Knowing all the terminology is helpful so you can have conversations and be able to further your learning in real estate.
Here is a list of the most common terms you’ll frequently hear in the real estate investing world. You’ll find this helpful so take notes!
This is beating down or removal of rent. It is an incentive/lure given by the landlord to tenants. It is usually given to early occupants of a new building.
Adjustable Rate Mortgage (ARM)
A mortgage is a loan facility offered by the financial institutions to home buyers. An ARM is a loan that attracts varying rates of interest repayments. The adjustment is done based on an adjustment period. The interest rate changes with change in the benchmarking index such as prime rate.
Adjusted Sales Price
This is the total price on the contract, minus the credit facilities offered to the buyer by the seller of a property.
This is a positive change in the value of an asset (including real estate) that is realized after some time. It is mostly used in reference to the gain in value of land and buildings over time. Capital gain is taxable in most countries.
Certificate of Occupancy
This is a document issued by the local authorities (read government) to person(s) or companies utilizing a building, verifying that the said building comply with building codes and regulations as provided for by the government.
This is a term used by real estate brokers when they agree to share commissions raised from a sale or a buy of property. It usually applies when one broker acts on behalf of the buyer and the other is listed as the exclusive agent for the seller.
Comparables/Comparative Market Analysis
This is also referred to as Comps. It is a referencing point that uses a recently sold house that is smaller in size, amenities, location and condition as compared to the property about to be sold. Based on what it fetched, the property at hand’s price will be readjusted to reflect its fair market value.
This is a one- or two- bedroom apartment whose space is enough to create an extra bedroom. Note that the added bedroom ought to have a window for it to be recognized as an extra room legally.
This is a clause inserted in a mortgage deed. It gives the borrower a right to redeem ownership of a property at any time before he has defaulted, by paying the contract amount in full.
Disclosure and Informed Consent
This is a verbal and written consent by a real estate agent explaining the said agent’s position in his agency relations with the client.
This is a situation where one person acts in trust on behalf of the other assuring the other party to an agreement that he will perform as per the agreements in a contract. In such cases, the attorney of the seller acts as the escrow agent where all the money is deposited by the buyer, assuring the seller that the buyer will pay the full contract amount.
Fixed Rate Mortgage
This usually extends between 15 and 30 years. It is a loan that is secured for real estate and whose repayment interest rate will be fixed until the loan is fully settled.