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Real Estate Terms You Should Know

Glossary of Helpful Real Estate Terms You Should Know


Are you considering purchasing or selling a home with Myrean? Through out the home buying and selling process, you will run across a variety of terms that will be vital to understand. Don’t worry, Myrean has your back!

 

There are two sides of a real estate transaction; the seller side and the buyer side. Let’s take a look at the terms involved in a real estate transaction for better understanding.


The following terms are in alphabetical order:

Acceptance Aka Accepted Offer

Consent by the person receiving the offer to be bound by the terms and conditions of the person making the offer. Acceptance of an offer constitutes an agreement.

Agreement

The written contract for the sale and purchase of property between the seller (vendor) and the buyer (purchaser).

Amenity

A feature of real property that enhances its attractiveness and increases the occupant’s or user’s satisfaction although the feature is not essential to the property’s use, ex: scenic views, proximity to public transport or recreational facilities.

Appraisal

A written analysis of the estimated value of a property prepared by a qualified appraiser.

Appreciation

An increase in the value of a property due to changes in market conditions or supply and demand, etc.

Assessed Value

The valuation placed on a property for the purposes of taxation by an authority. The owner may be willing to negotiate.

Assignment

The transfer of a mortgage or lease from one person to another.

Buyers Market

When the demand for property is less than supply so the advantages shift to the buyer.

Certificate of Title

A description of a property with the name of the registered owner, encumbrances, i.e.: mortgages or easements on the property. It must be produced by the vendor before the sale of the property.

Clear Title

A title that is free of or legal questions as to ownership of the property.

Commission

A proportion (usually a percentage) of the sale price of a property paid to a real estate agent for negotiating a real estate transaction.

Contingency

Contingency. See Special Condition.

Contract of Sale

An agreement in wiring setting out the terms and conditions relating to the sale or purchase of a property. It is the purchase document signed at auction.

Credit History

A record of an individual’s current and repaid debts which is usually used by a lender to assess the risk of a potential borrower.

Deed

A legal document conveying title to a property.

Default

Failure to make mortgage payments regularly or to comply with other requirements of the mortgage.

Deposit

A percentage of the purchase price given to bind the sale of real estate.

Depreciation

A decline in the value of property due to changes in market conditions or other clauses.

Easement

A right that someone has to use the land belonging to another, eg: a water authority may have a sewerage easement across part of your property.

Encroachment

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

Encumbrance

An impediment to the use or transfer of the property in the form of an interest or right in the property.

Equity

The amount of an asset actually owned, Equity is the difference between the market value of the property and the amount still owed on its mortgage.

Estate

The total of all the real estate and personal property owned by an individual at the time of death.

Exclusive Listing/Sole Listing

A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time.

Fiduciary

A person who essentially holds the character of a trustee. Real Estate agents and salespersons are considered by law to be fiduciaries, thus they have a duty to act primarily for the benefit of the principal (the person who employed them) and not their own. A fiduciary must act with the highest degree of care and good faith in relations with the principal and on the principal’s business. Penalties for failing in fiduciary duties may be quite severe.

First Mortgage

A mortgage that is the primary lien against a property.

Fixed Installment

The monthly payment due on a mortgage loan. The fixed installment includes payment of both principal and interest.

Fixed Rate Mortgage

A mortgage in which the interest rate does not change during the term of the loan.

Foreclosure

The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually results in the selling the property by auction and the proceeds being used to service the mortgage debt.

Home Equity Line of Credit

A mortgage loan which allows the borrower to obtain multiple advances of the loan proceeds up to a specified percentage of the borrower’s equity in a property.

Home Improvement Loan

A loan made to a homeowner in which the home is used as collateral for the loan.

Home Inspection

A thorough inspection that evaluates the structural and mechanical condition of a property.

Insured Mortgage

A mortgage that is protected by private mortgage insurance. If the borrower defaults on the loan, the insurer must pay the lender the lesser of the loss incurred or the insured amount

Interest

The fee charged for borrowing money.

Interest Only Loan

A loan where only the interest is repaid throughout the course of the loan. The original amount is repaid at the end of the term of the loan, rolled over by the same bank or the owner re-mortgages.

Interest Rate

The rate of interest in effect for the monthly payment due.

