Decode the Language of Real Estate

Real Estate Glossary

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ACCEPTANCE – The time at which an offer to purchase is accepted.  The fact that it was accepted must be relayed to the person that made an offer in order for all parties to be bound to the contract.

AD VALOREM TAX-Charged by local government, this tax is based on the value of the property, as determined by the local government authorities.

ADJUSTABLE RATE MORTGAGE (ARM)– A mortgage whose interest rate over the life of the loan is not necessarily the same as the original interest rate at the loan inception.  Rate changes may go up or down and are usually tied to an economic indicator and a time period.  The person getting the mortgage should check to see if these fluctuations have a cap, and make sure they are comfortable with whatever that cap is.  Some ARMS are convertible to a fixed interest rate after a period of time.

AGENT– A person authorized to act on another’s behalf. In real estate, this agent may be a listing agent representing the seller, a selling agent representing the buyer, or a dual agent which means the agent or company may represent both the seller and the buyer. There is a fourth option, a transaction agent (or broker) that represents neither party but helps the transaction to be completed.  A real estate agent must be licensed under the laws of their state. An agent must place their license under the direction of a real estate broker. To become a broker, one must take the same courses that a salesperson does, but also complete addition training and meet experience requirements which differ from state to state.

AMORTIZATION – The repayment of a loan over time. With each payment, there is a reduction of both principal (the original amount borrowed), plus the interest.

AMORTIZATION SCHEDULE– This table shows each payment amount for the mortgage, how much of each payment is applied to the principal, how much is applied to the interest, and how much remains to be paid. The table shows each payment until there is a zero balance and the loan is paid in full.

ANNUAL PERCENTAGE RATE (APR)-Required by the Federal Truth-in-Lending-Act, this details the amount of money financed.  The APR is the true cost of borrowing money, which includes the total finance charges added to the principal amount.

APPRAISAL – A professional determination of value.  Mortgage companies usually require an appraisal of the property by a licensed, disinterested party before agreeing to loan money on the property.  Methods of determining value may be based on many things, such as comparable sales in the area, the cost approach, the income approach, or the highest and best use of the property.

APPRAISED VALUE-The worth of the property as determined by a professional appraiser.

APPRECIATION-The opposite of depreciation. When the value of a property rises, based on economics and market conditions of the area, it appreciates.

AS IS CONDITION-Disclaiming any warranties or representations regarding the condition of a property.

ASKING/LISTING PRICE-The price a seller is asking in order to sell their property. The price that a buyer offers to purchase the property and the final contract price may be less than, equal to, or even more than the asking/listing price.

ASSESSED VALUE– The value used by the governing authority (i.e. either the local government or the condominium association) by which to levy a tax or fee on the property owner.

ASSIGNEE – The person responsible if the rights and responsibilities for a property are transferred to a new person.

ASSUMABLE MORTGAGE-The buyer takes over and assumes the existing mortgage on the property on the same terms as the original person that took out the mortgage. This would mean the new buyer does not have to obtain a new loan. In years past, the new buyer could take over the loan without having to qualify, but mortgage requirements are now more stringent.

ASSUMPTION OF MORTGAGE-The act of taking over and accepting legal responsibility for the terms of an existing mortgage.

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