Miguel Avila | Real Estate Agent | Long & Foster

Real Estate Questions & Answers

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A 1031 exchange lets you delay capital gains taxes on real estate investments. This is also known as Starker exchange after the man who won the court battle to delay tax on real estate transactions.

A 1099 form is a statement of income reported to the Internal Revenue Service (IRS) for an independent contractor.

Most states require a 24-hour notice to the current tenant before entering a rental unit.

A

A/I is a contract that is pending with attorney and inspection contingencies.

An accompanied showing are those showings where the listing agent must accompany an agent and their clients when viewing a listing.

A real estate addendum is used to update an original purchase or lease agreement.

Adjustable rate mortgages (ARMs) are a type of mortgage loan whose interest rate is tied to an economic index, which fluctuates with the market. Typical ARM periods are one, three, five and seven years.

The total costs (interest rate, closing costs and fees) that are part of a borrower's loan, expressed as a percentage rate of interest. The total costs are amortized over the term of the loan.

An application fee is a fee that mortgage companies charge buyers at the time of written application for a loan; for example, fees for running credit reports of borrowers, property appraisal fees, and lender-specific fees.

An appraisal documents the value of a property at a specific point in time, and it is performed by a professional appraiser during the process of obtaining a mortgage.

The appraised price is the price a third-party relocation company offers (under most contracts) the seller for their property. Generally, this is the average of two or more independent appraisals.

When a property goes under contract "as-is," it means there is a clause in the offer stating that the seller will not repair or correct any problems with the property. This phrase may also be used in listing and marketing materials.

An assumable mortgage is one in which the buyer agrees to fulfill the obligations of the existing loan agreement that the seller made with the lender. When assuming a mortgage, a buyer becomes personally liable for the payment of principal and interest. The original mortgagor should receive a written release from the liability when the buyer assumes the original mortgage.

B

Back on market (BOM) may be used when a property or listing is placed back on the market after being removed from the market recently.

A back-up agent is a licensed agent who works with clients when their primary agent is unavailable.

A balloon mortgage is a type of mortgage that is generally paid over a short period of time, but it is amortized over a longer period. The borrower typically pays a combination of principal and interest. At the end of the loan term, the entire unpaid balance must be repaid.

A back-up offer is when an offer is accepted contingent on the fall through or voiding of an accepted first offer on a property.

The bill of sale transfers title to personal property in a transaction.

An association of Realtors in a specific geographic area.

The broker of record is the person registered with their state licensing authority who serves as the managing broker of a specific real estate sales office or company.

A broker's market analysis is the real estate broker's opinion of the expected final net sale price, determined after acquisition of the property by the third-party company.

The broker's price opinion is the real estate broker's opinion of the expected final net sale price, determined prior to the acquisition of the property.

A broker's tour is a preset time and day when real estate sales agents can view listings by multiple brokerages in the market.

A buyer's agent is the agent who shows the buyer properties they are interested in purchasing, negotiates the contract or offer for the buyer, and works with the buyer to close the transaction.

C

Carrying costs are the cost incurred to maintain a property (for example, taxes, interest, insurance and utilities).

A closing occurs at the end of a transaction process where the deed is delivered, documents are signed and funds are dispersed.

A Closing Disclosure is a document that gives consumers the final details about the mortgage they have chosen when buying or refinancing a property. It includes the terms of the loan, closing costs and the projected monthly payment. The lender is required to provide the Closing Disclosure to the consumer at least three business days before closing.

CLUE stands for Comprehensive Loss Underwriting Exchange and is the insurance industry's national database that assigns individuals a risk score. CLUE also has an electronic file of a property's insurance history. These files are accessible by insurance companies nationally. These files could impact the ability to sell a property as they might contain information that a prospective buyer might find objectionable, and in some cases not even insurable.

A real estate commission is the compensation paid to the listing brokerage by the seller for selling the property. A buyer agency agreement may require the buyer to pay a commission to their agent.

A commission split is the percentage split of commission compensation between the real estate sales brokerage and the real estate sales agent or broker.

A comparative market analysis is the study done by real estate sales agents and brokers using active, pending and sold comparable properties to estimate a listing price for a property.

An association of all property owners in a condominium or all property owners in a designated neighborhood. They may collect dues to help pay for the community's shared assets and amenities and make decisions on things like large-scale repairs and community appearance guidelines.

A condominium/homeowners association budget is a financial forecast and report of a condominium/homeowners association's expenses and savings.

Condominium/homeowners association by-laws are rules passed by the condominium or homeowners association used in administration of the condominium property or properties in a neighborhood.

Condominium/homeowners association declarations are a document that legally establishes a condominium/homeowners association.

