Client Resources
Glossary
At Bob Parks Realty, we want you to feel comfortable with the real estate process. We know you have questions, and we look forward to assisting you. In the meantime, we have provided you with a glossary of real estate terms.
Agency
Agency is a relationship in which one person (the agent) is authorized to act on behalf of the best interests of another (the principal or client) in business dealings with third persons.
Appraisal
An estimate of the value of a certain property by a qualified, independent individual.
Client
A party to a transaction with whom the broker has entered into a specific written agency agreement to provide services.
Condominium
A form of home ownership in which the owner owns the airspace within the walls but doesn’t own the actual walls, ceilings, or floors of the home. The owner may also own a percentage of the common areas, such as the swimming pool.
Contingency
A provision included in a sales contract stating that certain events must occur or certain conditions must be met before the contract is valid.
Conventional Mortgage
A type of mortgage made by banks and other lending institutions that is not insured by the Federal Housing Administration (FHA), Farmers Home Administration (FMHA), or Veterans’ Administration (VA).
Counteroffer
An offer made by one party that makes changes to the original or latest offer of the other party. Can be made by the seller or the buyer.
Credit Report
A report of all of your debt information compiled by an independent agency. The credit report shows all outstanding debt as well as a record of payment on outstanding debts.
Customer
Any party other than a client in a transaction, for whom or to whom a licensee provides services.
Deed
The legal document that conveys the title to a property.
Designated Agent
A licensee who has been chosen by such licensee’s managing broker to serve as the agent of an actual or prospective party to a transaction, to the exclusion of other licensees employed by or affiliated with such broker.
Dual Agent
A situation in which the licensee has agreements to provide services as an agent to more than one (1) party in a specific transaction and in which the interests of such parties are adverse.
Earnest Money
A deposit you make when you make an offer on a house.
Easement
A right given by the landowner to use the property. For example, you may have easements on your property for phone lines, utility poles, and so on.
Equity
The financial interest or cash value of your home, minus the current loan balance(s). If selling the home, this would also be minus any costs incurred in selling the home.
Escrow
A trust account created by a neutral third party to hold money for the seller or buyer.
Good Faith Estimate
A lender must give a prospective homebuyer a written estimate of closing costs within three days of submitting a mortgage loan application. It is a good idea to request this estimate before choosing a lender so that you can compare lenders’ fees.
Loan Origination Fee
A fee charged by the lender – usually 1 percent of the loan amount.
Material
Any statement, representation or fact relative to a transaction that would affect a reasonable person’s decision to enter into an agreement and which has been identified by such person as being of significance to a particular party.
Pre-approved
Meeting with a lender and providing all the financial details to get pre-approved for a loan. When you are pre-approved, you have a definite commitment from a lender. Compare this to pre-qualify.
Pre-qualify
Meeting or talking with a lender informally, providing the lender with your financial information, and then having the lender qualify you for a loan for a certain amount. When you are pre-qualified, the lender gives you an estimate but does not formally commit to giving you a loan. Compare this to pre-approved.
Principal
The amount of money borrowed and still owed on a loan not including the interest.
Private Mortgage Insurance (PMI)
Insurance that protects mortgage lenders against default on loans by providing a way for mortgage companies to recoup the costs of foreclosure. PMI is usually required if the down payment is less than 20 percent of the sale price. Homebuyers pay for the coverage in monthly installments. PMI is usually terminated when the homebuyer has built up 20 percent equity in the property.
Proration
The division of certain fees. If the sellers have paid for taxes six months in advance, for example, they may want a portion of that payment back for the months you are living in the house.
Real Estate Settlement Procedures Act (RESPA)
This act requires the lender to disclose certain information about a loan, including the estimated closing costs and APR.
Sales Contract
The contract you draw up when you want to make an offer on a home. Sometimes called the purchase agreement.
Survey
An examination of a property’s boundaries to determine the quantity of land, location of improvements, and other information. Usually the surveyor creates a map or drawing of the legal boundaries of the property.
Transaction / Facilitator Broker
Any licensee (A) who assists one (1) or more parties to a transaction who has not entered into a specific written agency agreement to represent one (1) or more of the parties; or (B) whose specific written agency agreement provides that if the licensee or someone associated with the licensee also represents another party to the same transaction.
Transaction
The purchase, sale, rental, or option of an interest in real estate or business opportunity.
