Vocab Flashcards
(50 cards)
What is an Adjustable-Rate Mortgage (ARM)?
A mortgage with an interest rate that can change periodically based on fluctuations in a corresponding financial index.
Monthly payments can increase or decrease over time.
Define Amortization.
A gradual repayment of a loan through regular payments over a set period, covering both principal and interest.
Each payment reduces the balance of the loan.
What is an Appraisal?
A professional assessment of a property’s value, usually conducted by a licensed appraiser based on factors like location, condition, and comparable property sales.
It helps determine the market value of a property.
What does Appreciation refer to in real estate?
An increase in the value of a property over time due to factors such as market demand, location, or property improvements.
It can significantly affect investment returns.
What does As-Is Condition mean?
A term indicating that the seller is selling the property in its current state and will not make any repairs or improvements before the sale.
Buyers accept the property with all existing flaws.
Who is a Broker in real estate?
A licensed real estate professional who can manage a brokerage, supervise real estate agents, and negotiate real estate transactions.
Brokers typically have more education and experience than sales agents.
What is the role of a Buyer’s Agent?
A real estate agent who represents the buyer in a transaction, finding suitable properties and negotiating the best deal on behalf of the buyer.
They act in the best interest of the buyer.
Define Capitalization Rate (Cap Rate).
A formula used in commercial real estate to estimate the rate of return on an investment property, calculated by dividing the net operating income (NOI) by the property’s purchase price.
It helps investors assess the profitability of an investment.
What is Closing in real estate?
The final step in a real estate transaction, where the property is transferred from the seller to the buyer, and all legal and financial matters are settled.
This process finalizes the sale.
What are Closing Costs?
Expenses associated with finalizing a real estate transaction, typically including loan origination fees, title insurance, taxes, and escrow fees.
These costs are usually shared by the buyer and seller.
What is a commission in real estate?
A fee paid to a real estate agent or broker for facilitating the sale or purchase of a property, typically a percentage of the property’s sale price.
What is a Comparative Market Analysis (CMA)?
A report that evaluates the prices of similar properties in the same area to help determine the fair market value of a property.
What is a contingency in a real estate contract?
A condition that must be met for the contract to become binding, such as financing approval, home inspections, and appraisals.
What is a conventional loan?
A mortgage that is not insured or guaranteed by a government agency like the FHA or VA, offered through private lenders.
What is a counteroffer?
A response to an initial offer in a real estate negotiation, where the party receiving the offer suggests different terms or conditions.
What is a deed?
A legal document that transfers ownership of property from one party to another.
What is equity in real estate?
The portion of the property’s value that the owner truly owns, calculated as the difference between the market value of the property and the outstanding mortgage balance.
What is depreciation?
A reduction in the value of a property over time, often due to wear and tear or outdated features. In real estate investing, depreciation can be used as a tax deduction.
What is escrow?
A neutral third party that holds funds or documents on behalf of the buyer and seller until the conditions of a transaction are met. The escrow company ensures that all parties fulfill their obligations before the property is transferred.
What is a down payment?
The portion of the purchase price that the buyer pays upfront, typically expressed as a percentage of the total price, with the remainder covered by a mortgage.
What is dual agency?
When a real estate agent or brokerage represents both the buyer and the seller in the same transaction, creating a potential conflict of interest. Disclosure and consent are required in most states.
What is an easement?
A legal right to use someone else’s land for a specific purpose, such as access to a driveway or utility lines.
What is an encumbrance?
A claim, lien, charge, or liability attached to and binding on real estate, such as a mortgage or easement, that may affect the property’s value or transferability.
What is earnest money?
A deposit made by the buyer to demonstrate their serious intent to purchase the property, typically held in escrow and applied toward the purchase price at closing.
