108 terms

Final Real Estate Terms

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Cost Approach
loss in value due to deterioration and obsolescense (Depreciation)
Market Approach
a method of valuing property based on recent sales of similar properties
Income Approach
a method of valuing a property based on the monetary returns it can be expected to produce (rental property)
FIRREA
Financial Institution's Reform, Recovery, and Enforcement Act (appraisals)
Functional Obsolescence
results from outmoded equipment (old-fashioned plumbing fixtures in the bathrooms and kitchen), faculty or outdated design (a single bathroom in a three- or four-bedroom house or an illogical room layout), inadequate structural facilities (inadequate wiring to handle today's household appliance loads), and over-adequate structural facilities (high ceilings in a home).
Economic Obsolescence
the loss of value due to external forces or events
Appraisal License
license needed to acquire to appraise for a fee (put in place by FIRREA)
Principal Broker
the broker in charge of a real estate office
Sales Associate (independent contractor)
a sales person or broker employed by a broker (normally independent contractors)
REALTOR
a registered trademark owned by the National Association of REALTORS for use by its members
Commission Sales
the amount of compensation the owner agrees to pay the broker
Franchised Offices
Places like Century 21, ReMax, etc.
Listing Agreement
the right to find a buyer and offer the listing to the public
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
Multiple Listing Service
organization of member brokers agreeing to share listing information and share commissions
Universal Agency
the principal gives the agent legal power to transact matters of all types on the principal's behalf
General Agency
the agent is given the power to bind the principal in a particular trade or business
Special Agency
empowers the agent to perform a particular act or transaction
Principal
a person who authorizes another to act
Fiduciary Relationship
representing the principal to the best of your ability by acting in their best interest
Relying on Apparent Authority
a concept used in agency law that refers to the situation that arises when a principal, such as a corporation, indicates to a third party that an officer or agent is authorized to act on its behalf and the third party relies in good faith upon such authority. Commingling the mixing of clients' or customers' funds with an agent's personal funds
Lead Based Paints
a two page notice must be given to home buyer built prior to the 1978 ban on such paint
Disclosure
The act of releasing all relevant information pertaining to a company that may influence an investment decision. In order to be listed on major U.S. stock exchanges, companies must follow all of the Securities and Exchange Commission's disclosure requirements and regulations.
Red Flags
something that would warn a reasonably observant agent that there may be an underlying problem
"As Is"
means the seller is not going to make repairs on certain aspects of the building or house
Puffing
statements a reasonable person would recognize as nonfactual or extravagant
Sellers Disclosure Statement
required if you go through a realtor to answer questions about problems with the house.
Collusion
a secret agreement between two or more persons for a deceitful or fraudulent purpose; conspiracy
Antitrust
have had a major impact on the real estate brokerage industry. Has the purpose of promoting competition in an open marketplace
Price Fixing
two or more people conspiring to charge a fixed fee, having an anticompetitive effect
E&O Insurance
Errors and Omission--the broker pays an annual fee to an insurance company that, in turn will defend the broker and pay legal costs and judgments
Community Reinvestment Act (CRA)
federal statute encouraging federally regulated lenders to increase their participation in low-income areas
Equal Credit Opportunity Act (ECOA)
Federal Law that provides for equal credit to borrowers
Protected Class
a class of people that by law are protected from discrimination
Steering
Practice of directing home seekers to particular neighborhoods based on race, color, religion, sex, national origin, or handicapped or adults-only status
Block Busting
the illegal practice of inducing panic selling in a neighborhood for financial gain
Handicapped
having a physical or mental impairment that substantially limits one or more life activities, or having a record of such impairment (newest protected class)
Testers
an individual or organization that responds to advertising and visits real estate offices to test for compliance with fair housing laws
CC&Rs
Covenants, conditions, and restrictions by which a property owner agrees to abide
Condominium
individual ownership of a space of air plus undivided ownership of the common elements
Cooperative
land and building owned or leased by a corporation that, in turn, leases space to its shareholders
Common Elements
those parts of a condominium that are owned by all the unit owners
Owners Associations
a legal framework so that the unit owners of a condominium can govern themselves and can pay due to maintain common areas
Pitfalls of Condos
if you are the only owner or one of the only owners of a condo then you will have a large share to pay to maintain common areas
Planned Unit Development (PUD)
individually owned lots and houses with community ownership of common areas
Timeshare
the exclusive use of a property for a specified number of days each year
Homeowners Insurance
a combined property and liability policy designed for residential use; protects you from liability from contents and other things
Fire and Casualty Insurance
Just protects the structure itself not any of the contents or anything else from liability
Endorsements
a policy modification; also called a rider or an attachment; like an add on to protect you on your insurance policy
Personal Liability
the financial responsibility one has toward others
HO-2
an insurance policy that covers a large number of named perils
HO-8
modified coverage form; older homes with replacement values that may far exceed their market values; basic coverage on dwelling and personal property; not available in many places
Flood Insurance
Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.
