ACCEPTANCE – terms of an offer are agreed upon by either party, it is considered acceptance. There may be several When stages of acceptance while an offer is being negotiated if there are counter-offers. When all terms of a contract have been agreed upon by both parties, it is considered mutual acceptance.
ACRE – 43,650 square feet. The average lot size in Seattle is anywhere between 3,500 and 7,500 sq. ft.
ACTUAL AGE VS. EFFECTIVE AGE BUILT – Actual age is self-explanatory, but when a home is completely renovated from the ground up, it is then given an effective year built to reflect the total renovation.
AGENCY – A relationship of trust created when one person, known as the principal, delegates to an agent the right to represent them in dealing with third parties. The Law of Real Estate Agency pamphlet should be given to any buyer or seller prior to entering into any agreement. It clearly describes the law of agency relationships, such as buyer’s agent, listing agent, and dual agent.
AMENITIES – The intangible benefits of owning a particular property, such as being near a great shopping center, having a wonderful view, accessible buses nearby, or having an award-winning school in the neighborhood.
AIR RIGHTS – Sometimes an issue in Seattle because of views, this is the right to undisturbed use and control of airspace over a parcel of land. Air rights may be transferred separately from the land.
APR – ANNUAL PERCENTAGE RATIO – The actual finance charge for a loan, including the stated interest, rate points and fees.
APPRAISAL – Also called valuation, this is an expert opinion of a property’s value at a particular time. Generally, an appraisal is ordered by the bank or mortgage company and is paid for by the buyer as part of closing costs. This is not the same as a market analysis.
APPRAISER – A trained and educated professional who estimates the value of real or personal property.
ASSESSED VALUE – The county places a value on a property for the purpose of determining the annual property taxes. In King County, you will find significant differences between a property’s assessed value and sales price.
ASSIGN – To transfer a right, title, or interest of a property to another party.
BUY DOWN – When discount points are paid to a lender to reduce (buy down) the interest rate charged to the borrower, especially when a seller pays discount points to help the buyer qualify for the loan.
CASH FLOW – The money left over after expenses and debt service are subtracted from gross income. This term is used in considering income property as an investment.
CAPITAL IMPROVEMENT – Any improvement that is designed to become a permanent part of the property and will have the effect of improving the life of the property. Items such as a new roof, new furnace, new electrical panel would all be considered capital improvements.
CC&R’S – A declaration of covenants, conditions, and restrictions. They’re recorded by developers to place restrictions on use of lots within a subdivision, or condominium complexes.
CLOSING – The final stage in a real estate transaction when the title to the property is transferred, the buyer receives the deed to the property, and the seller receives the proceeds of the sale. The buyers and sellers sign documents with escrow a few days in advance of the closing date.
CLOSING DATE – This occurs when all terms of a purchase and sale agreement must be met or the contract is terminated.
COMPARATIVE MARKET ANALYSIS – A comparison of homes on the market or recently sold, used to determine the correct pricing for a seller’s property. Current market conditions and amenities are also taken into account.
CONTINGENCY – A condition in the contract that must be met in order for the contract to be binding.
DEED – A legal document, which when properly executed and delivered, transfers ownership of property from seller to buyer.
DISCOUNT POINT – A percentage of the loan amount, paid as an additional yield to the lender for a particular interest rate.
EARNEST MONEY – A deposit or down payment made by the buyer as a show of good faith in completing a real estate transaction. In Seattle, the buyer can expect to put down 3% of the purchase price.
EARNEST MONEY AGREEMENT – A deposit or down payment made by the buyer as a show of good faith in completing a real estate transaction. In Seattle, the buyer can expect to put down an average of 3% of the purchase price.
ESCROW – An independent third party that oversees the transaction until all conditions are met.
FIXTURE – A permanently attached item, such as a medicine chest or a light fixture, that belongs to the property when it is sold.
HAZARD OR HOMEOWNERS INSURANCE – Insurance issued on a property to compensate for damage caused by hazards, such as fire, wind, water, etc.
INSURANCE BINDER – An instrument providing immediate insurance coverage until the regular policy is issued.
MARKET VALUE – The value of a property based on market conditions, comparable values of similar properties, and location.
MORTGAGE – A temporary, conditional pledge of property to a creditor as security for performance of an obligation or repayment of a debt.
MUTUAL TERMS All parties to a transaction agree on the terms.
NWMLS – NORTHWEST MULTIPLE LISTING SERVICE – A Puget Sound region service that provides real estate agents with detailed information of listed properties.
ORIGINATION FEE – The application fee banks or mortgage companies charge for a loan.
PITI – Principle, interest, taxes, and insurance. This is the break down for most mortgage payments.
POINTS – A “point” is one percent of the loan amount, paid to the lender at the time the loan is made. This is additional yield for the lender above the interest rate.
POSSESSION – Possession is the date and time the buyer may take full use of a property. In Seattle, possession is usually three days following the closing date, though possession is sometimes given to the buyer ON closing.
PRELIMINARY TITLE REPORT – A title report that is issued early in the transaction for the purpose of revealing all matters that presently have an effect on the title. Such as liens or judgments on the property, or easements and covenants.
TITLE REPORT – A report disclosing the condition of the title to a specific property.
TITLE INSURANCE – This is required when purchasing a property with a mortgage loan. The seller purchases the buyer’s title policy, and the buyer purchases a title policy for the mortgage.