Jeff’s Carlsbad Blog for First Time Home Buyers

Real estate terms

Posted in Glossary of terms by Jeff Dowler on October 1, 2006

Here are some of the many terms you might come across during the purchase process. You should ALWAYS ask about something that you do not understand so that you can make an informed decision. This is, of course, true whether you are buying for the first time or a seasoned buyer.

Agent – A person acting on behalf of another, called the principal.

Appraisal – An expert judgment or estimate of the quality or value of real estate as of a given date.

Assessed Value – The valuation placed upon property by a public tax assessor as the basis for taxes. Bill of Sale – An instrument which transfers title to personal property (chattel); a “Deed” transfers” real property.

CC& R’s: Covenants, conditions and restrictions – A document that controls the use, requirements and restrictions of a property.

Certificate of Reasonable Value (CRV) – A document that establishes the maximum value and loan amount for a VA guaranteed mortgage.

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 (Settlement) – The computation of financial adjustments between buyer and seller as of the day of closing a sale to determine the net amount of money which buyer must pay to seller to complete purchase of the real estate and seller’s net proceeds. Also, “settlement sheets,” “HUD-1.”

Commission – Payment to a real estate broker for services performed.

Condominium – A form of real estate ownership where the owner receives title to a particular unit and has a proportionate interest in certain common areas. The unit itself is generally a separately owned space whose interior surfaces (walls, floors and ceilings) serve as its boundaries.

Contingency – A condition that must be satisfied before a contract is binding. For instance, a sales agreement may be contingent upon the buyer obtaining financing.

Deed – A formal written instrument by which title to real property is transferred from one owner to another. Also known as “conveyance”.

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 to the instrument; the borrower, the trustee, and the lender (or beneficiary).

Earnest Money – The portion of the down payment delivered to the seller or escrow agent by the purchaser with a written offer as evidence of good faith.

Equity – The interest or value which owner has in real estate over and above the debts against it. (Sales Price minus Mortgage Balance = Equity).

Escrow- A procedure in which a third party acts as a stakeholder for both the buyer and the seller, carrying out both parties” instructions and assumes responsibility for handling all of the paperwork and distribution of funds. 

Fee Simple – An estate in which the owner has unrestricted power to dispose of the property as he wishes, including leaving by will or inheritance. It is the greatest interest a person can have in real estate.

Fixture – What was formerly personal property, which is now permanently attached to real property and goes with the property when it is sold.

Hazard Insurance – Protects against damages caused to property by fire, windstorms, and other common hazards.

Home Inspection Report – A qualified inspector’s report on a property’s overall condition. The report usually includes an evaluation of both the structure and mechanical systems.

Home Warranty Plan – Protection against failure of mechanical systems within the property. Usually includes plumbing, electrical, heating systems and installed appliances.

Lien – A legal hold or claim on property as security for a debt or charge.

Loan Commitment – A written promise to make a loan for a specified amount on specified terms.

Loan-To-Value Ratio – The relationship between the amount of the mortgage and the appraised value of the property, expressed as a percentage of the appraised value.

Market Value – The highest price which a buyer, ready, willing and able but not compelled to buy, would pay, and the lowest price a seller, ready, willing and able but, not compelled to sell, would accept. Basis for “listing price”, or “asking price”.

Mortgage – A lien or claim against real property given by the buyer to the lender as security for money borrowed.

Origination Fee – A fee or charge for work involved in evaluating, preparing, and submitting a proposed mortgage loan. The fee is limited to 1 percent of FHA and VA loans.

PITI – Principal, interest, taxes and insurance.

There are many more terms to know, some of which are a bit obscure whereas others are critical to the transaction. Click here to request a free copy via email.


2 Responses to 'Real estate terms'

Subscribe to comments with RSS or TrackBack to 'Real estate terms'.

  1. […] tuned for more discussion on this critical topic. See my earlier post on real estate terms for more information on this and other terminology you will […]

  2. […] tuned for more discussion on this critical topic. See my earlier post on real estate terms for more information on this and other terminology you will hear. This entry was posted in Due […]

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: