REAL ESTATE DICTIONARY

Agency - Agency means a relationship in which a real estate broker or a licensee represents a client by the client’s consent, whether expressed or implied, in an immovable property transaction. An agency relationship is formed when a real estate licensee works for you in your best interest and represents you. Agency relationships can be formed with buyers/sellers and lessors/lessees.

Agent - One who acts or has the power to act for another.

APR - Annual Percentage Rate is the relationship of the total finance charges associated with a loan. This must be disclosed to borrowers by lenders under the Truth-in-Lending Act.

Appraisal – An estimate of the quantity, quality, or value of something. The process through which conclusions of property value are obtained; also refers to the report that sets forth the process of estimation and conclusion value.

Appraiser – An independent person trained to provide an unbiased estimate of value.

Appreciation – An increase in the worth or value of a property due to economic or related causes, which may prove to be either temporary or permanent.

Closing Costs - Fees and expenses, over and above the price of the property that buyers and sellers normally incur to complete a real estate transaction. Costs incurred include loan origination fees, appraisal fees, title searches, title insurance, surveys, taxes, deed-recording fees and credit report charges. Also known as "settlement costs".

Commission – Payment to a broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.

Contingency – A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding.

Contract – A legally enforceable promise or set of promises that must be performed and for which, if a breach of the promise occurs, the law provides a remedy. A contract may be either unilateral, by which only one party is bound to act, or bilateral, by which all parties to the instrument are legally bound as prescribed.

Conveyance – A term used to refer to any document that transfers title to real property. The term is also used in describing the act of transferring.

Deed – A written instrument that, when executed and delivered, conveys title to or an interest in real estate.

Equity – The interest or value that an owner has in property over and above any indebtedness.

Ethics – The system of moral principles and rules that becomes standards for professional conduct.

Fair Housing Act – The federal law that prohibits discrimination in housing based on race, color, religion, sex, handicap, familial status, and national origin.

FHA Loan – A loan insured by the Federal Housing Administration and made by an approved lender in accordance with the FHA’s regulations.

Home Inspection – An inspection of a home to discover damage or defects.

Homeowner’s Insurance Policy – A standardized package insurance policy that covers a residential real estate owner against financial loss from fire, theft, public liability, and other common risks.

Interest – A charge by a lender for the use of money.

Legal Description – A description of a specific parcel of real estate complete enough for an independent surveyor to locate and identify it.

Loan – A loan is a type of debt.

Market Value – The most probable price property would bring in open and competitive market under normal conditions.

Mortgage – A conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien.

Plat – A detailed map that illustrates the geographic boundaries of individual lots.

Private Mortgage Insurance – Insurance provided by private carrier that protects a lender against a loss in the event of a foreclosure and deficiency.

Protected Class – Any group of people designated as such by the Department of Housing and Urban Development (HUD) in consideration of federal and state civil rights legislation. Currently includes ethnic minorities, women, religious groups, the handicapped, and others.

Real Estate Settlement Procedures Act (RESPA) – The federal law that requires certain disclosures to consumers about mortgage loan settlements. The law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees.

Real Property – The interests, benefits, and rights inherent in real estate ownership.

Regulation Z – Implements the Truth-in-Lending Act requiring credit institutions to inform borrowers of the true cost of obtaining credit.

Sales Contract – A contract containing the complete terms of the agreement between buyer and seller for the sale of a particular parcel or parcels of real estate.

Title Search – The examination of public records relating to real estate to determine the current state of ownership.

VA Loan – A mortgage loan on approved property made to qualify veteran by an authorized lender guaranteed by the Department of Veterans Affairs in order to limit the lender’s possible loss.