Usually used to mean the same thing as “national economy” when talking about the economy or economic factors and forces at the macro-level (as opposed to the micro-level).
Risk factors or variables that have the ability to alter the prices and returns on all properties in all markets.
The trademark of the mortgage insurance company MGIC Mortgage Marketing Corporation for the first non-federal secondary market for conventional mortgages.
The angle between magnetic north and true north, measured in degrees east or west.
Member of Appraisal Institute.
A railroad line’s main or through track, on which traffic moves through yards or between stations. The main line follows a timetable or train order and is controlled by block signal indication.
The expense incurred in order to keep a property in good working order.
Activities necessary to restore a property’s normal wear and tear.
The care and work put into a building to keep it operational and productive; general building repair and upkeep. Deferred maintenance contributes to a building’s value loss.
A charge or lien imposed on property owners to keep their real estate in operation and productive use, particularly in condominiums. The amount of the maintenance fee in a condominium is usually determined by the board of directors after a review of the budgets. Typically, there are two budgets. The first is intended to anticipate monthly needs with totals by category for the entire year. Monthly financial statements compare actual receipts and disbursements to operating budget figures, providing a clear financial picture upon which management decisions can be made.
A five-year capital budget, prepared or updated on a yearly basis, is intended to anticipate major expenditures such as painting the building, purchasing association insurance for the common areas, re-carpeting corridors, and replacing any large-ticket items. To cover these costs, a reserve fund is established. This reserve fund money is kept in regular savings accounts or higher yield time certificate deposits and is withdrawn as needed for disbursements.
An owner’s association charges a fee to cover the costs of running the property.
The age at which a person is no longer considered a minor and can enter into contracts without parental consent. The majority of states set the legal drinking age at eighteen years old.
The individual (borrower) who signs a promissory note and thus becomes primarily liable for payment to the payee (lender). The drawer is the person who creates a check.
The commission of a clearly unlawful act, especially when committed by a public official.
A landscaped public space designated for pedestrians. Malls are common components of large retail shopping centers. They are being built in established downtown retail areas to revitalize existing businesses, as well as in suburban areas to generate new business.
A shopping center’s covered public space that connects individual retail establishments.
Being able to keep an eye on how an investment is doing and make changes as needed.
The agreement that serves as the foundation for the property owner’s relationship with the property management agency.
A contract between the owner of a property that makes money and the person or company in charge of managing that property. The management agreement spells out how much power the agent has, as well as their duties, pay, how to fire them, how to pay for expenses, and other things. A written management agreement should include, at a minimum, the legal description of the property to be managed, hold-harmless clauses, the scope of services, the rate and schedule of compensation, requirements for accounting and reports, the start date, the end date, and any options for renewal.
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The agreement between a property owner and a management business that specifies the management company’s responsibilities, duration, and fees.
Risk that a property may not be managed successfully, resulting in a decrease in net cash flows and returns.
A detailed examination of a property’s economic, physical, and operational aspects, with recommendations for changes and improvements that could increase the property’s profitability.
You have authorized a real estate agent to manage your property.
Used in the construction process.
The partner who makes the decisions and carries the majority of the risk in a limited partnership.
An investor’s or manager’s efforts to control or reduce investment risk.
A court-issued emergency writ directing a public official to perform a specific action. A court, for example, might order a reluctant public official to issue a real estate license if the complainant is qualified, or it might order a governmental agency to issue a building permit if the complainant is qualified.
A style of architecture where the top floor or floors of a building are made to look like the roof. A roof like this has two slopes on each of the building’s four sides, with the upper slope being less steep.
Tax of one percent of the selling price on any residence that costs more than $1,000,000 is placed on the buyer.
The decorative piece that goes around the edge of a fireplace. Most mantels are made of pretty wood and have a shelf on top.
The area above a fireplace opening where a shelf is located.
A type of housing unit that is built in a factory according to the Federal Manufactured Home Construction and Safety Standards (HUD, Title 6), has at least 320 square feet, and is built on a permanent chassis. Not more than 5 percent are moved more than once.
Even though many communities have zoning laws that limit factory-built housing, manufactured housing is a cost-effective way to deal with rising housing costs in many parts of the country. But both Fannie Mae and Freddie Mac will buy mortgage loans backed by a manufactured home on the secondary market if certain conditions are met. At the very least, the home must be a single-family dwelling that is considered real property in that community, and it must be permanently attached to the foundation according to the manufacturer’s requirements for anchoring, support, stability, and maintenance.
Smaller pieces of wood are glued or mechanically connected together to create a bigger piece of wood, like a truss, beam, glue lam or microlam.
A printed instruction handbook that comes with a product.
A graphical depiction of a part of the earth’s surface rendered to scale and on a precise projection, displaying both natural and man-made elements.
An ordered system of lines on a plane - that represents an imagined system of lines on a datum surface.
Land surveys are made by registered surveyors or civil engineers and show landmarks, boundaries, area, ownership, and other things about a piece of land. Most of the time, sub-dividers must send maps and plats of proposed subdivisions along with their applications to record and register the subdivisions (if the Torrens system is used). After that, when lots in a subdivision are sold, the legal description only needs to say the subdivision, lot, and block number, which can be found on the map that was recorded.
On adjustable rate mortgages, the “markup” is often two to three percentage points over the index rate.
In an adjustable-rate loan, the amount added to the index rate represents the lender’s cost of doing business (costs, profits, and loan risk). In most cases, the margin remains constant throughout the life of the loan.
The gains obtained from an additional unit of output are described as an economic term. It might be used to express the financial benefits of extra investment in a financial context.
The cost of producing each extra unit of an item or service in terms of economic terms.
The cost of one more dollar in new capital funds.
The expense of increasing one’s production rate by one unit every period.
Land that isn’t worth much because it’s hard to get to, doesn’t get enough rain, or has steep terrain. Modern techniques for reclaiming and developing land have made it possible to turn some unusable land into attractive and useful developments. Former desert land, for example, has been turned into nice subdivisions.
Property that is just marginally profitable to operate.
A county recorder’s notation of a satisfaction or release of mortgage, as evidenced by a note of its liber (book) and page number on the margin of the recorded mortgage.
An economic phrase used to indicate money generated by the sale of an extra unit of an item or service.
The rate of income tax that is charged on the last dollar of income. This number is often used when figuring out how to invest money.
The tax rate that is applied to the last dollar of income.
Satisfaction resulting from the purchase of an additional unit of an economic item or service.
A place for boats to dock and stay that usually has places to fix them, gas, supplies, and other amenities. Also called a boat basin.
The federal estate tax deduction equal to 100 percent of the assets passing to the surviving spouse.
A type of signature symbol.
To recalculate an asset’s worth depending on its current market price.
An institution that enables the exchange of goods and/or services.
A collection of properties that are each competitive to a specific type of buyer.
Changes in market conditions or parameters caused by one or more market signals, such as price changes caused by shifts in supply and demand. Usually referred to as cycles, fluctuations, or trends (categories that differ in terms of cause, duration, and impact on commercial real estate markets).
The integration of supply and demand analyses in a particular market.
Supply and demand economic dynamics and their effects on real estate profits, risks, and valuations are studied.
The process of looking at market supply and demand, demographics, and opportunities, finding alternative locations or sites that meet certain goals or meet certain criteria, and figuring out if they are financially viable. This helps make decisions about the commercial potential or suitability of different locations or sites for a certain activity or use.
An assessment approach that determines the worth of a property by comparing it to the market value of similar structures sold recently in a comparable market location.
The geographical region containing the majority of demand and the majority of competitors.
A place like a Metropolitan Statistical Area where supply and demand affect how business is done (MSA).
At a given period in time, the connection between supply and demand for a certain type of real estate in a local market.
Interest rates, demographics, employment levels, vacancy rates, and absorption levels are just a few examples of market characteristics to consider.
Information/data is collected and shown for a given market or by market area.
One of the three conventional assessment methods. The examination of previous sales of similar properties gives an indicator of value.
A way to figure out how much a property is worth by looking at how much it sold or rented for recently.
The amount of an economic commodity or service that will be desired at various price levels is represented by a curve. Demand curves are usually downward sloping, showing that as prices rise, so does demand.
Refers to how market conditions change and the underlying processes that cause change and define or re-define the relationships between different parts of an economic system (consider the change in price levels of a given commodity as an outcome of the forces and interplay of supply and demand).
A site’s evaluation or selection, or an analysis of a site’s highest and best use.
In a given real estate market, the demand for space minus the supply of space for a specific type of commercial property.
A subset within a market segment that can be distinguished from the remainder of the segment by particular features.
Advantageous market circumstances that facilitate a particular action or outcome that is generally regarded as profitable.
Critical summary characteristics of a real estate market, such as occupancy rates, rental rate increases, or sales rates.
The proportion of overall demand captured by a project in a market area.
A property’s actual purchase price; ‘market value’ is simply an estimate.
Commodity pricing (including rental rates for various types of commercial properties) as determined by market forces and factors of influence.
The rent that a property would fetch on the open market if it were unoccupied and available right now.
The rent that might be earned if a property was rented on the open market.
