Sell Your Home: Definitions

Selling your home is all about financial
transactions and legalities. Bottom line, you
need to understand the lingo. Here is an
abbreviated list of terms you should know.

The legal document that conveys ownership or title to a property.
deed-in-lieu of foreclosure
The transfer of title, from a borrower to the lender, to satisfy a mortgage debt and avoid foreclosure. Also called a voluntary conveyance. The lender may or may not stop foreclosure activities if the borrower offers to provide a deed-in-lieu.
Failure to fulfill a legal obligation. A default includes failure to pay a financial obligation, but it also may be a failure to perform some action or service that is not monetary. For first mortgages or first trust deeds, if a payment is not made within 30 days of the due date, the loan is considered to be in default.
Failure to make a payment when it is due. The condition of a loan when a scheduled payment has not been received by the due date, but generally used to refer to a loan for which payment is 30 or more days past due.
A decline in the value of property; it may be due to changing market conditions or lack of maintenance. Depreciation is also an accounting term that indicates the declining monetary value of an asset; it is used as an expense, to reduce taxable income. Since it is not a true expense, involving actual payment of money, lenders will add back the depreciation expense for self-employed borrowers and count it as income.
due-on-sale provision
A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage.
earnest money
A deposit made by a potential buyer to demonstrate sincerity about buying a property.
effective age
An appraiser’s estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age.
Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions.
A homeowner’s financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens.
An item of value, a piece of property, money, or documents, held in trust by a third party, to be delivered upon the fulfillment of a condition. For example, earnest money is deposited in escrow and is not delivered to the seller until the transaction is closed.
All of an individual’s assets (both real property and personal property) and liabilities, especially at death. Also, an individual’s interest in land and other real property.
The lawful expulsion of an occupant from real property.
examination of title
A report of the title of a property, taken from public records, or an abstract of the title.
exclusive listing
A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time.
exclusive right-to-sell listing
The traditional agreement under which a property owner appoints a real estate broker as exclusive agent to sell the property on the owner’s stated terms, and agrees to pay the listing broker a commission when the property is sold, regardless of whether the buyer is found by the broker, the owner, or another broker. If a second real estate broker finds the buyer for the property, then some commission will be paid to that broker.
exclusive agency listing
A listing agreement under which a real estate broker acts as an exclusive agent to sell a property but may be paid a reduced or no commission if the property owner rather than the listing broker finds the buyer. If a second real estate broker finds the buyer for the property, then some commission will be paid to that broker.
A person named in a will and approved by a probate court to administer the deposition of an estate in accordance with the instructions of the will.. The court will appoint an administrator if no executor is named.
fair market value
The price at which property would be transferred between a willing buyer and willing seller, each of whom has a reasonable knowledge of all pertinent facts and is not under any compulsion to buy or sell.
fee simple
A fee without limitation to any class of heirs and without restrictions on transfer of ownership; the private ownership of property, in which the owner has the right to control, use, and transfer the property at will.
Personal property that becomes real property when it is attached to real estate in a permanent manner.
A legal action that terminates all ownership rights of the homebuyer due to failure to make mortgage payments or meet other terms of the mortgage loan. This usually involves a forced sale of the property at public auction, with proceeds of the sale being applied to the mortgage debt.