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  • Agency

    A contract by which one party undertakes to represent another in certain business situations, such as realty brokerage.

    Agent

    A person (natural), corporation, society, association or partnership (legal persons) acting by authority of a principal in a realty transaction for compensation.

    Associate Broker

    A broker who chooses to work as a salesperson for a broker (the employing broker).

    Attorney-At-Law

    A lawyer employed by a party to manage a cause.

    Attorney-In-Fact

    Anyone (underlined) who is authorized in writing to perform certain acts for another; valid only during lifetime of party giving this power.

    Binder

    Deposit or earnest money given as evidence of good faith by buyer to secure property until sale is consummated; in insurance, it is memorandum of temporary coverage at passing of papers until formal policy is issued later.

    Bond

    Guarantee by third party that it will make good any loss, up to certain amount, incurred by a party dealing with a broker not acting in good faith; bonding company is Surety and obligor and State is obligee. Broker bond is made payable to State.

    Client

    Principal who hires an agent; CUSTOMER is the other party.

    Commingling

    The mixing of funds held for the benefit of others with the broker's personal or business funds.

    Commission

    Money or other valuable consideration given to broker by principal for services rendered; amount is by agreement (underlined).

    Corporation

    A legal person created by state law owned by one or more people; corp. must be licensed and vonded; at least one (underlined) officer of corp. must be licensed as a broker but all members of the corp. involved or engaged (underlined) in realty must be licensed also.

    Earnest Money

    Deposit or binder given with Agreement to Buy

    Escrow

    The holding of something of value by a person (escrowee or escrow agent) for the benefit of other parties.

    Finder's Fee

    Fee for locating a property, client or customer - commission.

    Friable

    Crumbling/brittle - such as asbestos

    Homestead Laws

    Laws designed to protect homeowner from forced sale of home to satisfy certain unsecured debts.

    National Association of Realtors (NAR)

    A national, private trade association with state and local chapters whose members are called REALTORS. Trademarked.

    Net Listing

    A fixed, specified price below which owner will not sell and at which broker receives no commission; broker receives everything over fixed price; illegal. Seller gets fixed amount.

    Power of Attorney

    Written instrument authorizing another to act in her/his place; person given power is attorney-in-fact.

    Promulgate

    To publish or make known such as license law.

    Reciprocity

    Mutual exchange of privileges.

    Statute

    Act of legislature

    Surety

    One who guarantees performance of another.

    Accrued Depreciation

    Difference between cost of replacing property new as of date of appraisal and present value.

    Amenities

    Features of property making it desirable and thus adding value, such as scenic views, convenient shopping, etc.

    Anticipation

    A forecast of expected benefits during ownership and at time of resale.

    Appraisal

    An estimate of value.

    Appreciation

    Increase in value resulting from market forces.

    Approaches to Value

    Three methods used by appraiser to form an estimate of value such as cost, market and income approaches.

    Arm's Length Transaction

    Sale without duress on either party resulting in fair market value. An open and willing sale.

    Assemblage

    The act of process of combining two or more lots under single ownership.

    Assessed Valuation

    Value given to realty by assessor's office for property taxation purposes. Also called assessment. Actual collection of tax comes from Tax Collector or Treasurer.

    Betterments

    Improvmts. adding to value of realty, done by local government and paid for by ganers of value. Sidewalk, sewer, etc.

    Capitalization

    Process of computing current value from expected future income by dividing annual net (underline) income by selected rate of return desired for that type of property. The cap rate.

    Capitalization Rate

    Profit expressed as a percentage that an investor expects from an investment on a yearly basis. A rate of return.

    Carrying Charges

    Expenses necessary for holding property such as vacant land pending development or zoning charges.

    Cash Flow

    Profit after principal and interest are deducted from net operating income (NOI).

    Cash on Cash

    The return on equity (divide cash flow by equity).

    Change

    Real estate values always move up or down in a predictable cycle (growth, stability, decline and renewal)

    Clear Title

    Free of encumbrances.

    CMA

    Competitive (comparable, comparative) market analysis, market value determined by a real estate agent that resembles sale comparison approach.

    Competition

    Excess profits attract competition on supply side.

    Conformity

    Maximum value is created with homogenous property

    Contribution

    Added investment in a site is measured by added value.

    Cost of Reproduction

    Cost of exact duplication of property using similar materials

    Dust

    Acronym for elements of value (effective Demand, Utility, Scarcity and Transferability.

    Economic Life

    Period of time in which property may be profitably used. Each income property sale begins a new property economic life.

    Effective Demand

    The ability to act on the desire to buy.

    Elements of Value

    The best way to describe value.

    External Obsolescence

    aka. Econimic Obsolescence. Loss in value due to outside forces such as neighborhood deterioration. Not curable.

    Functional Obsolescence

    Loss in value due to out-of-date, poorly designed or old-fashioned fixtures or equipment. May be curable.

    Gross Living Area

    Per square foot of living space per floor measured from outside the building. Standard measure floors above ground visible. No decks, garages or basements.

    Highest and Best Use

    Use of a property that produces greatest net income.

    Infrastructure

    Network of public facilities of an area.

    Insurable Value

    The value of property for insurance purposes (cost)

    Investment Value

    The value of a property to a particular investor.

    Liquidation Value

    Value of property in a forced sale such as a foreclosure.

    Market Data

    Approach to value by which valuation of a property is baed on comp. with previously SOLD properties with SIMILAR characs. Also known as sales comparison approach.

    Market Value

    Price for which realty can be sold on open market if there is a willing seller and buyer and a reas. time to make sale negotiated at arms length.

    Market Price

    The price the property actually sells for.

    Marketable Title

    A title which buyer would accept as being good performance on part of seller. A good deed by grantor.

    Net Income (NOI)

    Also known as the net operating income (NOI). Effective gross income minus operating expenses and property taxes.

    Net Worth

    Value left after liabilities are deducted from assets.

    Obsolescence

    Loss of value from any source other than wear and tear.

    Overabundance

    Too much supply given the demand.

    Physical Depreciation

    Loss in value from any source other than wear or tear.

    Plottage Value

    Increase in the value of land by ASSEMBLAGE of smaller lots into one ownership. Known as plottage increment.

    Raw Land

    Unimproved land.

    Reconciliation

    Final step in appraising.

    Scarcity

    Insufficient supply to meet demand.

    Substitution

    When two or more LIKE properties are for sale, the one with the lowest price attracts the greatest demand.

    Topography

    Nature or contour of land surface.

    Transferability

    A seller has to be able to transfer title.

    Unimproved Property

    Land without buildings or other improvements

    Unearned Increment

    Increase in value, not anticipated by owner due primarily to outside forces. Example: population growth and inflation.

    URAR

    Uniform Residential Appraisal Report. Most widely used method of communicating a residential appraisal. Required by Fannie Mae.

    USPAP

    Uniform Standards of Professional Appraisal Practice. A code of conduct in performing appraisals.

    Utility

    The ability to satisfy desires and expectations.

    Weighted Averaging

    Math technique where one or more numbers has greater impact than others on final number.

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