Home Warranty Insurance
normally sold by the realtor that sells the house and is intended to cover appliances, A/C, etc.
Land Use Control
a broad term that describes any legal
Zoning
public regulations that control the specific use of land
Building Codes
locals and state laws that set minimum construction standards
Planning Commision
An advisory group to a community.
R-1
residential homes owners zone
R-3
apartments/multi-unit housing zone
C-1
commercial zone
I-1
industrial zone
Variance
allows an individual land-owner to vary from zoning requirements
Deed Restrictions (subdivisions)
the right to sell or lease it on whatever legally acceptable conditions the owner wishes including the right to dictate to the buyer or lessee how he shall or shall not use it
EPA
addresses due diligence in real estate transactions
Economic Base
The ability of a region to export goods and services to other regions and receive money in return
Base Industry
an industry that produces goods or services for export from the region
Service Industry
an industry that produces goods and services to sell to local residents
SPEC Houses
houses built on the intention of being sold
Housing Demand
Baby boom increased this..
Cash Flow
the number of dollars remaining each year after collecting rents and paying operating expenses and mortgage payments
Tax Shelter
the income tax savings that an investment can produce for its owner
Real Estate Tax Credits
Unlike deductions and exemptions, which reduce the amount of your income that is taxable, tax credits reduce the actual amount of tax owed. Governments may grant a tax credit to promote a specific behavior, such as replacing older appliances with more efficient ones, or to help disadvantaged taxpayers by reducing the total cost of housing.
Capital Gains
profits from the sale of an asset held for 12 months
Leverage
the impact that borrowed funds have on investment return
Limited Partnerships
composed of general partners who mainly organize and operate the partnership and limited partners who provide the capital
Limited Family Partnerships
A type of partnership designed to centralize family business or investment accounts. FLPs pool together a family's assets into one single family-owned business partnership that family members own shares of. FLPs are frequently used as an estate tax minimization strategy, as shares in the FLP can be transferred between generations, at lower taxation rates than would be applied to the partnership's holdings.
Real Estate Investment Trusts (REITs)
A security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages. They receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate.
Prospectus
a disclosure statement that describes an investment opportunity
Blue-Sky Laws
State regulations designed to protect investors against securities fraud by requiring sellers of new issues to register their offerings and provide financial details. This allows investors to base their judgments on trustworthy data.
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
Warranty Deed
grantor warrants title only against defects occurring during the grantor's ownership
Deed of Trust
a document that conveys legal title to a neutral third party (a trustee) as security for a debt
Mortgage
a document that makes property security the repayment of a debt
Section
each 36-square-mile township is divided into 36 one-square-mile units called this. The contain 640 acres. Each acre ins 43,560 sq. ft. Therefore a quarter-section contains 160 acres.
Township
6 mile x 6 mile imaginary square
Range
six mile wide columns that are numbered consecutively east and west of the principal meridian
Acre
43, 560 sq. ft.
Metes & Bounds
a detailed method of land description that identifies a parcel by specifying its shape and boundaries
Lot & Block
recorded subdivision
Appurtenance
a right or privilege or improvement that belongs to and passes with land but is not necessarily a part of the land
Quarter Section
160 acres
Fixture
an object that has been attached to land so as to become real estate
Fee Simple
the largest, most complete bundle of rights on can hold in land; land ownership
Tenancy by the Entirety
a form of joint ownership reserved for married persons; right of surviorship exists and neither spouse has a disposable interest during the lifetime of the other
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
Joint Tenancy
a form of property co-ownership that features the right of survivorship
Easement
the right or privilege one party has to use land belonging to another for a special purpose not inconsistent with the owner's use of the land
Lien
a hold or claim that one person has on the property of another to secure payment of a debt or other obligation
Dower
Recognizes the wife's efforts in marriage and grants her legal ownership to one-third of the family's real property for the rest of her life
Leasehold
estates are tried under personal property laws in court
Adverse Possession
acquisition of land through prolonged and unauthorized occupation
Land Patent
a government document used for conveying public lands in fee to miners and settlers
Abstract
a summary of all recorded documents affecting title to a given parcel of land
Usury
charging an interest rate that is in excess of the legal rate
Fannie Mae
a real estate industry nickname for the Federal National Mortgage Association
Freddie Mac
a real estate industry nickname for the Federal Home Loan Mortgage Corporation
Curtsey
gives the husband benefits in his deceased wife's property as long as he lives