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Choose from the topics below for a short, informative section on the subject of Real Estate Terms.
An abstract of title is a historical summary of everything that affects ownership of a specific property. The abstract will include the chain of owners of the property, recorded easements, mortgages, wills, tax liens, judgments, pending lawsuits, marriages, and anything else that affects the title. The abstract can usually be obtained from the title company that is currently insuring the title, and is used to assure interested buyers that the title of the property is "free and clear."
A buyer hires an attorney to examine the abstract and give a formal opinion as to the validity of the title. The attorney's official opinion is known as the certificate of title. Before hiring an attorney to prepare a certificate of title, the buyer should make sure that the title company will issue insurance based on the certificate. Back to the Top
An appraisal is an expert judgment or estimate of the value of real estate as of a given date, based on market comparison. The following factors are used to determine the value of the property: the amount of land and landscaping, the size and number of rooms and bathrooms, the size of the kitchen and its storage space, the size and condition of the basement, attic and screened-in porches, and the quality of construction.
An appraiser will also assess whether electrical, plumbing, heating, and cooling systems are new or in good repair, and assess energy saving features such as storm windows, insulation, heat pumps, roofing, gutters, and siding. The convenience of the house is another factor in its value as well as the location. Some factors which do not weigh heavily into the value of a home are carpeting, wallpaper, lighting fixtures, and paint colors. Back to the Top
Condominiums and cooperatives are forms of shared property ownership. They are attractive to people who want property without having to care for a yard or other outdoor maintenance. In a condominium or townhouse, the owner individually owns the inside of his or her unit and jointly owns the common areas with the other condo owners. The individual owners control their own unit and pay a fee to have the common areas maintained. Common areas include hallways, lobbies, parking lots, garages, and recreational facilities. Owners become a member of the condominium association when they purchase the unit. The condominium association operates the property as a business enterprise.
In a cooperative or co-op there is no individually owned property. Rather, the owners hold shares of stock in a cooperative corporation which in turn owns the land and building, and issues proprietary leases to the owners to use specific units. Therefore, the tenant is also an owner of the building along with the other tenants. Back to the Top
Curb appeal is a term used to refer to how attractive a piece of property is to a prospective buyer who approaches it from the street. Maximizing curb appeal is an important step in selling a home, as this is the first impression the buyer receives. Curb appeal may be enhanced by keeping the lawn evenly mowed and edged, and by trimming any landscaped shrubs. Colorful plants and flower beds are also eye-catching and attractive. Any loose woodwork, bricks, or shingles should be repaired or replaced. Make sure your street address is clearly visible on the curb, mailbox or house in order to help people find your home. Finally, a fresh coat of paint on the exterior enhances the appearance of any home. Back to the Top
Down payment is the cash buyers give sellers in addition to the mortgage amount. There's no limit to how large a down payment can be, although loan terms often require a minimum amount. This is good news for buyers who want to purchase a home costing more than a mortgage they can afford. By paying cash for the difference between the cost and mortgage amount, you can purchase the home you have your heart set on. The sale agreement will specify how much money you used as down payment, so your records will reflect the total investment in your home.
One caution: if you don't purchase the home after you've given a down payment, your money might not be refunded. The best way to ensure you'll get your money back is to insert a clause regarding refunds into the sales agreement. If the sellers can't transfer the title after you've provided a down payment, most sales agreements require them to return your money as well as reimburse you for expenses incurred and sometimes for interest, too. Back to the Top
Eminent domain is the right of the government to take ownership of privately-held real estate regardless of the owner's wishes. Land for schools, freeways, parks, public housing, and other social and public interests are obtained in this manner and the structures on the existing land may be condemned and destroyed. Quasi-public organizations, such as utility companies and railroads are also permitted to obtain land needed for utility lines, pipes, and tracks.
The property owner must be paid the fair market value of the property taken from him or her. Government inspectors also have the authority to condemn structures which are deemed unsafe for human habitation. In many cases, the owner of the property will be given the opportunity to make repairs sufficient to make the structure meet safety regulations. Back to the Top
Equity is what a house is worth, versus what is owed on its mortgage. Your home's equity can increase in two ways. First, you can continue to pay your mortgage, so an increasing amount of the value is your equity. Another important way your equity can grow is through market value. If you mortgaged 80 thousand and your property's value has increased to 120 thousand, then your equity has increased, regardless of how much of the mortgage you still owe.
