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Real Estate Glossary of Terms

Complete glossary of frequently used terms in Real Estate. As defined by Jeanne M. Newton, Real Estate Broker, REALTOR® and Owner of Newton Realty | 2015 ALL RIGHTS RESERVED ©

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Addendum

A document that is sometimes found in a Purchase and Sale Agreement that adds adjustments to the original document. It includes any contingencies, ‘as-is’ language or omissions.

Annual Percentage Rate (APR)

Used in financing, this term is the unit prescribed to your charge for borrowing money. It is expressed as a percentage of your total loan amount and typically amortized over a set number of periods.

Appraisal

In real estate, an appraisal is the professional determination of the fair market value of your home or property. It is expressed in terms of currency and represents what the asset is believed to trade for. Lenders and Real Estate Agents seek appraisals to estimate home values before buying or selling.

Balloon Mortgage

This is a mortgage loan with relatively low monthly payments for an initial time period only. After this time period expires a ‘balloon payment’ is made for the remaining balance in full. Balloon mortgages have the advantage of providing a lower interest rate over the initial time frame but demand a larger payment to retire the debt at the end.

Broker

This is a person who is licensed to sell real estate. They have higher education requirements than Real Estate Agents and have earned a broker’s license after passing a broker’s exam. Jeanne M. Newton is the Real Estate Broker, REALTOR® and owner of Newton Realty.

Break-even point

A specific point of equilibrium between revenues and expenses. This accounting term, is when revenue and expenses are equal ie: when there is no net loss or gain. The break-even point is a tool many real estate investors use to determine the exact point at which each additional unit of monetary gain becomes profit. For instance; a property investor may compare total expenses purchasing, renovating and upgrading a house to the total revenue from the final sale of the house. Every unit over the break-even point is what the investor would call profit and similarly every unit under the break-even point is what the investor would call a loss. Additionally, a break-even point can be used in terms of economics and thus act as a helpful negotiation tool. See Point of Equilibrium.

Buyers Agent

This a person who is a licensed Real Estate Agent working to act on behalf of the buyer exclusively. They specialize in searching and negotiation the best terms and timelines for the buyer. A buyers agent has a fiduciary responsibility to their client.

Capitalization Rate

The rate of return on an income property. The Capitalization Rate (Cap Rate) is found by dividing the total income from a property by the purchase price of the property. It is expressed as a decimal or percentage.

CC&Rs

Covenants, conditions and restrictions placed on certain types of property. These are limits and rules placed on home owners by neighborhood associations, developers, builders etc. Examples of CC&Rs are noise regulations, fence-height restrictions and parking regulations.

Closing Costs

Costs associated to close the sale on a home. These are costs incurred in the transfer of real estate in addition to the purchase price of the real property ie: escrow fees, insurance, broker commissions, and transfer tax.

Deed

A legal document that conveys ownership of real property.

Double Net Lease

This is when a tenant agrees to pay fees in addition to rent. Many times these can include expenses like property taxes, utilities and insurance.

Down Payment

An initial payment made to lender. A down payment can be of any amount but is typically no less than %10 of the total loan amount.

Duel Agency

When a single real estate agent/brokerage represents both the buyer and the seller of real property.

Easement

While there are many different kinds of easements this term is most often used to describe when someone gains the right to use land without owning or possessing it.

Equity

This is the difference between the value of a property and the total liens against it ie: mortgages.

  • Jeanne M. Newton
    <font size=4><i><bold>Jeanne M. Newton</font></bold></
    Everything you need to buy or sell property in Chico, CA

    530-354-5426
    newton@realtychico.com
    Real Estate Broker REALTOR®
    DRE # 01485153

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