Real Estate Glossary
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ABSORPTION RATE
The ratio of the number of properties in an area that have been sold against the number available in a particular market. Can be broken down to different types and sizes of properties. These rates are used to show the volatility of a market.'
ABSTRACTION METHOD
A Method of estimating the value of property using similar properties available in the same market to determine the value of a parcel of land. It is a structured analysis to systematically examine demand factors needed to support any increase in supply of real estate space in any given area.
ACCELERATION CLAUSE:
This is a clause in your mortgage or loan that allows the lender the legal right to demand the full payment of your loan if you default. This payment can be due immediately upon your failure to pay or if the borrower transfers the title to the property to another individual without informing the lender, this also applies to non payment of property taxes or homeowners insurance. Most mortgages contain the acceleration clause as a protection for the lender.
ACCESSORY BUILDING
A structure on a property that serves a special purpose or complements the home or main building like a garage or shed is an accessory building. In most zoning districts an accessory building can be erected unattached from the house or main building.
ACCRETION
The natural growth of a piece of land resulting from forces of nature or the gradual addition to the shore or bank of a waterway by deposits of sand or silt. This natural process of land addition on a stream, lake or seaside is a special gift from mother nature to the land owner.ACRE
A tract of land containing 43,560 square feet, or 0.0016 square miles of land. An acre measures 208.71 feet on each side. In the metric system, one acre equals 0.4047 hectare or 40.47 area. When purchasing real estate, whether it is land void of a structure, or land with a structure, it is important for every buyer to be aware of the land size. The survey will notify the buyer of the land size.
ACTUAL AGE
In appraisal terms the chronological age of an improvement, as contrasted with its Effective Age. Example: Although the actual age of the building was only 5 years, excessively heavy use made it appear much older. When purchasing insurance on your property, you will need to know the actual age.
ADJUSTMENT DATE
An adjustment date is the date on an adjustable rate mortgage that the interest rate changes. This date is frequently predetermined and, the amount of the adjustment rate is also predetermined when the mortgage is written
AD VAL OREM TAX
Refer to the taxes assessed by the government agency, the office of the assessor, based on the value of the land and improvements. The office of the assessor will list and value all taxable property, real and tax purposes.
ADDENDUM
An addendum to a real estate contract or purchase agreement is a document that becomes a part of the original contract to explain or add information or requirements that are not clear in the original contract. Appraisers might use an addendum to explain items for which there was inadequate space on the original contract.
ADJUSTABLE RATE MORTGAGE
A type of mortgage program in which the interest rate and payments are adjusted as frequently as every month. The purpose of the program is to allow mortgage interest rates to fluctuate with market conditions. The moving of these rates higher and lower are usually pre-selected.
ADJUSTED BASIS
The base price of an asset or security that reflects any deductions taken on or improvements to the property or security, used to compute the gain or loss when sold.
ADJUSTED SALES PRICE
The adjusted sales price is an adjustment of the selling price of a property, sometimes used to match the characteristics of another property. Since no two parcels of land are exactly the same, an appraiser will analyze a other sales to find patterns, and assign dollar amounts to the main differences and then adjust the selling price. An example is two homes, next door to each other and looking exactly the same except one might have a garage attached. A momentary amount will be assigned to the garage. This amount will add to the selling price. The difference in the selling price would be the adjusted sales price
AESTHETIC VALUE
Increment of market or user value attributed to the appearance of a property. Example: The lake and mountain setting of the vacation cabin contributed a great amount of aesthetic value to the property. A tennis court, swimming pool or beautiful landscaping can also increase the value of a property and allow the owner to obtain more of a premium price.
AFFIRMATION
A declaration that a certain set of facts are truthful, made under the penalties of perjury by a person who conscientiously declines taking an oath.
AFFORDABILITY ANALYSIS
A calculation used to determine an individual's likelihood of being able to meet the obligations of a mortgage for a particular property. Takes into account the down payment, closing costs and on-going mortgage payments. This information is important for both the buyer and the seller.
AGENT
A person who has been appointed to act on behalf of another for a particular transaction, also know as a foot soldier, because he or she finds properties for a particular buyer and then takes the buyer to view the property and handles all aspects to the purchasing of the property.
AMENITY
Any feature of a property that increases its value or desirability. These might include natural amenities such as location or proximity to mountains, or man-made amenities like swimming pools, parks or other recreation. Might also include proximity to schools, libraries and shopping.
