Real Estate Glossary By Nikhil Pattani | A to E | Realty Discovered

There is a lot of real estate terminology used during the home buying and selling process. With the motive to help you understand those terms, we are enlightening you all about the most commonly used real estate terms and their definitions..... 

A for-

Abatement Notice

It is a legal notice served on the owner or occupier/tenant of a property to inform them of the violation of local laws pertaining to maintenance of the property. The notice also indicates actions that are needed to address the violation and notifies them of the consequences in case they fail to take corrective measures.

Acre

Unit of measurement of land. One acre is equal  to 4048.32 square meters and 43560 square feet.

Addendum

An addition or change in a legal contract.

Agent

A person authorized  by the state to conduct real estate transactions.

Alienation Clause

A provision that requires the borrower to pay the balance of the loan amount in a single large instalment after the property is sold or transferred.

Alley

A lane behind a row of buildings or between two rows of buildings.

Allottee

The person who is allotted a property, either by a government authority or by a builder.

Appraisal

Official valuation of a property carried out  by a certified Real Estate appraiser or valuer.

Appreciation

An increase in the value of a property due to changes in market conditions or any other causes over a period of time.

Assessed Valuation

The value that a taxing authority places on real property for the purpose of calculating  the amount of tax on that property.

B for-

Balloon Payment

A loan payment (EMI) that is at least the double the amount of  previous payments (EMIs), done to clear a debt. 

Basic Sales Price ( BSP)

Price of an apartment excluding the charges for amenities like car parking, clubhouse etc.

Bayana

It is a hindi term used to denote the token money given by a buyer for a particular property after negotiations are done. The payment indicates the buyer's interest in the property and is usually offered to seal the deal.

Beneficiary

A person/persons or an institution designated to receive an income from a trust, estate or a deed of trust.

Building Code

Based on the notified safety standards within a specific area, a building code is a regulation that defines the design, construction and materials used in a building.

Built-Up Area

It includes the carpet area plus thickness of the outer walls and the area of balcony/balconies.

C for-

Call option

A call option is a contract giving one party the right to buy and another party the right to sell a piece of property at a future time and specific price.

Cash-out refinance

A cash-out refinance, also known as a cash-out refi, is when a homeowner refinances their mortgage for more than it’s worth and withdraws the difference in cash. To be eligible for this kind financing, a borrower usually needs at least 20% in equity.

Certificate of eligibility

During the VA loan process, lenders require veterans to show proof they’ve met the minimum service requirement to qualify for a VA loan.

Certificate of reasonable value

A certificate of reasonable value (CRV) is issued by the Department of Veterans Affairs and is required for veterans to receive a VA loan. It establishes the maximum value of the property and therefore the maximum size of the loan.

Closing

Closing is the final stage of the real estate transaction. The date is agreed upon when both the buyer and seller go under contract on the home. On the closing date, the property is legally transferred from seller to buyer.

Closing costs

Closing costs are usually comprised of between 2-5% of the total purchase price of the home. According to a recent survey by Zillow, the average homebuyer pays approximately $3,700 in closing costs. These fees are paid on or by the closing date.

Co-borrower

If a buyer is having trouble getting approved for a loan, they can elicit the help of a co-borrower. This person is usually a family member or friend who's added to the mortgage and guarantees the loan. They're listed on the title, have ownership interest, sign loan documents, and are obligated to pay monthly mortgage payments if the buyer is unable to.

Commission

Real estate commission is generally 5-6% of the home’s sale price. That commission is usually split between the buyer’s and seller’s agents and is paid by the seller at the time of closing.

Common area assessments

If you pay a monthly fee towards a Homeowners Association (HOA), part of that fee likely goes toward a common area assessment to maintain an area open to the community.

Community property

Community property refers to property acquired by a married couple and owned equally by both spouses.

Comparable sales

Comparable sales are used by an appraiser to establish how much a home is worth based on what other similar homes in the area have sold for recently. Only homes that have legally closed count as a comp -- and most lenders and insurance providers require appraisers to use at least three closed sales.

Construction loan

A construction loan -- or self-build loan -- is a short-term loan used to finance the construction of a home or real estate project. This type of loan covers project costs before long-term funding can be financed.

Contingency

If a property is contingent, or the contract contains a contingency, certain events must transpire or the contract can be considered null. A contingency might be that the home must past an appraisal or receive a clean inspection.

The sale of a home could also be contingent on the buyer selling their home by a specified date. If either the buyer or seller fail to meet the expectations of the contingency, either party can exit the contract.

Conventional mortgage

A conventional mortgage is a loan not guaranteed or insured by the federal government. These borrowers usually make larger down payments (at least 20%), don’t require mortgage insurance, and are at a lower risk of defaulting on their home loan payment.

Convertible ARM

A convertible adjustable rate mortgage (ARM) allows buyers to take advantage of low interest rates by receiving a loan at a “teaser” loan interest rate.

Cost of funds index (COFI)

A cost of funds index is an average of the regional interest expenses acquired by financial institutions. It’s used to calculate variable rate loans.

D for-

Deed

A housing deed is the legal document transferring a title from the seller to the buyer. It must be a written document and is sometimes referred to as the vehicle of the property interest transfer.

Deed-in-lieu of foreclosure

A deed-in-lieu of foreclosure is a document transferring the title of a property from a homeowner to the bank that holds the mortgage. A homeowner might submit a deed-in-lieu of foreclosure if the bank has denied them a loan modification or short sale. However, the bank can deny the request for a deed-in-lieu (and often do).

Default

If a homeowner defaults on their loan, it means they have not paid the sum they agreed to. Typically, a mortgage default means the homeowner hasn’t made a home loan payment in 90 days or more.

Delinquency

A mortgage is considered delinquent when a scheduled payment is not made. If a payment is more than 30 days late, a lender might begin collection or foreclosure proceedings.

Discount points

Discount points are also known as mortgage points. They’re fees homebuyers pay directly to the lender at the time of closing in exchange for reduced interest rates which can lower monthly mortgage payments.

Down payment

The down payment is the amount of cash a homebuyer pays at the time of closing. Typical home loans require a 20% down payment. Some conforming loans will accept a 5% down payment, and FHA loans will accept a 3.5% down payment.

Due-on-sale clause

A due-on-sale clause protects lenders against below-market interest rates. It's a contract provision requiring the seller of the property to repay the mortgage in full when the property is next sold. It is also called an acceleration clause.

E for-

Earnest Money Deposit Or EMD

A nominal sum of money given as a token to the vendor, signifying the assent to a contract of sale. It affirms that the parties have made up their minds to purchase the said property.

Elevation

Artist's impression of the final look of a project.

Encroachment

Part of a house or establishment illegally overhanging the street or a neighbour's property.

Encumbrance Certificate

A report issued by Registrar or Sub-Registrar's office after due verification of the relevant documents certifying that the property in question is free from mortgages, leases, easements or any other kinds of restrictions.

Equity

It is the actual amount of an asset actually owned by you.

Eviction

Expulsion of an occupant or tenant from a real property( lawful).

Executor

A person named in a will to take care of an estate.

To be continued .. . .