A condominium right of first refusal is a person or an association that has the first opportunity to purchase condominium real estate when it becomes available or the right to meet any other offer.

Condominium/homeowners association rules and regulations are the rules of a condominium/homeowners association by which owners agree to abide.

A contingency is a provision in a contract requiring certain acts to be completed before the contract is binding. For example, a seller may include a contingency that they must close on their new home before the sale of their current home can close.

Continue to show is when a property is under contract with contingencies, but the seller requests that the property continue to be shown to prospective buyers until contingencies are released.

A contract for deed is a sales contract in which the buyer takes possession of the property but the seller holds title until the loan is paid. This is also known as an installment sale contract.

A contract of sale is an agreement between the third-party relocation company and the seller (transferee) whereby the third-party company purchases the property owned by the seller.

A conventional mortgage is a type of mortgage that has certain limitations placed on it to meet secondary market guidelines. Mortgage companies, banks, and savings and loans underwrite conventional mortgages.

A cooperating commission is offered to the buyer's agent brokerage for bringing a buyer to the selling brokerage's listing.

A cooperative (co-op) is where the shareholders of a corporation are the inhabitants of the building. Each shareholder has the right to lease a specific unit. The difference between a co-op and a condo is in a co-op, one owns shares in a corporation; in a condo one owns the unit fee simple.

A corporate client is the company with whom the third-party relocation company has an agreement to handle the relocating employees.

A counteroffer is the response to an offer or a bid by the seller or buyer after the original offer or bid.

A credit report includes all the history for a borrower's credit accounts, outstanding debts and payment timelines on past or current debts.

A credit score is the score assigned to a borrower's credit report based on the information contained therein. It provides lenders and others with a general idea of the health of someone's credit.

Curb appeal is the visual impact a property projects from the street.

 

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D

Days on market is the number of days a property has been on the market for sale.

Destination services are services provided to a transferee at their new location, typically during a corporate relocation. These can include familiarization tours, temporary housing and school searches, among similar services.

Direct home-selling costs include carrying costs, loss on sale, repairs and improvements, commission, closing costs, principal, interest, taxes and insurance, interest on equity loans, and utilities.

Disclosures forms or statements are often required by federal, state, county and local authorities, and in these documents, the seller must disclose certain defects, problems or issues with a property and the buyer acknowledges these items.

A down payment is the amount of cash put toward a purchase by a buyer, or borrower.

A dual agent is a state-licensed individual who represents both the seller and the buyer in a single transaction. Some states do not allow dual agents.

E

An earnest money deposit is the money given to the seller at the time the offer is made as a sign of the buyer's good faith.

This type of escrow account is an account into which borrowers pay monthly proration's for real estate taxes and property insurance.

Exclusions are fixtures or personal property in a home that are excluded from the contract or offer to purchase.

An expired listing is a property listing that has expired per the terms of the listing agreement.

F

Fee simple is a form of property ownership where the owner has the right to use and dispose of property at will.

FHA is the acronym for the Federal Housing Administration, a government agency that provides mortgage insurance on property loans made through FHA-approved lenders.

An FHA loan guarantee is a guarantee by the FHA that a percentage of a loan will be underwritten by a mortgage company or banker.

A fixture is personal property that has become part of the property through permanent attachment, such as a ceiling fan.

Flat fee is a predetermined amount of compensation received, or paid, for a specific service in a real estate transaction.

For sale by owner (FSBO) means that a property is for sale by its owner without representation from a real estate agent or brokerage.

G

A gift letter is a letter to a lender stating that a gift of cash has been made to a buyer and that the person gifting the cash is not expecting the gift to be repaid. The exact wording of the gift letter should be requested of the lender.

Under the Real Estate Settlement Procedures Act, within three days of an application submission, lenders are required to provide in writing to potential borrowers a good faith estimate of closing costs.

Gross closed commission income is the total amount of commission income a real estate sales agent or broker receives from closed transactions.

Gross sale price is the sale price before any concessions.

Often used in employee relocations, a guaranteed offer is the amount, after appraisals, the employer offers the transferring employee for their property.

H

Hazard insurance is insurance that covers losses to real estate from damages that might affect its value.

Home-finding assistance is additional assistance provided by a third-party relocation company that can include information about the destination community.

Homeowner's insurance is insurance coverage that includes personal liability and theft insurance, as well as hazard insurance, to protect a person's house.

HUD is the acronym for the U.S. Department of Housing and Urban Development, a federal agency that enforces fair housing laws and oversees national policies and programs that work to address housing needs of Americans.

A hybrid-adjustable rate offers a fixed rate on the mortgage for the first 5 years and then adjusts annually for the next 25 years.

