Agent
A person acting on behalf of another.
Agreement of Sale
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.
Also known as contract of purchase, purchase agreement, sales agreement, or binder.
Annual Percentage Rate (APR)
The quoted interest rate on a loan plus all additional service and finance charges
associated with the loan, including 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 on property by a public tax assessor as the basis for taxes.
Bill of Sale
A document which transfers personal property.
Certificate of Title
A document signed by a title examiner or attorney, stating that the seller has a
good, marketable, and insurable title.
Closing Statement
A document which details the net amount of money a buyer and seller must pay to
complete the purchase of real estate. Also called settlement sheet or HUD-1 statement.
Commission
Payment to a real estate broker for services performed.
Convey
To transfer title of property from one person to another.
Deed
A document which transfers title to real property from one owner to another.
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 involved: the borrower,
the trustee, and the lender (or beneficiary).
Earnest Money
A deposit given to the seller, and usually held in escrow, by a potential buyer
to show they are serious about buying a house.
Equity
The difference between the current market value of a property and the debts against
it. In general, sales prices minus mortgage balance equals 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
Personal property which is permanently attached to real property, such as lighting,
medicine cabinets, and mantels. Fixtures are included when the property is sold.
Hazard Insurance
Protects property against damages caused by fire, windstorms, and other common hazards.
Listing Agreement
A contract between a homeowner (as principal) and a licensed real estate broker
(as agent) by which the broker is employed to market the property within a given
time and the homeowner agrees to pay a commission. Also called a listing contract.
Market Value
The highest price a ready, willing, and able buyer will pay, and the lowest price
a ready, willing, and able seller will accept. Market value is the basis for the
listing or asking price.
Market Price
The actual amount for which a piece of property is sold. Also called sales price
or purchase price.
Mortgage
A loan to purchase a house where a claim, or lien, against the house is given by
the buyer to the lender as security.
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
called a deed of trust note.
P.I.T.I.
Principal, interest, taxes, and insurance. Most residential mortgage payments include
P.I.T.I. Also called carrying charges.
Points
One percent of the amount of the mortgage. Also called discount points.
Prepayment Penalty
Penalty for paying a mortgage note or deed of trust note before it actually becomes
due.
Principal
Principal has three definitions in real estate:
- A capital sum lent on interest.
- One who appoints an agent to act on their behalf.
- Either party to a contract.
Property Management
Managing real estate including selecting tenants, leasing space, collecting rent,
and repairing property.
Prorate
To distribute proportionality. Property taxes, insurance, or condominium fees are
often prorated at settlement.
Sales Associate
A person with a real estate license and associated with a specific real estate broker.
Also called an agent.
Settlement
The conclusion of a real estate transaction where the deed is delivered, notes are
signed, and funds are disbursed. Also called closing.
Survey
A map or plat made by a licensed surveyor showing land with its elevations, improvements,
boundaries, and its relationship to surrounding tracts of land. A survey is often
required by the lender to confirm a building is actually sited on the land according
to its legal description.
Title
A document that indicates rights of ownership and possession of a particular property.
Title Abstract
A summary of the public records relating to the title of 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 homeowners against loss of their interest in property due to
legal defects in a 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.