices.
Disclosures
The seller may be subject to disclose various known issues with the property. These can vary from damage to recent repairs to the home. Disclosures may also be necessary in the case of known local hazards such as earthquakes or fires.
Distressed Property
Any property that is under foreclosure or being sold by the lender. Normally, a distressed property is a result of a homeowner who was unable to keep up with the mortgage payments and/or tax bill on the property. It is common for a distressed property to be sold below market value.
Do Not Call (DNC)
Do Not Call is a registry (https://www.donotcall.gov/) provided by the Federal Trade Commission. US citizens place their number on the registry to advise that they do not wish to receive unsolicited calls by telemarketers.
Down Payment
A lump sum used to help fund the purchase of a home is a down payment. Often, this is a percentage of the total purchase price. The most common down payment amount is 20%, which the buyer pays upfront. The remaining balance can be financed through a mortgage loan.
Earnest Money Deposit (EMD)
A buyer can submit an earnest money deposit, which is most often a percentage or flat fee deposited early in a transaction to show a commitment allowing something to be placed on hold. This allows the buyer time to get affairs in order and not entertain other offers. If a deal goes through the EMD is applied to the purchase and if the deal falls apart, the EMD goes to the seller.
Easement
An easement is the right to use a piece of land granted by someone who does not own the land. This is often used by government or utility companies to access underground infrastructure. Easements can impact land value, but most of the time, the homeowner has little control over the result.
Encroachment
Encroachment refers to a dispute, often occurring between neighbors, in which one person’s perceived property line crosses parcel boundaries. Conflict arises when one neighbor has personal belongings, a fence, trees, etc., crossing into the other party’s parcel.
Equity
The difference between the market value of your home and the amount you owe the lender who holds the mortgage. It is the amount a homeowner would receive after paying off the mortgage when the home is sold. To calculate equity, take the market value of the home and subtract any mortgages or liens against the property. The amount leftover is the amount of equity you have in the home. Homeowners can leverage their equity to obtain loans to help finance items such as home repairs or to pay off higher interest debt.
Escalation Clause
When buyers anticipate multiple offers on a property they are looking to purchase; they can include an escalation clause in the contract that lets them increase their offer by a predetermined amount.
Escrow
Escrow refers to the phase of a transaction where both parties have reached an agreement. The escrow holder is a third party hired to handle the transaction, including the exchange of money and all associated documents.
Escrow Holder
The escrow holder is the agent and depositary (impartial third-party) who collects the money, written instruments, documents, personal property or other things of value to be held until the happening of specified events or the performance of described conditions, usually set forth in mutual, written instructions from the parties.
Estimated Value
The value the assessor estimates a property would likely sell for on the open market.
Failed Listing
A failed listing is when a property listed on the MLS fails to sell and the listing is taken off the market.
FHA Loan
Backed by the Federal Housing Administration, FHA loans are most beneficial for applicants with lower credit scores and down-payment amounts.
Fiduciary
A real estate agent and their client may choose to enter a fiduciary relationship, where one party has the legal right to act and make decisions on behalf of the other party.
Fixed-Rate Mortgage
Refers to a home loan that has a fixed interest rate for the entire term of the loan. Fixed-rate mortgages are chosen by consumers who want to know how much they’ll pay every month. Fixed-rate mortgages tend to have higher interest rates than variable-rate mortgages.
For Sale by Owner (FSBO)
A seller may choose not to involve a real estate agent in the sales process. When this happens, the seller takes responsibility for every aspect of the transaction – from showing the house to overseeing the negotiations and entering escrow.
Foreclosure
A legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.
Foreclosure Sale
Occurs when the bank exercises its “lien” rights and sells a home at auction. The bank obtains a lien (an ownership interest in the property) when a borrower takes out a mortgage. The bank will use either a judicial or nonjudicial foreclosure procedure, depending on the state’s process.
Free & Clear
Free and clear means there are no encumbrances secured to the property, such as a lien or mortgage.
Home Equity Line of Credit (HELOC)
A line of credit secured by your home that gives you a revolving credit line to use for large expenses or to consolidate higher-interest rate debt on other loans such as credit cards.
Homeowner Association (HOA)
A HOA is a private association often formed by a real estate developer for the purpose of marketing, managing and selling homes and lots in a residential subdivision.
