absorption rate

The ratio of the number of properties in an area that have been sold against the number available. Used to show the volatility of a market.

accretion

The natural growth of a piece of land resulting from forces of nature.

acre

43,560 square feet. A measurement of area.

addendum

A supplement to any document that contains additional information pertinent to the subject. Appraisers use an addendum to further explain items for which there was inadequate space on the standard appraisal form.

adjustable-rate mortgage (ARM)

A mortgage in which the interest changes periodically, according to corresponding fluctuations in an index. All ARMs are tied to indexes.

adjusted sales price

An opinion of a property's sales price, after adjustments have been made to account for differences between it and another comparable property.

affordability analysis

A calculation used to determine an individual's likelihood of being able to meet the obligations of a mortgage for a particular property. Takes into account the down payment, closing costs and on-going mortgage payments.

amenity

Any feature of a property that increases its value or desirability. These might include natural amenities such as location or proximity to mountains, or man-made amenities like swimming pools, parks or other recreation.

American Recovery and Reinvestment Act of 2009

The American Recovery and Reinvestment Act of 2009 was signed into law by President Obama on February 17, 2009. It is an unprecedented effort to jumpstart our economy, create or save three to four million jobs, and lay the foundation for a robust and sustainable 21st century economy.

appraisal report

The end result of the appraisal process usually consists of one major standardized form such as, the Uniform Residential Appraisal Report form 1004, as well as all supporting documentation and additional detail information. The purpose of the report is to convey the opinion of value of the subject property and support that opinion with corroborating information.

assumable mortgage

A mortgage that allows the obligation of the borrower to be transferred to the buyer of the borrower's property securedby the mortgage. If the loan is truly assumable ant the transfer is done ptoperly, the original borrower is relieved of further abligation.

buffer zone

A segment of land between two disparate municipal zones which acts as a shield to keep one zone from encroaching upon the other. Often used to separate residential districts from commercial areas.

certificate of occupancy

Issued by an appropriate jurisdictional entity, this document certifies that a building complies with all building codes and is safe for use or habitation.

chain of title

The complete history of ownership of a piece of property.

chattel

Any personal property which is not attached to or an integral part of a property. Chattel is not commonly taken into consideration when appraising the value of real property.

closing cost

All appropriate costs generated by the sale of property which the parties must pay to complete the transaction. Costs may include appraisal fees, origination fees, title insurance, taxes and any points negotiated in the deal.

code of ethics

The NATIONAL ASSOCIATION OF REALTORS® adopted the Code of Ethics in 1913, following the professions of medicine, law, and engineering. REALTORS® are real estate professionals who have chosen to join the National Association and abide by its strict Code of Ethics. What does this mean to you? It means that any REALTOR® with whom you work has voluntarily agreed to abide by a Code of Ethics, based on professionalism and protection of the public. REALTORS® are subject to disciplinary action and sanctions if they violate the duties imposed by the Code of Ethics. The Code of Ethics is a detailed document that spells out the professional responsibilities of every REALTOR®. Read more

consumer notice

Pennsylvania Law requires real estate brokers and salespersons (licensees) to advise consumers who are seeking to sell or purchase residential or commercial real estate or tenants who are seeking to lease residential or commercial real estate where the licensee is working on behalf of the tenant of the business relationships permitted by the Real Estate Licensing and Registration Act. This notice must be provided to the consumer at the first contact where a substantive discussion about real estate occurs unless an oral disclosure has been previously provided. If the oral disclosure was provided, this notice must be provided at the first meeting or the first time a property is shown to the consumer by the broker or salesperson. Click here to view the Consumer Notice.

conventional mortgage

A traditional, real estate financing mechanism that is not backed by any government or other agency (FHA, VA, etc.).

debt equity ratio

The ratio of the amount a mortgagor still owes on a property to the amount of equity they have in the home. Equity is calculated at the fair-market value of the home, less any outstanding mortgage debt.

deed of trust

A document which transfers title in a property to a trustee, whose obligations and powers are stipulated. Often used in mortgage transactions.

encroachment

A building or other improvement on one property which invades another property or restricts its usage.

fee simple

An estate under which the owner is entitled to unrestricted powers to dispose of the property, and which can be left by will or inherited. The greatest possible interest a person can have in real estate.