AMERICAN SOCIETY OF APPRAISERS
An appraisal organization consisting of persons involved in the appraisal of both real and personal property. Appraisers are not restricted to just real estate, but also appraisers are used to appraise a business for sale, or for estate taxes or an inheritance.
AMORTIZATION
To reduce a debt by regular payments of both principal and interest, as opposed to interest only payment. The operation of paying off indebtedness, such as a mortgage, by installments.
AMORTIZATION SCHEDULE
A table which shows the payment amount applied toward the principal and the interest amount over the life of the loan. The gradual decrease of the loan balance should also be shown over the life of the loan. The gradual decrease of the loan balance should also be shown until it reaches zero
AMORTIZATION TERM
The length of time over which an amortized loan is repaid. Mortgages are commonly amortized over 15 or 30 years
AMPERAGE
A measurement of the amount of electric current, The rate of flow of electricity through wire - measured in terms of amperes. A measure of the volume of electric flow (as opposed to the "pressure" of flow, which is measured in volts). The product of volts times amperes is equal to power which is measured in watts. One ampere flowing at 100 volts equals 100 watts. Similarly, 10 amperes flowing at 10 volts equals 100 watts. Amperes are commonly referred to simply as "amps."
ANNUAL PERCENTAGE RATE
The interest rate reflecting the cost of a mortgage as a yearly rate. This rate might be higher than the stated note rate or advertised rate on the mortgage, because it takes into account point and other credit cost. the APR allows home buyers to compare different types of mortgages based on the annual cost for each loan.
ANNUITY
An Annuity is a form of an investment that is typically provided by an insurance company. An annuity guarantees payments of pre-set amounts and pre-set times,, money paid at regular intervals, often annuity.
APPLICATION
A form used to apply for a mortgage loan that details a potential borrower's income, debt, savings and other information used to determine credit worthiness or a verbal request for assistance or employment or admissions to a school.
APPRAISAL
A defensible and carefully documented opinion of value. Most commonly derived using recent sales of comparable properties by a licensed, professional appraiser. Not only used for real estate, but also used to appraise estates for tax purposes or inheritance.
APPRAISAL FOUNDATION
A not-for-profit educational organization established by the appraisal profession in the United States in 1987. It is dedicated to the advancement of professional valuation and responsible for establishing, improving, and promoting the Uniform Standards of Professional Appraisal Practice (USPAP).
APPRAISAL INSTITUTE
A world-wide organization dedicated to real estate appraisal education, publication and advocacy.
APPRAISAL PRINCIPLES
The basic building blocks of the property valuation process, including property inspection, market analysis and basic economics.
APPRAISAL REPORT
The end result of the appraisal process usually consists of one major standardized form such as, the Uniform Residential Appraisal Report form 1004, as well as all supporting documentation and additional detail information. The purpose of the report is to convey the opinion of value of the subject property and support that opinion with corroborating information.
APPRAISAL STANDARDS BOARD (ASB)
An independent board of the APPRAISAL FOUNDATION, which writes, amends, and interprets USPAP. The ASB is composed of up to seven appraisers appointed by the Foundation's Board of Trustees. The ASB holds public meetings throughout the year to interpret and amend USPAP.
APPRAISED VALUE
An opinion of the fair market value of a property as developed by a licensed, certified appraiser following accepted appraisal principals.
APPRAISER
An educated, certified professional with extensive knowledge of real estate markets, values and practices. The appraiser is often the only independent voice in any real estate transaction with no vested interest in the ultimate value or sales price of the property.
APPRECIATION
The natural rise in property value due to market forces, or another way to describe appreciation is the increase in value of a property over time due to inflation.
ARMS LENGTH TRANSACTION
Any transaction in which the two parties are unconnected and have no overt common interests. Such a transaction most often reflects the true market value of a property.
ASSESSED VALUE
The value of a property according to jurisdictional tax assessment.
ASSESSMENT
The function of assigning a value to a property for the purpose of levying taxes.
ASSESSMENT RATIO
The comparative relationship of a property's assessed value to its market value.
ASSESSOR
The jurisdictional official who performs the assessment and assigns the value of a property.
ASSET
Any item of value which a person owns.
ASSIGNMENT
Transfer of ownership of a mortgage usually when the loan is sold to another company.
ASSUMABLE MORTGAGE
A mortgage that can be taken over by the buyer when a home is sold.
ASSUMPTION
When a buyer takes over, or "assumes" the sellers mortgage.
ATTACHED HOUSING
Any number of houses or other dwellings which are physically attached to one another, but are occupied by a number of different people. The individual houses may or may not be owned by separate people as well.