I

IDX stands for Internet Data Exchange and allows real estate brokers to advertise each other's listings posted to listing databases such as the multiple listing service.

Inclusions are fixtures or personal property in a home that are included in a contract or offer to purchase.

A real estate sales agent who conducts real estate business through a broker is an independent contractor. This agent does not receive salary or benefits from the broker.

An inspection contingency, or inspection rider, allows the home buyer to have the home they have made an offer on inspected by a professional. The contingency can be for information purposes only or give the buyer an opportunity to further negotiate the terms of the sale or void the contract entirely.

An installment land contract is a contract in which the buyer takes possession of the property while the seller retains the title to the property until the loan is paid.

Interest rate float is when the borrower decides to delay locking their interest rate on their loan. They can float their rate in expectation of the rate moving down. At the end of the float period, they must lock a rate.

Interest rate lock is when the borrower and lender agree to lock a rate on loan. Terms and conditions may be attached to the lock.

In general real estate terms, inventory refers to the number of available homes on the market. In terms of relocation, inventory is a transferee's property that a third-party relocation company has acquired.

J

 

K

 

L

A list date is the actual date a property was listed for sale with the current broker.

A list price is the price of a property agreed upon in a listing agreement.

When a property is listed for sale with a real estate agent who has a written agreement with the sellers to represent them and their property, it is referred to by agents as a listing.

A listing agent is the real estate sales agent that is representing the sellers and their property, through a listing agreement.

A listing agreement is a document that establishes the real estate agent's agreement with the sellers to represent their property in the market.

A listing appointment is the time when a real estate sales agent meets with potential clients selling a property to try to secure a listing agreement for them and their property.

A listing exclusion is a clause included in the listing agreement in which the seller requests that if a specific person or persons purchases their home, the agent's listing commission won't apply to the sale.

A loan is an amount of money that is lent to a borrower who agrees to repay the amount plus interest.

A loan application is a document that buyers who are requesting a loan complete and submit to a lender.

Loan closing costs are the costs a lender charges to close a borrower's loan. These costs vary from lender to lender and from market to market.

A loan commitment is a written document telling the borrowers that the mortgage company has agreed to lend them a specific amount of money at a specific interest rate for a specific period. The loan commitment may also contain conditions upon which the loan commitment is based.

A loan package is the group of mortgage documents that the borrower's lender sends to the closing or escrow.

A loan processor is an administrative individual who checks, verifies and assembles all the documents and the buyer's funds and the borrower's loan for closing.

A loan underwriter is one who underwrites a loan for another. Some lenders have investors underwrite a buyer's loan.

A lockbox is a tool that allows secure storage of property keys on the premises for agent use. A combo uses a rotating dial to gain access with a combination; a Supra (electronic lockbox or ELB) features a keypad.

M

A managing broker is a person licensed by the state as a broker who is also the broker of record for a real estate sales office or company. This person manages the daily operations of a real estate sales office.

In a relocation, a market familiarization trip is a visit by the transferee to the new location to view housing market options and location highlights.

In a relocation, the marketing period is a period in which the transferee may market their property (typically 45, 60 or 90 days), as directed by the third-party company's contract with the employer.

A mortgage banker is one who lends the bank's funds to borrowers and brings lenders and borrowers together.

A mortgage broker is a business that (or an individual who) unites lenders and borrowers and processes mortgage applications.

A mortgage loan servicing company is a company that collects monthly mortgage payments from borrowers.

An MLS is a service that compiles available properties for sale by member brokers.

Multiple offers mean more than one buyer broker has presented an offer on one property where all offers are negotiated at the same time.

N

NAR is a national association comprised of real estate professionals. Only real estate agents who are members of NAR can call themselves Realtors.

The net sales price is the gross sales price, less concessions, to the buyers.

 

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O

Off market means a property listing has been removed from the sale inventory in a market. A property can be temporarily or permanently off market.

An offer to purchase is when a buyer proposes certain terms and presents these terms to the seller, often through their real estate agent.

P

A public open house is when a listing that is on market is available to the public for viewings and showings.

A private open house is when people must request an appointment to view a home.

A parcel identification number is a taxing authority's tracking number for a property. Typically, the taxing authority is a town, city or county.

A payoff letter is a written document from a seller's mortgage company stating the amount of money needed to pay the loan in full.

Pending means a real estate contract has been accepted on a property, but the transaction has not yet closed.

A planned unit development is a mixed-use development that sets aside areas for residential use, commercial use and public areas such as schools and parks.

Preapproval is a higher level of buyer/borrower prequalification required by a mortgage lender. Some preapprovals have conditions the borrower must meet.