Homeowner Association (HOA) Lien
A lien is a legal claim or hold on a piece of property. Among the types of liens out there, a HOA lien is a judgment lien that results from a court-ordered money judgment. An HOA will go to court over a homeowner member’s delinquent dues and attempt to convince the court to issue a judgment. HOAs can record judgments that they obtain against homeowner members against those members’ homes.
Interest
Interest is the cost of borrowing money, usually defined as an annual percentage and paid as part of a monthly loan payment. Mortgage interest rates fluctuate depending on the market, but once a borrower enters a fixed-rate mortgage loan, their interest rate will not change for the entire loan duration.
Intrafamily Transfer
A transfer of ownership or management of an operation between or among individuals who have a familial relationship including parent, spouse, child, sibling, grandchild, grandparent, stepparent, stepchild, step-sibling, step grandchild or step grandparent.
Involuntary Lien
A non-consensual claim to the property of another as collateral to ensure the repayment of a debt. An involuntary lien may be imposed by a court, often for non-payment of taxes. The involuntary lien gives the tax authority (or other body) the right to confiscate one’s property if the debt is not settled.
Licensed Real Estate Salesperson
The official term for a real estate agent.
Lien
When a homeowner owes on a debt and their home is used as collateral, a “lien” is placed on the home. Liens are typically placed by mortgage companies but can be placed by other businesses like mechanics or utility companies.
Lien Released
Used to cancel a lien that has already been filed. Lien releases are also referred to as a release of lien, cancellation of lien or a lien cancellation. These are typically used to cancel the filed claim for public records.
Lis Pendens
A written notice that a lawsuit has been filed concerning real estate, involving either the title to the property or a claimed ownership interest in it. The notice is usually filed in the county land records office.
Loan Contingency
A loan contingency is a clause or addendum (also known as a mortgage contingency) in an offer contract that allows a buyer to back out of a deal and keep their deposit if they are unable to secure a mortgage with specified terms during a fixed period of time.
Loan Officer
A loan officer acts as a representative at a financial institution like a bank or credit union. They assist borrowers with the application process and must possess extensive knowledge about rules and regulations within the banking industry, lending products, and documentation required for taking out a loan.
Loan to Value (LTV)
LTV is a number lenders use to determine how much risk they’re taking on with a secured loan. It measures the relationship between the loan amount and the market value of the asset securing the loan. If a lender provides a loan worth half the value of the asset, for example, the LTV is 50%. As LTV increases, the potential loss the lender will face if the borrower fails to repay the loan also rises, creating more risk.
To determine your LTV ratio, divide the loan amount by the value of the asset, and then multiply by 100 to get a percentage. LTV = (Amount owed on the loan ÷ Appraised value of asset) x 100.
Local Owner
Property owner within the same county as the property.
Lot Size
The lot size is the living space plus front and back yard (total land space).
Mechanics Lien
A security interest in the title to property for the benefit of those who have supplied labor or materials that improve the property. The lien exists for both real property and personal property.
Mortgage Broker
A mortgage broker works with borrowers to help them find lenders that fit their needs. They will evaluate the unique financial situation to help determine the lender with the best loan terms for that borrower. The mortgage broker acts as a sort of “intermediary” between the lender and borrower; however, they don’t use their funds to assist with mortgages.
Multiple Listing Service (MLS)
An MLS is a database established by cooperating real estate brokers to provide data about properties for sale. An MLS allows brokers to see one another’s listings of properties for sale with the goal of connecting homebuyers to sellers.
Non-Disclosure State
In non-disclosure states, the sales price of real property is not recorded and made available through the public record. There are 12 non-disclosure states (Alaska, Idaho, Kansas, Louisiana, Mississippi, Missouri (some counties), Montana, New Mexico, North Dakota, Texas, Utah and Wyoming).
Non-Owner Occupied
A real estate classification that means the property owner does not occupy the property as their personal residence.
Notice of Default
A notification given to a borrower stating that he or she has not made their payments by the predetermined deadline or is otherwise in default on the mortgage contract.
Notice of Trustee Sale
Informs homeowners and mortgage borrowers of record that their home will be sold at a trustee’s sale on a specific date and at a specific location.
