Coming to Terms With Real Estate
Here is a lexicon of the most commonly used terms in real estate:
Agency--Legal relationship in which one party (agent) acts on the behalf of another party (principal) in a business transaction. For example, a seller who employs the services of a realtor establishes an agency relationship with the realtor.
Agreement of sale--Written agreement or contract between the seller and purchaser stating the terms and conditions of the sale. Also referred to as a sales contract, purchase agreement or sales deposit receipt.
Amenities--Features of a property that increase its desirability and value. Examples of amenities include pools, spas and excellent views of the ocean or city.
Appraisal--An estimate of property value by a qualified person.
Appurtenance--Anything incident to or attached to something else, such as a garage to a house. The appurtenance is part of the property.
As is--Contractual statement that there are no guarantees regarding a property, which is being sold in exactly its existing condition.
Asking price--Price at which a seller is offering property.
Assessed value--Value placed on real property for tax purposes.
Assessment roll--Official listing of the assessed values of properties in a given area, including the name and address of the taxable owner, the legal description of the property and its assessed value.
Assessor--One who estimates value of property for tax purposes.
Auction--Taking bids for a property and selling it to the highest or best bidder.
Authorization to sell--Contract giving a broker the authorization to find a buyer. Usually this does not authorize the broker to enter into a sales contract.
Broker--Intermediary between a lender and borrower or a buyer and seller who, for a fee or commission, arranges loans or sales.
Built-ins--Stationary equipment such as cabinets or kitchen appliances that are permanently attached to, and usually sold with, the property.
CC&R--Covenants;, conditions and restrictions on the use of real property. For example, a housing tract’s CC&Rs; could prohibit a homeowner from parking his car on his yard: A condominium complex could limit the number of visitors who can stay with one homeowner at any given time.
Capital improvements--Expenditures that stop deterioration of property or add new improvements and appreciably prolong its life.
Commission--Money paid by a seller to a broker for the sale of a property. Usually the commission is a percentage of the sales price, but it may be negotiated.
Common areas--Land and improvements that benefit all residents and property owners. This might include parking lots, parks, swimming pools or playgrounds.
Comparables (Comps)--Appraisal method for determining a property’s fair market value based on valuations of comparable property.
Condominium (Condo)--Legal form of ownership consisting of individual fee ownership of units in a building and joint ownership of common areas, such as pools or greenbelts.
Consideration--Anything of value given to induce another to enter into a contract.
Cooperative (Co-op)--A form of leasehold interest ownership in which residents of a building hold shares in a corporation having ownership of the building. Ownership of cooperative shares allows a resident to exclusively occupy a specified housing unit. Shareholder residents usually pay a monthly fee to the cooperative to cover operating and maintenance costs, much like condominium owners pay a monthly association fee.
Duplex--Structure containing two separate living units that share a common wall and roof.
Easement--A right, interest or privilege that one party has in another’s land; for example, a right of way.
Eminent domain--Right of the government to acquire private property for public use through condemnation.
Exclusive right to sell listing--Agreement giving an exclusive listing agent the right to collect a commission should the property be sold by anyone during the term of the agreement.
Fee Simple--Highest possible interest in real property; absolute and unencumbered title. A fee simple estate is of potentially infinite duration, freely transferable and inheritable.
General contractor--One who contracts for the entire construction of a building or project, rather than a portion of the work. A general contractor typically hires subcontractors, such as plumbers or electricians, coordinates all work and is typically responsible for payment to those subcontractors.
Homeowners’ association--Organization of homeowners whose purpose is to protect the covenants of the subdivision, condominium or planned-unit development and to manage the common areas.
Listing--Agreement between a property owner and a broker authorizing the broker to find a buyer or tenant for a particular property.
Open listing--Listing given to any number of brokers without the seller having to compensate any broker except the one who first secures a buyer ready, willing and able to meet the terms of the listing.
Public report--Government report given to prospective buyers in a new subdivision stating the condition in the area, costs of facilities, etc.
Realtor--A registered trademark that can only be used by real estate professionals who pledge to adhere to the business code of ethics written by the National Assn. of Realtors. In California, about one-third of the salespeople licensed by the state Department of Real Estate are Realtors.
Subcontractor--Individual or firm who performs services such as electrical and plumbing work for a general contractor.
Subdivision--Improved or unimproved land divided for the purpose of sale, lease or financing into two or more parcels, lots, interest or units.
Townhouse--Type of dwelling unit normally having two floors and its own separate “walk-up,” or entry. Usually employs the use of party walls and shared common grounds.
Tract map--Map prepared by a developer showing the physical boundaries of lots and tracts under development.
Unit--Part of a property intended for any independent use and with an exit to a public street or corridor.
Zero lot line--Term that describes the positioning of a structure on a lot where one side rests directly on the lot’s boundary line. Such a configuration can provide more useable yard space.
Next week: Financing terms. Reprinted from “Real Estate Glossary” by Kenneth Leventhal & Co.