Tries to ascertain consumer sentiments; attempts to ascertain what customers want, where they want it, and how much they are ready to pay for it.
A study of customer demands used to create a product that is appropriate for a specific market segment.
The investigation of market circumstances in a certain location.
Because of changes in the marketplace’s economic conditions, there’s a chance that net operating income will fall short of forecasts.
The chance that an investment’s market value will go down if the market goes down.
Risk factors or circumstances that cannot be mitigated. Also known as systemic risk factors.
A wide picture of a region’s economics and demography.
Submarket identification and demarcation
Based on current market patterns and trends, the percentage of total sales in a retail category that each competing outlet is expected to capture.
An effort to mimic the activities of buyers and sellers in the market. In real estate, it would be an effort to predict the result of a real estate transaction by modeling the activities of “most likely” buyers and sellers.
A plan of action set up for a certain phase of the real estate market. For example, think about the market strategy of not buying or selling real estate when there is too much space on the market.
The price at which a property may be purchased on the open market in an arm’s-length transaction under all of the circumstances necessary for a fair sale. The commonly recognized definition assumes that both the buyer and the seller behave responsibly and with knowledge, and that the price is not altered by undue stimulation received by any side.
The price a property should sell for in a competitive market with a regular offering period, no coercion, arm’s-length negotiation, standard financing, and well-informed buyers and sellers.
The greatest price at which a property is expected to sell, usually agreed upon by the vendor and the listing agency.
A qualified buyer’s pricing range for a property.
The most likely price a property should fetch in a competitive and open market under all conditions necessary for a fair sale as defined by federal lending institutions (Fannie Mae, Freddie Mac). Such conditions include the assumption that both the buyer and seller acted prudently and with knowledge, and that the price was not influenced by undue stimulus. The consummation of a sale as of a specified date and the passing of title from seller to buyer are implied in this definition if the following conditions are met:
- Both the buyer and the seller are usually motivated.
- Both parties are well-informed or well-advised, and they are acting in their best interests.
- A reasonable amount of time is allowed for open market exposure.
- Payment is made in cash in US dollars or via comparable financial arrangements.
- The price represents the normal consideration for the property sold, unaffected by any special or creative financing or sales concessions granted by anyone involved in the transaction.
This is an estimate of the property’s value based on the current status of the market.
The most likely price for a property in a competitive and open market under fair sale conditions. An estimate of this price is also referred to as market value.
Normal selling price adjusted for changes in market circumstances between the date of sale and the date of the subject property’s appraisal.
The ability to quickly sell or lease a property. Marketability is concerned with the appeal and demand for a particular property, good, or service.
An examination of how to bring a product or service to market. It evaluates the product’s or service’s features in connection to the demands of potential customers, as well as which marketing channels are most likely to generate the intended outcomes.
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Real estate title that is devoid of reasonable questions.
The term “merchantable title” refers to a title that is free of defects that could lead to a lawsuit. A marketable title is one that: 1) doesn’t have any hidden encumbrances; 2) doesn’t have any serious flaws and doesn’t rely on doubtful questions of law or fact to prove its validity; 3) doesn’t put a buyer at risk of lawsuits or embarrassment while enjoying the property; and 4) would be accepted by reasonably well-informed and prudent people acting on business principles and knowing the facts and their legal significance.
A marketable title doesn’t have to be perfect; it just has to be free of reasonable or plausible arguments against it. If asked to order specific performance of the sales contract, a court would tell the buyer to take it.
If there was a big chance of a lawsuit, the title wouldn’t be marketable, and the buyer couldn’t be forced to buy the lawsuit along with the property. An unmarketable title doesn’t mean that the property can’t be transferred, but it does mean that certain flaws in the title may limit or restrict its ownership, and the buyer can’t be forced to accept a transfer that is significantly different from what was agreed upon or “marketed” in the contract of sale.
If the buyer writes into the contract that the seller must deliver the title “free from all defects or encumbrances,” the seller should know that the buyer could probably reject the title even if there was a small or insignificant defect or encumbrance. If the contract doesn’t say otherwise (in a “subject to” clause), any of the following could make the title unmarketable: easements, restrictions, violations of restrictions, zoning ordinance violations, existing leases, encroachments (except for small ones), and outstanding mineral and oil rights.
A burdensome zoning ordinance does not generally render title unmarketable. But if a seller lies and says that a zoning ordinance won’t stop a buyer from using the property the way they want to, when in fact it will, the zoning ordinance may be the same as a lien or encumbrance. Also, if the seller doesn’t tell the buyer about a zoning ordinance violation, it could be considered fraud or give the buyer the right to get out of the contract.