Notice of Foreclosure Sale
In nonjudicial foreclosure states, there is no trial. Lenders simply issue a “notice of intent to foreclose,” alerting the borrower that the foreclosure process has begun. They will also need to advertise the sale—usually in a newspaper, for at least a few weeks before the scheduled sale date. The property’s actual selling is done via auction, and usually by the local sheriff’s department. In many cases, banks and lenders are forced to purchase the properties back due to a lack of buyer interest. These are then dubbed “bank-owned properties” or “real estate-owned properties” (REOs), and the lender then makes efforts to sell those directly to a buyer. Many banks and larger financial institutions list their REO properties somewhere on their website.
Occupancy Status
Defines the legal situations of households concerning the occupancy of their main residence. Three main statuses can be distinguished:
The status of owner applies to households who are owners, co-owners and becoming owners
The status of tenant and/or sub-tenant applies to households paying a rent, irrespective of the type of accommodation occupied
The status of a free lodger applies to households which are not owners, and which do not pay any rent
On Market
Property that is available to buy
Opening Bid
The first bid of an auction, which is set by the foreclosing lender. This opening bid is usually equal to the outstanding loan balance, interest accrued, and any additional fees and attorney fees associated with the Trustee Sale. If there are no bids higher than the opening bid, the property will be purchased by the attorney conducting the sale, for the lender.
Opt-In
Opt-in means that customers or potential customers need to have subscribed to your services in order to receive communications from you.
Out of County Owner
A property that is owned by a person that does not reside within the county.
Out-of-State Owner
A property owner that lives in a different state then the property. Some people find the Return on Investment (ROI) to be better out-of-state, which is the main reason to buy outside the region where you reside. Purchase price, appreciation rates, mortgage expenses, taxes, housing regulations, rental market conditions and more factors might be more favorable in another state and will contribute to a property’s potential ROI.
Owner Occupied Property
An investment property you buy to generate income, but also live in yourself. For a home to be classified as having an owner occupant, a property needs to be the landlord’s primary residence; a second home doesn’t qualify.
Owner Type
There are three types of property ownership.
- Individual Ownership/Sole Ownership: When a property is bought and registered in the name of one individual, s/he alone holds the ownership title of the property.
- Joint Ownership/Co-ownership: When a property is registered in the name of more than one individual, the property is deemed to be under joint ownership. There is no difference between joint ownership and co-ownership of property – the two terms can be used synonymously. There are several ways to own a property jointly:
- Joint Tenancy: When the title deed of the property works on the concept of unity and provides each joint owner equal share of the property.
- Tenancy in Entirety: This form of ownership is tenancy between married people.
- Tenancy in Common: When two or more people jointly hold a property without holding equal rights.
Pending
Pending means the seller has accepted an offer from a buyer but hasn’t yet closed. Though most pending home sales go to closing, a deal can still fall through if the buyer can’t get funding, changes their mind about the sale or finds a problem with the home.
Per Diem
“Per diem,” meaning “per day” in Latin, refers to possible charges that are paid to the lender if a loan is not established by the initial closing date set for the home. These charges will be reflected on the Closing Disclosure when completing the sale.
Planned Unit Development (PUD)
The local government sometimes works with new housing developments to determine private areas, common areas, and building guidelines, known as “Planned Unit Developments (PUDs). These developments aren’t subject to standard zoning requirements, and the community will be operated by a homeowner’s association (HOA) once completed.
Pre-Foreclosure
The notice informs the owner that the lender will pursue legal action toward foreclosure if the mortgage debt isn’t paid. The owner can either reverse the default status by making up the late payments or sell the property before it goes into foreclosure. It begins when the lender files a notice of default on the property because the owner has not been making mortgage payments.
Pre-Foreclosure Release
For various reasons, the pre-foreclosure on a property is released. Could be due to paying of loan, loan modification, etc.
Pre-Probate
Pre-Probate is the new ability to link property owners with a death record. The current name on a property title matches with a name and address of a death record.
Principal
The principal balance of a mortgage loan is the amount of money owed to the lender, not including interest. Say you borrow $300,000. That’s the principal of the loan or what you borrowed to buy the home. Buyers pay the principal plus interest each month, although calculated daily for most loan type. Payments nearly always go toward interest first, then toward paying down the principal. After all, the interest is the reason the bank agrees to make the loan.
