Tài liệu dictionary real estate doc

Building Capitalization Rate A rate that converts building income into value - the ratio of building income to value.. Long term monthly payment obligations are divided by net income FHA

Abstract (Of Title)

A summary of the public records that identifies transfers, conveyances, and other facts used as evidence of title including documents, liens, or judgments that may impair title If there are any title defects, they must be cleared before a buyer can purchase and receive marketable, insurable title

Acceleration Clause

A clause in a mortgage note or loan contract that allows the lender to [1] speed up the rate at which your loan comes due -or- [2] to demand immediate payment of the entire balance of the loan in the event of default

Adjustable Rate Mortgage (ARM)

A mortgage in which the interest rate is adjusted periodically based upon an index Also referred to

as the renegotiable rate mortgage or variable rate mortgage

Air Rights

The property rights associated with the control, regulation, and use of air space above a tract of real estate

Amortization

[1] The retirement of a debt and/or capital recovery through scheduled repayments [2] Loan

payment calculated to pay off the debt at the end of a fixed period, including interest on the

outstanding balance

Annual Percentage Rate (APR)

The cost of credit as a yearly rate

The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller Assuming a loan can usually save the buyer money since this is an

existing mortgage debt

Balloon (Payment) Mortgage

Usually a short-term fixed-rate loan that is not fully amortized at maturity Smaller initial payments are made with a large lump sum (balloon) payment due at maturity

Band Of Investment

A technique used to derive a weighted average "rate of return" on a total investment Uses the cash flow rates attributable to the components of a capital investment

Base Rent

The minimum rent stipulated in a lease agreement

Binder or "Offer to Purchase"

A preliminary agreement between a buyer and seller to purchase real estate A binder with earnest money deposit, that secures the right to purchase real estate upon agreed terms for a limited period

of time If the buyer changes his mind or is unable to purchase, earnest money is forfeited unless thebinder expressly provides for a refunded

Broker

An individual who acts as an intermediary bringing together two or more parties in a market

transaction

Bridge Loan

Short term financing between the termination of one loan and the commencement of another

Examples: construction/permanent loans, temporary loans used for acquiring and rehabilitating

properties prior to sell or conversion to a permanent mortgage

Building Capitalization Rate

A rate that converts building income into value - the ratio of building income to value Usually

applied in residual or band of investment techniques

Building Line or Setback

Distances from the front, rear, or sides of a lot beyond which construction may not extend

Setbacks may be established by a filed plat of a subdivision, restrictive covenants in deeds or

leases, building codes, or by public zoning ordinances

A limitation on the amount monthly payments (on an adjustable rate mortgage) may change

assessed at settlement Typical closing costs are 2 to 6 percent of the mortgage amount

Cloud (On Title)

An encumbrance or outstanding claim that negatively affects the marketability of title

Collateral

Property pledged as security for a loan that can be seized in event of default

Commission

Compensation paid to a real estate agent or broker for finding a buyer and/or tenant and

successfully completing the sale

Any area within a property that is available for common use by all owners, occupants, or their

invitees and not designated for sale or rent Examples include parking, side- walks, landscaped areas, exterior of buildings in condo projects, etc

Condemnation

[1] A determination by a governmental agency that a particular building is unsafe or unfit for use [2] The act or process of enforcing the governments right of eminent domain

A mortgage that is neither insured or guaranteed by an agency of the federal government A

conventional loan may be privately insured

Cooperative Ownership

An apartment building or a group of dwellings owned by a corporation in which the stockholders are the residents It is operated for the benefit of the residents by their elected board of directors In a cooperative, the corporation/association holds title to the real estate Residents purchase stock in the corporation thereby entitling them to occupy a unit in the building Although residents do not owntheir units, they have an absolute right to occupy their unit for as long as they own the stock

Credit Ratio

A ratio (expressed as a percentage) used by lenders to judge a borrower's repayment ability Long term monthly payment obligations are divided by net income (FHA/VA loans) or gross monthly

income (Conventional loans)

Credit Scoring System

A statistical system used to rate the credit worthiness of a loan applicant according to various

characteristics

Curable Functional Obsolescence

An element of accrued depreciation A curable defect in the structure, materials, or design

Deed

A formal written instrument that transfers title to real property from one owner to another Parties include the grantor (seller) and grantee (buyer) The deed should contain the following: [1] a

complete legal description, [2] signatures of all parties holding an interest in the property and [3] witnesses to the conveyance The conveyance becomes valid when executed and delivered at closing (See deed of trust, general warranty deed , quitclaim deed , and special warranty deed.)

