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 individualâ€™s assets (both real property and personal property) and liabilities, especially at death. Also, an individualâ€™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 ownerâ€™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.