Preliminary Report
A preliminary report reveals any issues with a title that need to be dealt with by the seller in order to deliver a clear title. It gives details such as ownership history, liens and easements. The title company gathers this report by searching existing property records at the county recorder’s office. This report is required for a title insurance company to issue a title insurance policy. Most lenders require borrowers to purchase title insurance coverage to protect their interest in a property. It’s customary in many areas for a seller to pay for this policy, although it is a negotiable item.
Probate
Probate is the legal process of administering a person’s estate after their death. It involves transferring the title from the deceased to next of kin (only if the next of kin is not on the title).
Property Classification
Properties are classified as either residential, non-residential, farmland, linear or machinery and equipment. Some properties have more than one class.
Property Ownership by Nomination
A process under which a property owner can give someone the right over his immovable property and other assets, in the event of his death. This has become a common practice among owners to as a way the landlord can ensure that the property does not remain unclaimed or become subject to litigation after his death.
Property Type
Real estate listings have property types (or building types) fields to describe the kind of property for sale. For example – townhouse, duplex, single family, condo.
Real Estate Agent
An industry professional who takes and passes all required real estate classes, along with the real estate licensing exam in the state in which they intend to work. The agent can represent both buyers and sellers involved in a real estate transaction. Agents are also referred to as real estate associates.
Real Estate Auction
A real estate auction is an innovative and effective method of selling real estate. There are two forms of auctions that take place (1) non-distressed auction, which is a situation of an owner looking to sell and profit from equity in the home and (2) distressed auction, which is a situation of the lender, not holder, auctioning off the property to recover debt owed. The distressed auctions typically occur at a courthouse for public bidding and are the final step of the Pre-Foreclosure process. There are also Bank Owned Auctions where a bank that has fully foreclosed on a property decides to auction it off to the highest bidder.
A house may be auctioned if it has been foreclosed on; repossessed by the bank (sold in order to recover the money it originally lent); or the original homeowner owed the government enough money for it to reclaim and sell the house.
Real Estate Broker
Someone who continues his or her education past the real estate agent level and successfully passes a state real estate license exam. A broker can work as an independent agent or have other agents working for them.
Real Estate Comparables
A comp, which is an abbreviation for comparable sale, is a recently sold home in a property’s area that’s similar to the property being evaluated in location, size, condition and features.
Real Estate Investing (REI)
REI stands for Real estate investing. REI involves the purchase, ownership, management, rental and/or sale of real estate for profit. Improvement of realty property as part of a real estate investment strategy is generally considered to be a sub-specialty of real estate investing called real estate development.
Real Estate Owned (REO)
Homes that banks or lenders have foreclosed on are “real estate owned” (REO), or “bank-owned.” In these situations, the banks or lenders own and can sell the homes. If the sale doesn’t occur, the bank can put it up for auction, where the home can be purchased for less than the expected market price.
REALTOR®
An actively licensed real estate agent and REALTOR® are often used interchangeably, although not every real estate agent is a REALTOR®. A REALTOR® is a member of the National Association of REALTORS® (NAR). A REALTOR® promises to uphold the Code of Ethics of the association and to hold each other accountable for when serving the public, customers, clients and each other, with a high standard of practice and care.
Refinance
To replace the mortgage of a property with a new one, with better terms.
Reverse Mortgage
A homeowner, at least 62 years of age, may apply for a reverse mortgage which means a lender essentially pays the homeowner in advance from the home’s equity. These payments are typically tax-free but can leave the homeowner owing more over time. A reverse mortgage can be paid back by using income from selling the home.
Seller Carry Back
Owner-provided financing. May also be referred to as seller financing or owner will carry (OWC). The seller acts like the bank, holding the note and collecting payments.
Seller Concession
Sellers may offer concessions to incentivize buyers to purchase a home or make a deal more lucrative. Concessions are most readily seen as a contribution towards the buyer’s closing costs, up-to certain limitations and approvals by a buyer’s lender, which ultimately leaves more money in a buyer’s pocket when all is said and done.
Seller Disclosure
A disclosure by the seller of information about the property or which could affect a buyer’s decision to purchase the property, all of which to the best of the seller’s knowledge. A seller must also indicate items which are not specific to the property itself, but related to a person’s enjoyment of the property, such as pest problems, property line disputes, knowledge of major construction projects in the area, military base related noises or activities, association related assessments or legal issues, unusual odors caused by a nearby factory or even recent deaths on the property as permitted by law.