Deed of Release

A legal instrument by which the property securing a mortgage is absolved from the lien of the

mortgage Must be subscribed and acknowledged by the mortgagee (lender) Can be a partial or whole release

A judgment awarded in a suit initiated to recover the difference between a legally imposed

indebtedness and the money received from a foreclosure sale of the debtor's assets

A planned unit development (PUD) that has relatively minor common areas and improvements A

de minimis PUD [1] cannot include any multi-dwelling units that represent the security for a single mortgage; [2] cannot be a building conversion, [3] must not have any common areas other than greenbelts, private streets & parking, tot lots & playgrounds, etc., and [4] must not be subject to additional phasing or annexation that would result in the inclusion of significant common areas

Department of Housing and Urban Development (HUD)

The federal government's department responsible for major housing and urban development

programs (urban renewal, low rent public housing, mortgage insurance, metropolitan planning, etc.) Created in 1965, it replaced the Housing and Home Finance Agency

Department of Veterans Affairs (VA)

An independent agency of the federal government which guarantees long-term, low- or no-down payment mortgages to eligible veterans

Direct Reduction Mortgage

A mortgage loan repaid in periodic (usually equal) installments that includes a repayment of part of the principal and interest due on the unpaid balance

Prepaid interest assessed at closing by the lender Each point is equal to 1 percent of the loan

amount (e.g two points on a $100,000 mortgage would cost $2,000)

Discount Rate

[1] The term used to explain the compound interest rate used in the in approach to value to convert expected future cash flows into a present value [2] A benchmark for interest rates - the rate charged

by the Federal Reserve System on overnight loans to banks An increase in the rate not only

discourages borrowing, but it also serves as a signal to the money market that interest rates are probably going to increase Accordingly, interest rates charged by banks to customers usually

increase as a result of an increase in the discount rate

Discounted Cash Flow Analysis

A valuation technique that specifies [1] the quantity, variability, timing, duration of periodic income, and [2] the quantity/timing of the reversion (sale of property) then discounts these cash flows at a specified yield rate to derive a present value estimate

Downzoning

A government action in which the allowable density for a development is reduced, e.g., fewer

housing units, number or size of buildings, or changes from a high use to a lower use, e.g.,

multifamily to single family

A interest in real property that conveys use but not ownership of a portion of the property An

electric company or sewer line crossing private property is a common example

Easement By Prescription

The right to use another's land established by exercising this right over a period of time Not

specifically granted but understood (aka prescriptive easement)

Effective Gross Income

Anticipated income from operation of the real estate after deduction for vacancy and collection loss

Effective Gross Income Multiplier

A ratio that compares sale price or value to a single year's EGI (effective gross income) expectancy

or an annual average of several years' EGI expectancy EGIM = Sale Price/EGI

Efficiency Ratio

The ratio between a building's net rentable area (tenant occupied space) and its gross area

including the building core and common areas

prevent the legal transfer of property They are usually revealed through title search

Equal Credit Opportunity Act (ECOA)

A federal law requiring lenders and other creditors to make credit equally available without

discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs

Equity Capitalization Rate

An income rate that reflects the relationship between a single year's cash flows (or an annual

average of several year's pre-tax cash flows) and the owner's equity investment (aka equity

dividend rate, cash on cash rate, or cash flow rate) Used in Direct Capitalization to convert cash flows into an equity value indication

Equity Yield Rate

The annualized rate of return on equity capital Includes "return on" and "return of" the investment

et al

And others

Exclusive Right To Sell

A contract to sell property that specifically states that the listing agent collects a commission

regardless of who sells the property, including the owner

External Obsolescence

A defect (usually incurable) outside the property that negatively affects value (An element of

accrued depreciation) Examples include heavy traffic on a residential street, commercial

businesses encroaching into a residential neighborhood, etc

Fannie Mae

See Federal National Mortgage Association

Farmers Home Administration (FmHA)

Provides financing to farmers and other qualified borrowers who are unable to obtain loans

elsewhere

Federal Home Loan Mortgage Corporation (FHLMC)

Also called Freddie Mac, is a quasi-governmental agency that purchases conventional mortgages

from insured and uninsured depository institutions, HUD, and VA approved mortgage bankers

Federal Housing Administration (FHA)

A government agency that promotes homeownership, renovations, and the remodeling of

residences by issuing government guaranteed loans to homeowners Its main activity is to insure residential mortgage loans made by private lenders and to set underwriting standards

Federal National Mortgage Association (FNMA)

