Aug. 2, 2007 - Glossary of Terms

GLOSSARY OF TERMS

Appraisal
A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby.
 
Appraised Value
An opinion of a property's fair market value, based on an appraiser's knowledge, experience and analysis of the property. An appraisal is partially based on comparable sales.
 
Appraiser
An individual qualified by education, training and experience to estimate the value of real property and personal property. Although some appraisers work directly for mortgage lenders, most are independent.
 
Appreciation
The increase in the value of a property due to changes in market conditions, inflation or other causes.
 
Assessed Value
The valuation placed on property by a public tax assessor for purposes of taxation.
 
Assessment
Placing the value on a property for the purpose of taxation.
 
Broker
In the real estate industry, most REALTORS® are "agents" who work under a "broker". Some agents are brokers as well, either working for themselves or under another broker. As a normal definition, a broker is anyone who acts as an agent, bringing two parties together for any type of transaction and earns a fee for doing so.
 
Chain of Title
An analysis of the transfers of title to a piece of property over the years.
 
Clear Title
A title that is free of liens or legal questions as to ownership of the property.
 
Client Follow-up
One of the most important steps in the selling process in which the salesperson follows up with mailings over a period of time with the desired result of repeat business and referrals.
 
Closing
This has different meanings in different states. In some states, a real estate transaction is not considered "closed" until the documents record at the local recorders office. In others, the "closing" is a meeting where all of the documents are signed and money changes hands.
 
Condominium
A type of ownership in real property where all of the owners own the property, common areas and buildings together, with the exception of the interior of the unit to which they have title. Often mistakenly referred to as a type of construction or development, it actually refers to the type of ownership.
 
Credit Report
A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness.
 
Direct Marketing
A planned system of contacts seeking to produce a lead or a sale. One method is marketing via direct mail delivered directly to the individual prospective customer. Direct marketing generally uses a database and can be measured in costs and results. See Personal Marketing.
 
Earnest Money Deposit
A deposit made by the potential homebuyers to show that he or she is serious about buying the house.
 
Easement
A right-of-way giving persons other than the owner access to or over a property.
 
Equity
A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens.
 
Fair Market Value
The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.
 
Home Inspection
A thorough inspection by a professional that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser.
 
Homeowner's Association
A nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements.
 
Lender
A term which and refer to the institution making the loan or to the individual representing the firm. For example, loan officers are often referred to as "lenders".
 
Lien
A legal claim against a property that must be paid off when the property is sold. A mortgage or first trust deed is considered a lien.
 
Loan
A sum of borrowed money (principal) that is generally repaid with interest.
 
Marketing
The process of identifying and reaching specific segments of a population for the purposes of selling them a product or service; promoting, pricing and selling via a plan over a period of time.
 
Personal Marketing
Customized direct marketing where materials are personalized with photos and personal data to increase impact and encourage high response rates. The Personal Marketing Company has been producing these materials for over 25 years and helps professionals build their reputation, business - and income.
 
Pre-approval
A loosely used term which is generally taken to mean that a borrower has completed a loan application and provided debt, income and savings documentation which an under writer has reviewed and approved. A pre-approval is usually done at a certain loan amount and making assumptions about what the interest rate will actually be at the time the loan is actually made, as well as estimates for the amount that will be paid for property taxes, insurance and others. A pre-approval applies only to the borrower. Once a property is chosen, it must also meet the underwriting guidelines of the lender. Contrast with pre-qualification.
 
Pre-qualification
This usually refers to the loan officer's written opinion of the ability of a borrower to qualify for a home loan, after the loan officer has made inquiries about debt, income and savings. The information provided to the loan officer may have been presented verbally or in the form of documentation, and the loan officer may or may not have reviewed a credit report on the borrower.
 
Prospecting
The step in the selling process in which the salesperson identifies qualified potential customers.
 
Real Estate Agent
A person licensed to negotiate and transact the sale of real estate.
 
REALTOR®
A real estate agent, broker or an associate who holds active membership in a local real estate board that is affiliated with The National Association of REALTORS®.
 
Title
A legal document evidencing a person's right to or ownership of a property.
 
Title Company
A company that specializes in examining and insuring titles to real estate.