Definitions (A)

Real Estate Glossary - Meanings, Terms, & Acronyms

ABANDONMENT
A property status indicating that (1) the property is vacant and is not being maintained and (2) the property is not offered for sale or rent with a broker.

ABSTRACT OF TITLE
A written history of ownership to a specific area of land. An abstract of title covers the period from the original source of title to the present time and summarizes all subsequent documents that have been recorded against that area.

ACCELERATION CLAUSE

A clause in your mortgage which allows the lender to demand payment of the outstanding loan balance for various reasons. The most common reasons for accelerating a loan are if the borrower defaults on the loan or transfers title to another individual without informing the lender.

ACCOMPANIED SHOWINGS
Those showings where the listing agent must accompany an agent and his or her clients when viewing a listing.

ADDENDUM
An agreement or list that is added to a contract, agreement, or other document such as a letter of intent. FHA and VA require that an addendum be added to or incorporated in a sales contract, if it is written prior to the appraisal.

ADDITIONAL PRINCIPAL PAYMENT
A payment by a borrower of more than the scheduled payment due in order to reduce the remaining balance on the loan.

ADJUSTED ANNUAL INCOME
Income from all household members who live or propose to live in the dwelling as their primary residence for all or part of the ensuing 12 months. Adjusted annual income is used to determine whether an applicant is in come eligible for a guaranteed loan, or interest assistance, if applicable. Adjusted annual income provides for deductions to account for varying household circumstances and expenses.

ADJUSTABLE RATE MORTGAGE (ARM)
A type of mortgage loan whose interest rate is tied to an economic index, which fluctuates with the market. Typical ARM periods are one, three, five, and seven years.

ADJUSTMENT DATE
The date the interest rate changes on an adjustable-rate mortgage (ARM).

ADJUSTED GROSS INCOME
A person's total income, as reported on his or her IRS 1040 tax return form, after allowable contributions, deductions, and expenses.

ADJUSTED ORIGINATION CHARGE
The total of the "origination charge" and the credits or charges for the specific interest rate chosen. The adjusted origination charge cannot change between the Good Faith Estimate (GFE) and settlement statement without a valid changed circumstance.

AD VALOREM TAXES
Property taxes based on assessed value of property.

ADVERSE POSSESSION
A method of acquiring real property from the owner because of continuous, hostile and visible use of the property for a prescribed length of time.

AFFIDAVIT OF VALUE
A sworn statement required by the state to be attached to all conveyances, unless it has been specifically exempted. It includes the legal description, tax parcel number and the value of the property.

AGENT
The licensed real estate salesperson or broker who represents buyers or sellers.

AGREEMENT/OFFER
A legally binding compact made between two or more persons.

AGRICULTURAL PROPERTY

Unimproved property available for farming activities.

ALIENATION

Alienation of real property refers to the transfer of the interest in and/or title to real property by its owner to another, whether voluntary, for example by sale, gift, mortgage or lease; or involuntary, for example, by judicial process such as a tax sale, bankruptcy, or adverse possession.

ALIMONY
Periodic payments made under a divorce decree or a written separation agreement toward the support of a former spouse.

AMERICAN LAND TITLE ASSOCIATION (ALTA)

A national association of title insurance companies, abstractors, and attorneys specializing in real property law. The association speaks for the title insurance and abstracting industry and establishes standard procedures and title policy forms.

AMORTIZATION
The loan payment consists of a portion which will be applied to pay the accruing interest on a loan, with the remainder being applied to the principal. Over time, the interest portion decreases as the loan balance decreases, and the amount applied to principal increases so that the loan is paid off (amortized) in the specified time.

AMORTIZATION SCHEDULE
A table which shows how much of each payment will be applied toward principal and how much toward interest over the life of the loan. It also shows the gradual decrease of the loan balance until it reaches zero.

AMENDED VALUE

The actual sale price after the seller successfully markets and sells his or her home through the broker of his or her choice. The sale is turned over to a third-party relocation company for closing, and the guaranteed offer is amended or changed.

ANNUAL FEE
A periodic amount that is based on the average annual scheduled unpaid principal balance of the loan and is paid by the servicing lender to Rural Development on an annual basis for issuance of a Loan Note Guarantee. The fee is included in the monthly mortgage payment of a borrower and is used
when calculating payment ratios.

ANNUAL INCOME
Used to determine an applicant’s eligibility for assistance. All amounts, monetary or not, of the applicant’s household not specifically excluded by regulations, and amounts derived from assets any members of the family have access to.

ANNUAL PERCENTAGE RATE (APR)
The cost of credit on a yearly basis, expressed as a percentage. The APR includes the prepaid interest rate, discount points, fees, and other credit charges that the borrower is required to pay, and is therefore a more complete measure of a loan’s cost than the interest rate alone. The loan’s interest rate, not its APR, is used to calculate the monthly principal and interest payment.

