Real Estate Terms

We are committed to making the purchase or sale of your home as simple and easy as possible. During this process, you may encounter real estate terminology that is new to you. Following is a guideline of real estate terms, as well as financial and architectural terms to help you during the purchase or sale of your home.

Abatement

Derived from Latin battere, “abatement” a common legal term meaning “the beating down, removal, or diminishment” of something. For example, lead abatement refers to finding and removing lead paint. Abatement usually refers to “Rent Abatement”, the incentive offered by a...

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Absorption Rate

The rate at which rentable space is filled, divided into gross absorption and net absorption. Gross absorption is a measure of the total square feet leased over a specified period, with no consideration given to space vacated in the same...

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Abstract of Title

Abstract of title is a historical summary of the recorded instruments and proceedings on the title of a property.

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Acceleration Clause

A clause in your mortgage which allows the lender to demand payment of the outstanding loan balance for various reasons. The most common reasons for accelerating a loan are if the borrower defaults on the loan or transfers title to...

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Adjustable Rate Mortgage or ARM

An ARM is a loan that has a varying interest rate and payment based on an adjustment period. The adjustment is dependent on the variation in a benchmark index, usually the LIBOR or prime rate. This loan is also known...

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Adjusted Sales Price

Adjusted sales price is the price on the contract less all credit concessions by the seller.

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Air Rights

Air rights are the legal ability to use or control the space above a property. Air rights can be sold, rented or leased to another party.

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Amenities

Amenities are the enhancements that buildings offer its owners or tenants. These usually include a doorman, health club, garage, children’s playroom, common lounge, etc.

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Amortization

Amortization is the periodic payment of principal and interest on a liability (including a mortgage), or the write-off of a non-depreciable asset over a scheduled term.

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Amortization Schedule

An amortization schedule is the designation of periodic payments of principal and interest toward the principal to eventually pay off a debt.

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Annual Percentage Rate or APR

The APR is the actual effective rate of interest charged on a loan expressed on a yearly basis and represents the full cost of all elements associated with obtaining a full mortgage into a single formula. The APR is a...

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Appraisal

An appraisal is the evaluation of a property by a licensed appraiser on its price based on previous sales of similar properties. The appraised value is used by a bank to determine the lending limit on a given property. A...

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Appraised Value

An opinion of a property’s fair market value, based on an appraiser’s knowledge, experience, and analysis of the property. Since an appraisal is based primarily on comparable sales, and the most recent sale is the one on the property in...

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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.

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Assessment

An assessment is a levy against property and can be an extraordinary payment called for by the board of directors of a cooperative or condominium for the purpose of making a capital improvement or to provide some other essential service...

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Asset

An asset is something that is owned that has value.

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Assignment

Assignment is the process by which a right or contract is transferred from one party to another. Examples of typical assigned contracts are mortgages, leases and deeds of trust.

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Attorney-in-Fact

An attorney-in-fact is a person appointed to perform legal acts for another under a power-of-attorney.

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Board Approval

Board approval is a condition in the standard cooperative sales contract requiring that the buyer obtain approval from the board of directors of the cooperative corporation as a prerequisite to completing the sale.

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Bridge Loan

A bridge loan is a loan for a short duration of time and can be used when one is purchasing one property but is dependent on the equity from another property that has not yet been sold. Once the property...

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Brownstone

A brownstone is a townhouse that is usually a 3 to 5 story building, named for traditional “brown stone” used in the façade. It may be a single family building or have been converted into multiple apartments. The original structure...

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Building Restrictions

Building restrictions are the requirements in building codes that affect the size and appearance of the building.

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Buy Down

Buy down is the voluntary paying of discount points by a borrower to reduce mortgage interest rate at the time the loan is made.

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Buyer’s Broker

A buyer’s broker is a broker who represents the buyer in effectuating a purchase. Normally in residential real estate transactions, the buyer’s broker shares the commission received by the listing broker, who represents the seller.

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By-Laws

By-laws are the rules by which the cooperative corporation or condominium operates, including those regulating elections, officers, and authorizations.

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Capital Expenditure

A capital expenditure is an improvement that will have a life of one year or more and will increase the value of the property.

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Capital Gain

Capital gain is the seller’s gain on an asset used in a trade or business or for investment, including real estate. This gain is taxed at varying rates depending on whether the asset was held for more or less than...

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Capital Improvement

Capital improvement is an item that adds value to the property, adapts the property to new uses, or prolongs the life of property. Maintenance is not a capital improvement.

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Capitalization Rate

The percentage of the investment the investor will receive back each year from the net income from the property.

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Caps

Caps are percentage restrictions on an ARM which limit the amount the interest rate may change per year and over the life of the loan.

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