The buyer must ask about the title’s ability to be sold before accepting the deed. Once the buyer has signed the deed, the only thing he or she can do is sue based on any warranties that are written into the deed.
A title that is devoid of flaws.
State regulations aimed at limiting the number of years a title search must “reach back” through the title “chain.”
The time between the beginning of marketing and the final closing. The popularity of the sale is proportional to the length of the marketing period.
People who work in an office building.
A wall can be constructed from a variety of different building materials that are all joined together with mortar.
The primary conveyance document used by owners of land on which condominiums are built. According to state law, the master deed, along with a declaration, must be submitted when recording or registering the condominium.
A piece of legislation allowing the construction of a condominium.
A master form instrument is a document that is filed with the county registrar and has several forms, such as covenants and other clauses in a mortgage or deed of trust. Such a thing doesn’t have to be recognized (notarized and witnessed). It is organized by the name of the person who wrote it down. After that, any part of a master form instrument can be included in a mortgage or deed of trust by referring to it, as long as the reference says that the master is recorded in the county and gives the date, file number, volume, and page. A reference like this should also say that the person who signed the mortgage or deed of trust was given a copy of the master.
A building’s or development’s dominant lease. A developer, for example, might lease land from a fee owner, build a building or condominium, and then sublease space to others. Because the sublease is subject to the terms of the master lease, the provisions in the sublease generally conform to the terms of the master lease.
A lease with a lot of power.
A limited partnership formed under state partnership law in which the limited partnership’s interests are registered to be publicly traded; also known as a publicly traded limited partnership. The partnership interests are distributed to a “master” limited partner, who then arranges for the public sale of the units.
A long-term plan for how the land in a certain area will change over time.
The person or company in charge of servicing mortgage loans.
A wall switch that can be used to control more than one light or outlet in a room.
Coatings and cements are made from this paste-like substance
The second step in a four-step process for managing transactions is to gather and evaluate information about a property in order to bring together the investor and the user. During the match stage, the letters MATCH stand for the tasks to market, analyse, target, compare, and highlight.
Any information that can help someone make a decision. Real estate licensees must tell their clients all important facts, especially about the property’s condition, such as known structural flaws, violations of building codes, and hidden dangers. Using seller disclosure statements, which are now required in a number of states, moves a lot of the burden of disclosure from the real estate licensee to the seller.
Brokers are often in a no-win situation when they have to decide if a certain fact is important enough that it needs to be told to a potential buyer. For example, if a murder happened on the property ten years ago or if the neighbors throw loud parties, these are facts that need to be told. It can be hard to tell the difference between “factual” and “personal” “Real estate taxes are low” is not the same as “real estate taxes are $500 per year.” Even if brokers are acting in good faith, they could still be held responsible if they did not use reasonable care or competence to find and share important facts that the broker knew or should have known “ought to have known.”
Under the rules of fair housing law, the fact that a person living in a home has AIDS is not considered to be a material fact. If a broker doesn’t tell the client about this fact, they are not guilty of hiding a material fact.
The person who made the materials used to build an improvement. If the owner or the main contractor owes the material man money that hasn’t been paid, the material man can put a lien on the property. The material man has until the deadline set by state law to file a lien. Usually, the date of completion is used to figure this out.
Suppliers of materials used in the building or upgrading of real estate.
Claim based on the supply of materials in connection with the construction or improvement of real property.
The deadline for repaying a debt.
When a debt, such as a mortgage note, becomes due and is extinguished if paid in accordance with the agreed-upon payment schedule.
Banks, thrifts, and other financial organizations face a situation in which long-term assets are supported by short-term liabilities.
The arithmetic average is used in statistics.
The mean, also known as the average, is the value that falls in the middle of a group of values.
The middle number of a group of numbers. 5 is the average of 1, 3, 7, and 9.
The average value of a variable in a sample. This is a measure of central tendency for a set of values.
A surveyor’s use of an artificial line to measure the natural, uneven, winding property line formed by rivers, streams, and other watercourses bordering a property. The meander line is used to measure area rather than to delimit title or determine a boundary line. Surveyors will sometimes use straight lines to approximate the natural line on courses. The true boundary of land described as being bounded by a meander line is the stream or waters. imply high water See also high water mark.
The rule of law established by statute or case law regarding the amount of damages a plaintiff can recover from a defendant for breach of contract or other civil wrong.
Real estate professionals can do their jobs better if they know the metric equivalents of U.S. measurements. The Metric Conversion Act of 1975 says how the U.S. system can be changed to the International Metric System.
Real Estate Glossary M [Part 2]