Real Estate Terms to Help

Posted by  on Apr 16, 2009
 
There are a few Real Estate terms that you should understand, starting with the word in the word: estate. Estate is the ownership interest of a person in real property. Also refers to a deceased person's property. Exclusive agency listing is a written agreement giving the broker the right to market an owner's property for a certain period of time, but also allowing the owner to sell the property during that period without paying a commission.

Bond is an insurance agreement by which one party is insured against loss or default by a third party. In the construction business a performance bond ensures the interested party that the contractor will complete the project.

An additional term you can familiarize yourself with is breach. A breach is a violation of an obligation in a contract. Broker is a real estate professional who has acquired a higher level of training and experience than a sales agent. A minimum number of classes must be taken along with passing a state exam to acquire a broker’s license. Generally they are a legal representative or a proprietor of the office. Brokers usually charge a fee or receive a commission for their services.

Exclusive right to sell is written agreement between the agent and the owner whereby the owner promises to pay a fee or commission to the broker if his property is sold during the listing period, regardless of whether the broker is responsible for the sale.

Bridge Loan is a loan, usually short term that finances the portion of the purchase price not provided by the mortgage loan and the down payment. A bridge loan is commonly used when a purchaser has not sold his existing home before he closes on his purchase of a new home. The bridge loan is paid off when the old home is sold, out of the proceeds of that sale.

Abstract is a summary of the public records relating to the title to a particular piece of land. An attorney or title insurance company reviews an abstract of title to determine whether there are any title defects which must be cleared before a buyer can purchase clear, marketable, and insurable title.

Acceleration is the right of the mortgagee to demand the immediate repayment of the mortgage loan balance upon the default of the mortgagor, or by using the right vested in the Due-on-Sale-Clause.

Acknowledgment is a formal declaration before an authorized official by a person who has executed a document, that he did in fact execute the document. Fair Market Value is a price a property will bring given that both buyer and seller are fully aware of market conditions and comparable properties.

Buyers Market is a market condition which occurs in real estate where more homes are for sale than there are interested buyers. Cash Flow is the amount of cash derived over a certain period of time from an income-producing property.

The cash flow should be large enough to pay the expenses of the income producing property. Capitalization is an appraising term used in determining value by considering net operating income and a percentage of reasonable return on investment.

Certificate of Eligibility is the document given to qualified veterans which entitles them to VA guaranteed loans for homes, business, and mobile homes. Certificates of eligibility may be obtained by sending DD-214 to the local VA office with VA form 1880. Chain of Title is a history of conveyances and encumbrances affecting the title as far back as records are available.

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