APPLICATION FEES

Fees that mortgage companies charge buyers at the time of written application for a loan; for example, fees for running credit reports of borrowers, property appraisal fees, and lender-specific fees.

APPOINTMENTS

Those times or time periods an agent shows properties to clients.

APPRAISAL
A report made by a qualified person setting forth an opinion or estimate of property value. The term also refers to the process by which this estimate is obtained.

APPRAISED VALUE
An opinion of a property's fair market value that based on an appraiser's knowledge, experience, and analysis of the property. Since an appraisal is based primarily on comparable sales, and the most recent sale is the one on the property in question, the appraisal usually comes out at the purchase price.

APPRAISER
An individual qualified by educational training, and experience to estimate the value of real property and personal property. Although some appraisers work directly for mortgage lenders, most are independent.

APPRECIATION
An increase in the value of property due to either a positive improvement of real estate in the area or the elimination of negative factors. Commonly used to describe an increase in value through inflation.

APPRAISED PRICE (AP)

The price the third-party relocation company offers (under most contracts) the seller for his or her property. It’s generally the average of two or more independent appraisals.

APPROVED LENDER
A financial institution that meets the requirements to participate in the Single Family Guaranteed Rural Housing program.

AREA MEDIAN INCOME
The median income in a specific locality; typically a county or Metropolitan Statistical Area (MSA), as determined by the Department of Housing and Urban Development.
 
ARIZONA DEPARTMENT OF REAL ESTATE
Arizona state licensing authority that oversees and disciplines licensees. ARIZONA
 
ASSOCIATION OF REALTORS® (AAR)
AAR is the largest trade association in Arizona, representing more than more than 43,000 Arizona REALTORS®. 
 
ARM'S LENGTH TRANSACTION
Legal slang meaning that there existed no special relationship between the parties involved in a transaction which would contaminate the result.

AS-IS
A contract or offer clause stating that the seller will not repair or correct any problems with the property.

AS SEPARATE PROPERTY
Ownership in real property that is to be specifically excluded from community property.

ASSESSED VALUATION
The value that a taxing authority places on real or personal property for the purpose of taxation.

ASSESSMENT
A charge against a property for purpose of taxation. This may take the form of a levy for a special purpose, or a tax in which the property owner pays a share of the cost of community improvements according to the valuation of his or her property.

ASSESSOR
A public official who establishes the value of a property for taxation purposes.

ASSET
Items of value owned by an individual. Assets that can be quickly converted into cash are considered "liquid assets." These include bank accounts, stocks, bonds, mutual funds , and so on. Other assets include real estate, personal property, and debts owed to an individual by others.

ASSIGNMENT
When ownership of your mortgage is transferred from one company or individual to another, it is called an assignment.

ASSUMABLE MORTGAGE
One in which the buyer agrees to fulfill the obligations of the existing loan agreement that the seller made with the lender. When assuming a mortgage, a buyer becomes personally liable for the payment of principal and interest. The original mortgagor should receive a written release from the liability when the buyer assumes the original mortgage.

ASSUMPTION
The term applied when a buyer assumes the seller's mortgage.

ATTORNEY IN FACT
An agent authorized to act for another by virtue of a power of attorney.

AUCTION

A method of selling real estate in a public forum through open and competitive bidding. Also referred to as: public auction, auction sale or sale.

AUCTION ABSENTEE BID

A procedure which allows a bidder to participate in the bidding process without being physically present. Generally, a bidder submits an offer on an item prior to the auction. Absentee bids are usually handled under an established set of guidelines by the auctioneer or his representative. The particular rules and procedures of absentee bids are unique to each auction company.

AUCTION ABSOLUTE
An auction where the property is sold to the highest qualified bidder with no limiting conditions or amount. The seller may not bid personally or through an agent. Also known as an auction without reserve.

AUCTION WITH RESERVE
An auction in which the seller or his agent reserves the right to accept or decline any and all bids. A minimum acceptable price may or may not be disclosed and the seller reserves the right to accept or decline any bid within a specified time.

AUCTIONEER

The person whom the seller engages to direct, conduct, or be responsible for a sale by auction. This person may or may not actually call or cry the auction.

AUTOMATED VALUATION MODEL (AVM)

Automated valuation models, also known as a comparable sale reports are basically databases online that try to match up similar properties to give an idea of the range of sales prices that has historically been recorded. This information is limited to factual data, such as house size, number of rooms
and bedrooms, age, and distance surrounding the house. Some databases use historical information, taken from mostly county record data. Some databases collect information from appraisal reports.

AUTOMATIC CLEARING HOUSE (ACH)

Electronic system that debits an authorized bank account and electronically transfers funds scheduled for remittance.