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A contract by which one party undertakes to represent another in certain business situations, such as realty brokerage.
A person (natural), corporation, society, association or partnership (legal persons) acting by authority of a principal in a realty transaction for compensation.
Anyone (underlined) who is authorized in writing to perform certain acts for another; valid only during lifetime of party giving this power.
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.
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.
The mixing of funds held for the benefit of others with the broker's personal or business funds.
Money or other valuable consideration given to broker by principal for services rendered; amount is by agreement (underlined).
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.
The holding of something of value by a person (escrowee or escrow agent) for the benefit of other parties.
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.
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.
Difference between cost of replacing property new as of date of appraisal and present value.
Features of property making it desirable and thus adding value, such as scenic views, convenient shopping, etc.
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.
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.
Improvmts. adding to value of realty, done by local government and paid for by ganers of value. Sidewalk, sewer, etc.
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.
Profit expressed as a percentage that an investor expects from an investment on a yearly basis. A rate of return.
Expenses necessary for holding property such as vacant land pending development or zoning charges.
Real estate values always move up or down in a predictable cycle (growth, stability, decline and renewal)
Competitive (comparable, comparative) market analysis, market value determined by a real estate agent that resembles sale comparison approach.
Period of time in which property may be profitably used. Each income property sale begins a new property economic life.
aka. Econimic Obsolescence. Loss in value due to outside forces such as neighborhood deterioration. Not curable.
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.
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.
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.
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.
Increase in the value of land by ASSEMBLAGE of smaller lots into one ownership. Known as plottage increment.
When two or more LIKE properties are for sale, the one with the lowest price attracts the greatest demand.
Increase in value, not anticipated by owner due primarily to outside forces. Example: population growth and inflation.
Uniform Residential Appraisal Report. Most widely used method of communicating a residential appraisal. Required by Fannie Mae.
Uniform Standards of Professional Appraisal Practice. A code of conduct in performing appraisals.