Also known as Fannie Mae Created by Congress, it is a Corporation that purchases and sells

conventional residential mortgages bought from banks, trust companies, S & L's, mortgage

companies, and insurance companies, as well as those insured by FHA or guaranteed by VA FNMA facilitates liquidity in the market by providing funds for one in every seven mortgages

Fee Simple

Absolute ownership not encumbered by any other interest or estate and subject only to the four powers of government; [1] taxation, [2] escheat, [3] eminent domain, [4] police power

FHA Loan

An insured loan made by the Federal Housing Administration - open to all qualified home

purchasers FHA limits the size of loans but limits are usually sufficient to handle moderately priced homes most anywhere in the country

FHA Mortgage Insurance

A fee (up to 3% of the loan amount) paid at closing or a portion added to each monthly payment of

an FHA loan, to insure the loan with FHA FHA mortgage insurance also requires an annual fee of 0.5 % of the current loan amount

See Curable functional obsolescence and Incurable functional obsolescence

General Warranty Deed

A covenant/warranty in the deed that binds the grantor and heirs to defend the title against the

lawful claims of all persons It conveys not only all the grantor's interests but also warrants that if the title is defective or has a "cloud" on it (tax liens, title claims, judgments, mortgages, mechanic's liens, etc.) the grantee may hold the grantor liable

A value created by the proven/successful business operation It is a separate entity valued with an established business

Government National Mortgage Association (GNMA - Ginnie Mae)

Also known as Ginnie Mae It provides sources of funds for residential mortgages, insured or

guaranteed by FHA or VA by subsidizing these mortgages and issuing mortgage backed federally insured securities

Graduated Payment Mortgage (GPM)

A flexible-payment mortgage where payments increase for a specified period of time then level off This type of mortgage can have include negative amortization

Gross Building Area

Total floor area measured from the exterior walls - the most common standard of measure,

especially in computing size of industrial buildings (Excludes unenclosed areas)

Gross Income

Income produced from the operation/management of real estate Usually stated on an annual

basis See effective gross income and potential gross income

Gross Income Multiplier

See effective gross income multiplier (EGIM) or potential gross income multiplier (PGIM)

Gross Leasable Area

Total floor area designed for the occupancy/exclusive use of tenants (includes basements and mezzanines) It is the standard of measure usually used for shopping centers

Gross Living Area

Total area of finished and "above grade" residential space The standard usually used for

determining the amount of habitable space in residential properties

Gross Rent Multiplier

A ratio expressing the relationship between sale price or value and gross rental income

Ground Rent

The rent paid for the right to use/occupy land

Highest And Best Use

The most probable use of land or improved property that is; [1] legally possible, [2] physically

possible, [3] financially feasible (and appropriately supportable ) from the market, and [4] which results in maximum profitability HBU As Vacant - The use of a property as vacant or that which

can be made vacant thru demolition HBU As Improved - The use that should be made of an

improved property as it exists HBU "as vacant" is often different from HBU "as improved" See Consistent Use

Holdover Tenant

A tenant who remains in possession of the leased premises after lease expiration In some states, a lease may be considered automatically renewed if the lessor accepts rent payment after expiration

Home Equity Line of Credit

A form of open end credit in which the home is used as collateral

Housing Expenses-to-Income Ratio

A ratio that expresses the relationship between a borrower's housing expenses and net effective income (FHA/VA loans) or gross monthly income (Conventional loans)

HUD

U.S Department of Housing and Urban Development Office of Housing/Federal Housing

Administration within HUD that insures home mortgage loans and sets minimum loan standards

Impound

That portion of a borrower's monthly payments held by the lender (fiduciary) to pay for taxes,

assessments, hazard insurance, mortgage insurance, lease payments, etc as they become due (aka reserves)

Income Capitalization Approach

A valuation approach for income producing properties that converts the anticipated benefits

(positive cash flows and reversion/resale) into a value estimate by one of two methods; [1] direct capitalization of a single year's income estimate -or- an average of several year's income estimates, and/or [2] by discounting all anticipated annual cash flows and the reversion (equity gain after loan payoff) to a present value estimate using a specified "yield" rate

Income Rate

A measure of investment that reflects the ratio of a single year's income (or average of year's) to value, e.g., equity cap rate (Re), overall cap rate (Ro), mortgage constant (Rm) (aka cash flow rate) An income rate (single year measure) is not the same as a yield rate (measure of total

return)

Increasing And Decreasing Returns

A valuation concept that successive increments of one or more of the agents of production added to fixed amounts of other agents will enhance income at an increasing rate until a maximum is

reached Then, income will cease to increase proportionately with expenditures (commonly applies

to over-improvements)

Incurable Functional Obsolescence