Settlement
The last stage of a home transaction is when the contract closes, known as the “settlement.” At this time, the ownership of the property is transferred before the buyers, sellers, and real estate agents are paid out
Short Sale
In a short sale, the property is being sold for less than the debt secured by the property. Short sales will require the approval of the seller’s lender(s) as the proceeds for the sale will be just “short” of the amount owed; most lenders’ processes of approving short sales are long and drawn out, requiring more time to close than a traditional sale.
Solar Lien
A lender places a lien on solar equipment for non-payment of the loan, which will remain in place until the loan is paid off. When selling a home with a solar system, either the buyer needs to qualify for and assume the loan and the lien along with it, or the seller needs to pay off the balance of the loan, which will trigger the release of the lien.
Step Investment Rate
A step-up is an interest rate that starts a lower interest rate and allows for the rate to increase at periodic intervals. The amount and extent of the rate increase, as well as the timing, depending on the terms of the mortgage.
Square Footage
The livable square footage between interior walls. Some architects measure the square footage from the exterior walls.
Tax Assessed Value
An assessed value is the dollar value assigned to a property to measure applicable taxes. Assessed valuation determines the value of a residence for tax purposes and takes comparable home sales and inspections into consideration.
Tax Delinquent
An account becomes delinquent when the due date for the tax or other liability has passed and the amount due remains unpaid.
Tax Lien
When a landowner or homeowner fails to pay the taxes on their property, the city or county in which the property is located has the authority to place a lien on the property. A lien is a legal claim against the property for the unpaid amount that’s owed.
Title
A title provides the legal right to ownership of real estate property. Title insurance may be necessary when buying a home and can assist with issues that weren’t discovered early on, such as claims or liens existing on the property. During closing, buyers receive a copy of the title, showing their name(s) as the new legal owners. At this time, the information becomes public record for the county.
Title Search
A title search examines public records for the history of the home, including sales, purchases, and tax and other types of liens. Generally, a title examiner will conduct a search using title plants and sometimes the country records, to see who is listed as the record owner of the property. Such information, along with any liens or encumbrances that are recorded against the property, will be listed in the Preliminary Report for the parties to review prior to the close of escrow.
Traditional Lender
Traditional lenders typically provide long-term loans with lower interest rates, and the lenders are usually financial institutions such as banks or credit unions. These loans are required to follow the rules and regulations put in place by Fannie Mae or Freddie Mac, and the federal government does not back this kind of loan. Additionally, traditional lenders have stricter requirements regarding the credit scores of borrowers.
Trust Sale
A trust sale means the home is being sold by a trustee of a living trust – and not by a private party. Often, this is because the original homeowner passed away or has placed their assets in a living trust. The trustee may not be as emotionally attached to the property as a traditional owner, which could translate to them accepting a less attractive offer as the trustee may prefer to offload the property.
Under Contract
When a seller accepts an offer on their home, the home goes “under contract,” meaning the sale is not guaranteed until all the contingencies are met.
Utility Lien
A legal claim against the property for unpaid utilities.
VA Loan
A mortgage ensured by the U.S. Department of Veterans Affairs and issued by private lenders to assist veterans, service members, and their spouses with buying a home. Typically, these loans consist of no down payment and a lower interest rate.
Vacant
A residential property identified by the United States Postal Service (USPS) as uninhabited. Meaning that the USPS has decided they will no longer be delivering mail to a given property’s physical address.
Variable-Rate
A variable-rate mortgage is a type of home loan in which the interest rate is not fixed. Instead, interest payments adjust to a level above a specific benchmark or reference rate. These rates are typically taken by homeowners that want a cheaper rate and are comfortable with changes in their monthly payments.
Walkthrough
A final walkthrough of the property is standard practice to ensure that any repairs or amends the seller agreed to have been made. The buyer agrees to the home’s condition at this time, but if any further objections are made, it could delay the closing of the home.
Warranty
A home warranty helps cover the cost of maintenance and repairs with appliances or systems in the home for the first year after purchase. This would help buyers if a home inspection didn’t reveal issues with the appliances or systems during escrow.
Zombie Property
A property that is currently in pre-foreclosure and is identified as being vacant by the US Postal Service.