Prepaid interest is when funds are paid by the borrower at closing based on the number of days left in the month of closing.

A prepayment penalty is a fine imposed on the borrower by the lender when the loan is paid off before it comes due.

Prequalification is when the mortgage company tells a buyer, in advance of the formal mortgage application, how much money they can afford to borrow. Some pre-qualifications have conditions that the borrower must meet.

A preview appointment is when a buyer's agent views a property alone to see if it meets their buyer's needs.

The principal is the amount of money a buyer borrows.

PITI stands for principal, interest, taxes and insurance, which are the four parts that make up a borrower's monthly mortgage payment.

Private mortgage insurance is a special insurance paid by a borrower in monthly installments, typically on loans of more than 80% of the value of the property.

Professional designations are additional educational courses completed by a real estate professional that don't contribute to becoming licensed but offer helpful supplemental education.

A state licensing authority that oversees and disciplines licensees is a professional regulation body.

A promissory note is a promise-to-pay document used with a contract or an offer to purchase.

These types of reports are filed weekly or monthly by the listing or buying agent representing a transferee in a relocation.

Q

 

R

R & I stands for the estimated and actual repair and improvement costs.

A real estate agent, or agent, is an individual who is licensed by the state and who acts on behalf of their client, the buyer or seller. A real estate agent who does not have a broker's license must work for a licensed broker.

A real estate contract is a binding agreement between buyer and seller, which consists of an offer and an acceptance as well as consideration (that is, money).

Realtor is a registered trademark of the National Association of Realtors (NAR) that can be used only by its members. Only real estate agents who are members of NAR can call themselves Realtors.

A release deed is a written document stating that a seller or buyer has satisfied their obligation on a debt. This document is usually recorded.

A property that was listed with another broker but has been relisted with a new broker is a relist.

RESPA refers to the Real Estate Settlement Procedures Act, which provides home buyers and sellers with thorough disclosures of settlement costs and eliminates abusive real estate practices such as kickbacks. The Consumer Financial Protection Bureau enforces RESPA.

A rider is a separate document that is attached to a contract after the contract is written. This is done so that the entire contract does not need to be rewritten.

S

A salaried real estate sales agent or broker is an agent who receives all or part of their compensation on their real estate sales in the form of a salary.

Sale price refers to the final price paid for a listing or property.

A secondary market is a market where mortgage lenders and investors buy and sell existing mortgages or mortgage-backed securities. For example, when a homeowner pays their mortgage payments to one financial institution then is notified that they will make their mortgage payments to a different financial institution, their mortgage has been sold on the secondary market.

A seller is the owner of a property who has signed a listing agreement or a potential listing agreement to sell their property.

A showing is when a listing is shown to prospective buyers or the buyer's agent.

A sign rider is an additional sign placed on a brokerage yard sign, which may include the agent's name, as well as the status of the listing (for example, "Sold" or "Open Sunday"). It can be placed above the signpost or hang below the main sign.

A special assessment is an additional charge to a unit in a condominium or cooperative. It can also be a special real estate tax for improvements that benefit a property.

A state association of Realtors refers to an association of Realtors in a specific state.

A Supra is an electronic lockbox (ELB) that holds keys to a property. The user must have a Supra keypad to use the lockbox.

 

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T

Temporarily off market refers to a listed property that is temporarily taken off the market due to illness, travel, repairs or other similar reasons.

Temporary housing is housing a transferee occupies until permanent housing is selected or becomes available in a relocation.

A third-party company is a relocation company hired by an employer to coordinate an employee's move to a new location.

A transaction is the real estate process from offer to closing or escrow.

A transaction fee is a fixed fee in addition to the commission paid by the sellers.

A transaction management fee is a fee charged to the sellers by the listing broker as part of the listing agreement.

Transaction sides are the two sides of a real estate transaction, the sellers and the buyers. The term is used to record the number of transactions a real estate sales agent, or broker, participated in during a specific period.

U

A property that has an accepted real estate contract between seller and buyer is considered to be under contract.

V

A VA loan guarantee is a guarantee on a mortgage amount backed by the U.S. Department of Veterans Affairs.

In a relocation, a vacate date is the date on which the seller (transferee) vacates the property (generally the date when responsibility for property expense by the transferee ends) and the third-party company assumes ownership for the property through a buyout.

A virtual tour is an online-based video presentation of a property.

W

A W-2 is the IRS form issued by an employer to an employee to reflect compensation and deductions to compensation.

A W-9 is the IRS form requesting taxpayer identification number and certification.

A walk-through is a showing before closing or escrow that permits the buyers one final tour of the property they are purchasing.

X

 

Y

 

Z