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Brokerage Dictionary
Caravan: A group of Realtors, usually from several offices, will join together to view properties that are available in an effort to become more familiar with them prior to introducing them to potential clients.
Co-Brokering: When one broker lists the property and another office sells the property, they share the commission through the listing office. The commission fee is not doubled; the two offices share it.
Client: The client of the broker is the individual who pays the fee for the brokerage service.
Customer: The individual that has been attracted by the service provided.
Escrow: All deposits held by the broker are held in escrow; a customer’s account, separate from all other business accounts of the firm.
Home Inspections: A potential buyer has an opportunity to obtain a satisfactory structural and termite inspection within a reasonable length of time after the offer to purchase has been accepted. They buyer has the ability to cancel the transaction with the results of this inspection.
Listing: A property that has been offered for sale by a broker.
MLS: The Multiple Listing Service is a means of making possible the orderly dissemination and correlation of listing information to its members so that “realtors may better serve the buying and selling public.”
Open House: An opportunity to let the public view the property that is for sale during a specific period of time without an appointment. The property is advertised as an ‘open house’ and interested parties visit at random and talk with the agent present.
Real Estate Broker: An individual who is licensed by law to be employed by another, for a fee, to assist in real estate transactions.
Administrator: Person appointed by a court to take possession of property of a person who died without leaving a will.
Closing: The date on which the property is transferred from one individual to another.
Covenant: An agreement between the parties in a deed whereby one party promises to do or not to do certain acts with respect to the land (e.g. land used only for residential purposes).
Deed: The written instrument by which the title to land is transferred from one to another.
Easement: The right of use which one person may have over the lands of another (e.g. a right of way to install, operate, and maintain utility lines).
Encroachment: The intrusion of any improvement, partly or entirely on the land of another.
Encumbrance: Any interest in land held by person other than the owner, which will lessen the value of the title (e.g. mortgages, liens, etc.).
Fixture: Personal property that by state law becomes real property upon being attached to real estate (e.g. drapery rods).
Legal Descriptions: A property description that by law is sufficient to locate and identify the parcel of real property.
Lien: A claim of charge on property of another for payment of some debt.
Life Estate: An individual’s right to the use and occupancy of real property for life.
Offer to Purchase Property: A written instrument that is legally binding. It outlines the buyer’s intent to purchase and under what specific conditions.
Power of Attorney: An instrument in writing by which one person, the principal, authorizes another to act for him or her in the specific action described in the instrument.
Purchase and Sale Agreement (P &S): A written instrument that is legally binding. It is usually in more detail the Offer to Purchase, but includes the original details of the buyer’s intent.
Recording: The noting in the designated public office, usually the registry of deeds, of the details of a properly executed legal document, such as a deed or mortgage.
Survey: A map of land made by a surveyor showing boundary lines, buildings and other improvements of land.
Annual Percentage Rate (A.P.R.): The total amount of the finance charge including interest, points, and all loan fees (e.g. escrow, processing, etc.) calculated as a percentage of the borrowed amount and expressed as a yearly rate.
Application Fee: This is a fee that may be charged by the lender to cover the costs of processing your loan application. It is usually charged at the beginning of the application process.
Appraisal: An estimate of fair market value of property prepared by a qualified real estate appraiser.
Loan-to-Value (LTV) Ratio: The amount of the loan as a percentage of the property’s appraised value. For example, and 80% loan is determined by subtracting a 20% down payment from the property’s appraised value.
Margin: That margin is the difference between the ARM index and the rate the lender charges. Example: an index rate of 8% plus a margin of 2.5% could result in a home loan rate of 10.5%. In some areas, the margin is referred to as the factor. The fixed margin over the index covers the lender’s operation expenses and profit margin.
Mortgage: A mortgage is evident of the security for a loan. It is the document, signed by the borrower, which gives the lender the right to the property if the loan borrower failed to live up to the loan arrangement.
Negative Amortization: This happens when the minimum monthly payment on an adjustable rate mortgage is not large enough to cover the full amount of interest that is due. The difference between interest owed and interest paid may then be added to the loan’s principal balance, at the option of the borrower.
Origination Fee(s) (also see Points): Also called a Loan Fee, this is a fee assessed by the lender for processing the loan. Most lenders’ charges are based upon the amount of the loan. One point equals one percent of the loan amount. These fees are normally paid by the borrower at closing. In some cases, however, they may be paid by the seller or shared by bother parties. Also, the lender may “escrow” these charges to be deducted from the mortgage amount.
Payment Cap: This cap places an annual limit on the amount that a monthly payment can increase. This feature is offered by some ARM lenders instead of an annual interest rate cap.
Point(s): One-point equals one percent of the loan amount (see Origination Fee).
Assumption Fee: The fee you pay the lender in order to assume someone else’s mortgage loan.
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