In the mid to late eighties, real estate's equity increased so quickly that homes could be resold for a profit shortly after a purchase due to increased equity. The real estate market has changed drastically since then, and real estate professionals and experts no longer recommend buying homes for this type of quick profit. There are some ways you can increase your equity in a home if you need to sell it shortly after purchase. The simplest way is to make improvements to increase the home's market value. You'll need to weigh what the improvements cost with how much they increase the home's worth. Simple cosmetic changes, such as fresh paint or new flooring may prove worthwhile financially. Back to the Top
A real estate listing is a written agreement between a property owner and a real estate broker or agent. The owner and the broker or agent together determine the best length of time for a particular listing agreement. Homeowners must consider their own personal needs, while realistically assessing the time necessary for the broker or agent to conduct a sales campaign.
Generally, residential property in a stable market can be marketed within three to four months. But owners must consider a longer listing period if their property is on the high end of the price/value line or if special features or circumstances limit the number of interested buyers. Owners should also consider brokers or agents who offer marketing service guarantees, which list all the services the agent will perform to sell the property quickly and at the best price. These guarantees sometimes offer termination privileges if services aren't performed as promised. Back to the Top
A mortgage loan is usually paid back in installments--typically once a month. This method of payment is called amortization. Because amortization spreads the loan into several installments over a period of time, it reduces the debt gradually. The mortgage payment is comprised of principal, interest, and fees. Principal is the part of the mortgage that pays the cost of the home. Interest is the cost of borrowing the money. For the first few years, most of the mortgage payment goes towards the interest and a smaller portion goes towards the principal. The more money that goes towards the principal, the more equity, or ownership, is built. Back to the Top
Amortization is what allows the majority of home buyers to purchase a house. Most homes are not paid for with cash, but with a loan, This loan's payments are spread out over a number of years. Each payment's comprised of two portions. One portion, called principal, goes toward the actual cost of the house. The portion goes to the loan fee and is called interest.
Amortization is the schedule of how the entire principal and interest payments will be repaid. Some mortgages are amortized with the bulk of interest and only nominal principal being repaid during the first half of the loan. Then, during the last years, the payments apply more toward the principal than the interest. Amortization differs depending on the type of loan you choose for financing your home. Conventional loans and balloon loans are amortized differently, although the bulk of interest is generally paid prior to principal repayment in both types of loans. Back to the Top
Foreclosure is the lender's right to force the mortgage, or homeowner, to leave the property. Foreclosure is possible because the loan made to the homeowner was "guaranteed," meaning the lender was promised return on the loan. If the homeowner can't offer the lender money, then the lender recoups loss by seizing the property and selling it. The terms of the mortgage outline what circumstances must be present for the lender to foreclose on a property.
Most loan terms require the mortgagor to be behind several payments before the foreclosure process can begin. A single late mortgage payment, while it may affect the homeowner's credit rating, usually won't result in foreclosure. When death or illness results in non-payment, many conventional mortgage companies are willing to make temporary, special payment arrangements with the homeowner. While lenders aren't required to do this, their best interests may be served by accepting late payments and fees rather than the costly legal process of foreclosure. Back to the Top
"HUD", or Housing and Urban Development, is a federal agency. It oversees homes the government owns due to repossession, as well as ensuring tenants and renters are treated fairly under the law. You've probably seen a home advertised for sale as a HUD home. This means the former resident wasn't able to fulfill the terms of the mortgage, and the lender repossessed it. The loan was insured by the government, so the government then paid the lender for the home. Now, the government will attempt to sell the home to cover losses.
Because HUD is a non-profit agency, it won't attempt to sell the home for financial gain. If it sells for more than the mortgaged amount, HUD will use the funds to cover legal costs involved in the repossession and any necessary repairs. HUD's non-profit policy means you can sometimes purchase a HUD home for less than its market value. This program may mean you can afford a home when you didn't think it was possible, or that you can afford a larger home than you anticipated.
All COLDWELL BANKER KIGAR agents are qualified to guide you in purchasing a HUD home, so for more information, contact a COLDWELL BANKER KIGAR agent in your area.
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