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BACKFILL
Soil that is used to create a retaining wall on all or part of a property, or the slope of ground around a house, material placed adjacent to the retaining wall.
BALL COCK VALVE
The valve inside a toilet tank that controls the filling of the tank. Restricts water flow.
BALLOON MORTGAGE
A mortgage loan in which the monthly payments are not large enough to repay the loan by the end of the term. So at the end of the term, the remaining balance comes due in a single large payment.
BALLOON PAYMENT
The final large payment at the end of a balloon mortgage term.
BANKRUPTCY
When a person or business is unable to pay their debts and seeks protection of the state against creditors. Bankruptcies remain on credit records for up to ten years and can prevent a person from being able to get a loan.
BEAM
A structural supporting member.
BILL OF SALE
A physical receipt indicating the sale of property, or a document that attests a transfer of the ownership of personal property.
BIWEEKLY MORTGAGE
A mortgage where you make "half payments" every two weeks, rather than one payment per month. This results in making the equivalent of 13 monthly payments per year, rather than 12, significantly reducing the time it takes to pay off a thirty year mortgage.
BLIGHTED AREA
Any region of a city or town that has fallen into disrepair or otherwise has become undesirable.
BONA FIDE
Any genuine offer, made without intent to defraud or deceive.
BRIDGE FINANCING
An interim loan made to facilitate the purchase of a new home before the buyer's current residence sells and its equity is available to fund the new purchase.
BRIDGING
Structural members used between beams to strengthen the structure.
BROKER
An individual who facilitates the purchase of property by bringing together a buyer and a seller. Most agents are completely dependent upon commissions from sellers for their income, so it pays to find out which side the agent represents (buyer, seller or both).
BTU
British Thermal Unit. A unit of measurement used to describe heating or cooling capacity, that is used in the United States and sometimes in the U.K.
BUFFER ZONE
A segment of land between two disparate municipal zones which acts as a shield to keep one zone from encroaching upon the other. Often used to separate residential districts from commercial areas.
BUILDING CODE
Regulations that ensure the safety and material compliance of new construction within a municipality. Building codes are localized to ensure they are adequate to meet the risk of common hazards.
BUILDING LINE OR SETBACK
The statutory distance between buildings and the property line, imposed by municipalities, home associations, or other agreements.
BUILT-INS
Specific items of personal property which are installed in a real estate improvement such that they become part of the building. Built-in microwave ovens and dishwashers are common examples.
BUNGALOW
A one-story, home-style dating from the early twentieth century. Often characterized by a low-pitched roof.
BUY DOWN
Extra money paid in a lump sum to reduce the interest rate of a fixed rate mortgage for a period of time. The extra money may be paid by the borrower, in order to have a lower payment at the beginning of the mortgage. Or paid by the seller, or lender, as incentive to buy the property or take on the mortgage.
BX CABLE
Electrical cable shrouded in a galvanized steel outer cover.
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CALL OPTION
A clause in a mortgage which allows the lender to demand payment of the outstanding balance at a specific time.
CAP
Associated with Adjustable Rate Mortgages. A limit on how high monthly payments or how much interest rates may change within a certain time period or the life of the mortgage.
CAPE COD COLONIAL
A single-story house style made popular in New England. Often characterized by a steep roof with gables.
CAPITAL
Accumulated goods and money which is most often used to generate additional income. The assets of a business that can be applied to its operation. The amount of current assets that exceeds current liabilities.
CAPITAL EXPENDITURE
An outlay of funds designed to improve the income-producing capabilities of an asset or to extend its economic life. Money spent to acquire or upgrade physical assets such as buildings and machinery.
CASH-OUT REFINANCE
Refinancing a mortgage at a higher amount than the current balance in order to transform a portion of the equity into cash.
CAULKING
A pliable material used to seal cracks or openings such as around windows.
CAVEAT EMPTOR
Literally translated: ''Let the buyer beware.'' A common business tenet whereby the buyer is responsible for verifying any and all claims by the seller of property.
CERTIFICATE OF DEPOSIT
A document showing that the bearer has a certain amount of money, at a particular amount interest, on deposit with a financial institution.
CERTIFICATE OF DEPOSIT INDEX
An index based on the interest rate of six month CD's. Used to set interest rates on some Adjustable Rate Mortgages.
CERTIFICATE OF ELIGIBILITY
A document issued by the Veterans Administration that certifies eligibility for a VA loan.
CERTIFICATE OF OCCUPANCY
Issued by an appropriate jurisdic | 
