Real Estate Terms A-B
ABSORPTION RATE
The ratio of the number of properties in an area that have been sold against the number available. Used to show the volatility of a market.
ABSTRACTION METHOD
This method of estimating the value of property uses similar properties available in the same market to extract the value of a parcel of land.
ACCESSORY BUILDING
A building separate from the main structure on a property. Often used for a specific purpose, such as a workshop, storage shed or garage.
ACRE
43,560 square feet. A measurement of area.
ACTUAL AGE
The amount of time that has passed since a building or other structure was built. See also: EFFECTIVE AGE
ACRE
43,560 square feet. A measurement of area.
ACTUAL AGE
The amount of time that has passed since a building or other structure was built. See also: EFFECTIVE AGE
ADJUSTMENT DATE
The date the interest rate changes on an adjustable rate mortgage.
AD VAL OREM TAX
Taxes assessed based on the value of the land and improvements
ADDENDUM
A supplement to any document that contains additional information pertinent to the subject. Appraisers use an addendum to further explain items for which there was inadequate space on the standard appraisal form.
ADJUSTABLE-RATE MORTGAGE (ARM)
A type of mortgage where the interest rate varies based on a particular index, normally the prime lending rate.
ADJUSTED BASIS
The value of an asset (property or otherwise) that includes the original price plus the value of any improvement, and less any applicable depreciation.
ADJUSTED SALES PRICE
An opinion of a property’s sales price, after adjustments have been made to account for differences between it and another comparable property.
AESTHETIC VALUE
The additional value a property enjoys based on subjective criteria such as look or appeal.
AFFIRMATION
A declaration that a certain set of facts are truthful.
AFFORDABILITY ANALYSIS
A calculation used to determine an individual’s likelihood of being able to meet the obligations of a mortgage for a particular property. Takes into account the down payment, closing costs and on-going mortgage payments.
AMENITY
Any feature of a property that increases its value or desirability. These might include natural amenities such as location or proximity to mountains, or man-made amenities like swimming pools, parks or other recreation.
AMERICAN SOCIETY OF APPRAISERS
An organization of appraisal professionals and others interested in the appraisal profession.
AMORTIZATION
The repayment of a loan through regular periodic payment.
AMORTIZATION SCHEDULE
The breakdown of individual payments throughout the life of an amortized loan, showing both principal contribution and debt service (interest) fees.
AMORTIZATION TERM
The length of time over which an amortized loan is repaid. Mortgages are commonly amortized over 15 or 30 years.
AMPERAGE
A measure of electric current describing the magnitude.
APPRAISAL
A ”defensible” and carefully documented opinion of value. Most commonly derived using recent sales of comparable properties by a licensed, professional appraiser.
APPRAISAL FOUNDATION
A not-for-profit educational organization established by the appraisal profession in the United States in 1987. It is dedicated to the advancement of professional valuation and responsible for establishing, improving, and promoting the Uniform Standards of APPRAISAL INSTITUTE
A world-wide organization dedicated to real estate appraisal education, publication and advocacy.
APPRAISAL PRINCIPLES
The basic building blocks of the property valuation process, including property inspection, market analysis and basic economics.
APPRAISAL REPORT
The end result of the appraisal process usually consists of one major standardized form such as, the Uniform Residential Appraisal Report form 1004, as well as all supporting documentation and additional detail information. The purpose of the report is to convey the opinion of value of the subject property and support that opinion with corroborating information.
APPRAISAL STANDARDS BOARD (ASB)
An independent board of the APPRAISAL FOUNDATION, which writes, amends, and interprets USPAP. The ASB is composed of up to seven appraisers appointed by the Foundation’s Board of Trustees. The ASB holds public meetings throughout the year to interpret and amend USPAP.
APPRAISED VALUE
An opinion of the fair market value of a property as developed by a licensed, certified appraiser following accepted appraisal principals.
APPRAISER
An educated, certified professional with extensive knowledge of real estate markets, values and practices. The appraiser is often the only independent voice in any real estate transaction with no vested interest in the ultimate value or sales price of the property.
APPRECIATION
The natural rise in property value due to market forces.
ARMS LENGTH TRANSACTION
Any transaction in which the two parties are unconnected and have no overt common interests. Such a transaction most often reflects the true market value of a property.
ASSESSED VALUE
The value of a property according to jurisdictional tax assessment.
ASSESSMENT
The function of assigning a value to a property for the purpose of levying taxes.
ASSESSMENT RATIO
The comparative relationship of a property’s assessed value to its market value.
ASSESSOR
The jurisdictional official who performs the assessment and assigns the value of a property.
ASSET
Any item of value which a person owns.
ASSIGNMENT
Transfer of ownership of a mortgage usually when the loan is sold to another company.
ASSUMABLE MORTGAGE
A mortgage that can be taken over by the buyer when a home is sold.
ASSUMPTION
When a buyer takes over, or “assumes” the sellers mortgage.
ATTACHED HOUSING
Any number of houses or other dwellings which are physically attached to one another, but are occupied by a number of different people. The individual houses may or may not be owned by separate people as well.
BACKFILL
The slope of the ground around a house.
BALL COCK VALVE
The valve inside a toilet tank that controls the filling of the tank.
BALLOON MORTGAGE
A mortgage loan in which the monthly payments are not large enough to repay the loan by the end of the term. So at the end of the term, the remaining balance comes due in a single large payment.
BALLOON PAYMENT
The final large payment at the end of a balloon mortgage term.
BANKRUPTCY
When a person or business is unable to pay their debts and seeks protection of the state against creditors. Bankruptcies remain on credit records for up to ten years and can prevent a person from being able to get a loan.
BEAM
A structural supporting member.
BILL OF SALE
A physical receipt indicating the sale of property.
BIWEEKLY MORTGAGE
A mortgage where you make “half payments” every two weeks, rather than one payment per month. This results in making the equivalent of 13 monthly payments per year, rather than 12, significantly reducing the time it takes to pay off a thirty year mortgage.
BLIGHTED AREA
Any region of a city or town that has fallen into disrepair or otherwise has become undesirable.
BONA FIDE
Any genuine offer, made without intent to defraud or deceive.
BRIDGE FINANCING
An interim loan made to facilitate the purchase of a new home before the buyer’s current residence sells and its equity is available to fund the new purchase.
BRIDGING
Structural members used between beams to strengthen the structure.
BROKER
An individual who facilitates the purchase of property by bringing together a buyer and a seller.
BTU
British Thermal Unit. A unit of measurement used to describe heating or cooling capacity.
BUFFER ZONE
A segment of land between two disparate municipal zones which acts as a shield to keep one zone from encroaching upon the other. Often used to separate residential districts from commercial areas.
BUILDING CODE
Regulations that ensure the safety and material compliance of new construction within a municipality. Building codes are localized to ensure they are adequate to meet the risk of common hazards.
BUILDING LINE OR SETBACK
The statutory distance between buildings and the property line, imposed by municipalities, home associations, or other agreements.
BUILT-INS
Specific items of personal property which are installed in a real estate improvement such that they become part of the building. Built-in microwave ovens and dishwashers are common examples.
BUNGALOW
A one-story, home-style dating from the early twentieth century. Often characterized by a low-pitched roof.
BUY DOWN
Extra money paid in a lump sum to reduce the interest rate of a fixed rate mortgage for a period of time. The extra money may be paid by the borrower, in order to have a lower payment at the beginning of the mortgage. Or paid by the seller, or lender, as incentive to buy the property or take on the mortgage.
BX CABLE
Electrical cable shrouded in a galvanized steel outer cover.
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