Introductory Loan

A loan offered at a reduced rate for an introductory period to new borrowers.

Investment Property

A property that is not occupied by the owner, but provides a return to the owner through letting or leasing to a tenant.

Lien

A legal claim against a property that must be paid off when the property is sold.

Listing

A written contract between an owner and a real estate, authorizing the agent to perform services for the principal involving the owner’s property. The property so listed.

Loan

A sum of borrowed money that is generally repaid with.

Loan Application Fee

Also called Establishment Fee. A fee paid to a lender for processing a loan.

Loan to Valuation Ratio

The amount of the loan financed as a proportion of the property value, expressed as a percentage.


Now for the fun financial terms! With every attempt to finance a new property, you will encounter a variety of terms. Some of which may be to obtain a mortgage.

 

Mortgage

A legal document that pledges a property to the lender as security for payment of a debit.

Market Value

The price at which a seller is happy to sell and a buyer is willing to buy. This assumes that there is sufficient activity in the marketplace to generate enough buyers and sellers so that neither party controls the price. Establishing the market value is the objective of an appraisal.

Mortgage Broker

An individual or company that brings borrowers and lenders together for the purpose of loan origination. Mortgage brokers typically require a fee or a commission for their services. Usually paid by the Lender.

Mortgage Insurance

A policy that insures the lender against the borrower on a loan. Most lenders generally require insurance when borrowing more than 80% of the property value.

Mortgagee

The lender in a mortgage agreement.

Mortgagor

The borrower in a mortgage agreement.

Null and Void

That which cannot be legally enforced, as with a contract provision that is not in conformance with the law.

Offer

Conveyed intent by one party to form a contract, which may have conditions and stipulations, with another party.

Power-of Attorney

The person who has authority to execute documents on behalf of the grantor of the power. Also, a legal document which, can authorize another person to act on one’s behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.

Pre-qualification

The process of determining how much money a prospective home buyer will be eligible to borrow before he or she applies for a loan.

Prime Rate

The interest rate that banks charge their preferred customers. Changes in this rate can influence other rates including mortgage interest rates.

Principal

The amount borrowed or still to be repaid. The part of the monthly payment that reduces the balance of the mortgage.

Private Sale

The sale of property by the owner without the services of a real estate agent.

Qualified Buyer

A buyer who has satisfied a lender that he or she is financially able to qualify for a loan. Qualifying the buyer is one of the primary steps taken by the lender as part of the loan process.

Real Estate Agent

A person or Company licensed to negotiate and transact the sale or lease of real estate on behalf of the property owner.

Refinance

The process of paying off one loan with the proceeds from a new loan using the same property as security.

Requisitions on Title

A process where the buyer requests additional information about the title of the property from the vendor.

Right of First Refusal

A provision in an agreement that gives a party the first opportunity to purchase or lease the property before it is offered for sale or lease to others.

Second Mortgage

A mortgage that, on the sale of a property, is paid off only when the first mortgage is paid.

Seller’s Market

When demand for property is greater than supply. The result is greater opportunities for owners who may find someone willing to offer the asking price or even a figure greater than the asking price.

Settlement

The sale of a property is finalized by the legal representatives of the vendor and the purchaser, mortgage documents come into effect, costs are paid and the new owner takes possession of the property and receives the keys.

Special Condition

A condition that must be met before the contract is legally binding. For example, if buying a home the purchaser may specify that the contract is not legally binding until the purchaser has obtained a building inspection and been satisfied by the report.

Title

A legal document evidencing a person’s right to or ownership of a property.

Title Search

A check of the title records to ensure that the seller is the legal owner of the property and that there are no other claims or outstanding.

Townhouse

A dwelling unit, generally having two or more floors and attached to other similar units via party walls. Can be Strata or Cross lease titled.

Transfer

A document registered at the Land Titles Office and noted on the Certificate of Title which verifies the change of ownership of a property.

Trustee

A person who holds or controls property for the benefit of another.

Utilities

The private or public service facilities such as gas, electricity, telephone, water and sewer that are provided as part of the development of the land.

Zoning

Local authority guidelines for the permitted use of land.


Now hopefully after reading through these standard definitions, you can relate to common tendencies or existing questions you may have during the sale or purchase of your home.

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