FHA mortgage

A mortgage that is insured by the Federal Housing Administration (FHA).

fiduciary

A fiduciary duty is a legal or ethical relationship of confidence or trust between two or more parties, most commonly a fiduciary or trustee and a principal or beneficiary. A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.

foreclosure

The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt. Read more

home inspection

A complete examination of a building to determine its structural integrity and uncover any defects in materials or workmanship which may adversely affect the property or decrease its value. For more see Home Inspection - FAQ.

improvements

Generally buildings, but may include any permanent structure or other development, such as a street, utilities, fences etc.

mortgage

A financial arrangement wherein an individual borrows money to purchase real property and secures the loan with the property as collateral. Instead of mortgages, some states use First Trust Deeds.

mortgagee

The entity that lends money in a real estate transaction.

mortgage insurance

Insurance that covers the lender against some of the losses incurred as a result of a default on a home loan. Often mistakenly referred to as PMI, which is actually the name of one of the larger mortgage insurers. Mortgage insurance is usually required in one form or another on all loans that have a loan-to-value higher than eighty percent. Mortgages above 80% LTV that call themselves "No MI" are usually a made at a higher interest rate. Instead of the borrower paying the mortgage insurance premiums directly, they pay a higher interest rate to the lender, which then pays the mortgage insurance themselves. Also, FHA loans and certain first-time homebuyer programs require mortgage insurance regardless of the loan-to-value.

mortgagor

The borrower in a mortgage agreement.

pre-approval

A loosely used term which is generally taken to mean that a borrower has completed a loan application and provided debt, income, and savings documentation which an underwriter has reviewed and approved. A pre-approval is usually done at a certain loan amount and making assumptions about what the interest rate will actually be at the time the loan is actually made, as well as estimates for the amount that will be paid for property taxes, insurance and others. A pre-approval applies only to the borrower. Once a property is chosen, it must also meet the underwriting guidelines of the lender. Contrast with pre-qualification.

pre-qualification

This usually refers to the loan officer’s written opinion of the ability of a borrower to qualify for a home loan, after the loan officer has made inquiries about debt, income, and savings. The information provided to the loan officer may have been presented verbally or in the form of documentation, and the loan officer may or may not have reviewed a credit report on the borrower.

radon

Radon is a radioactive gas that you can’t see, smell or taste. It comes from the natural decay of uranium that is found in nearly all soils. It typically moves up through the ground to the air above and into your home through cracks and other holes in the foundation. Your home traps radon inside, where it can build up. Any home may have a radon problem. This means new and old homes, well-sealed and drafty homes, and homes with or without basements.
For more information click here or go to the EPA website.

Real Estate Settlement Procedures Act (RESPA)

A consumer protection law that requires lenders to give borrowers advance notice of closing costs. RESPA is about closing costs and settlement procedures. RESPA requires that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services. RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD.

right of redemption

A borrower's right to reacquire property lost due to a foreclosure.

risk management

Have you ever met someone who has had a bad real estate experience? Many things can go wrong, but most potential pitfalls are foreseeable by a skilled Agent. Our primary goal is to guide every aspect of your home sale process to eliminate avoidable problems during and after the sale.
Click here for our Risk Management Document (pdf).

settlement statement (HUD-1)

A document that provides an itemized listing of the funds that were paid at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow (impound) amounts. Each type of expense goes on a specific numbered line on the sheet. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing. It is called a HUD1 because the form is printed by the Department of Housing and Urban Development (HUD). The HUD1 statement is also known as the "closing statement" or "settlement sheet."

SFR / Short Sales and Foreclosures Resource

SFR is designed to equip Realtors® with stronger knowledge and greater resources to support the growing number of buyers and sellers who need these services. REALTORS® with the SFR certification can be a trusted resource for short sales and foreclosures.

short sale

A short sale is when a bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's Loss mitigation department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale. Read more

swing loan

An interim loan made so that the borrower may purchase property during a pending sale of borrower's property. The proceeds from the sale are then used to pay off the swing loan.

title search

A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.

transfer of ownership

Any means by which the ownership of a property changes hands. Lenders consider all of the following situations to be a transfer of ownership: the purchase of a property "subject to" the mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust device.

transfer tax

State tax on the transfer of real property. Based on purchase price or money changing hands. Check statutes for each state. Pennsylvania has a 2% transfer tax which is usually split, half to the buyer and half to the seller.

Truth-in-Lending (TIL)

Also referred to as Regulation Z. Part of the Consumer Credit Protection Act. Federal legislation designed to protect borrowers by requiring lenders to furnish information regarding the cost of the loan. The law requires interest to be expressed as the annual percentage rate (APR) to the nearest 1/8 of a percent. The APR must include charges such as loan fees, discount points, servicing fees, etc., as well as interest. The law applies to 1 to 4 family residential property only.

US Dept of Housing and Urban Development (HUD)

HUD's mission is to increase homeownership, support community development and increase access to affordable housing free from discrimination. To fulfill this mission, HUD will embrace high standards of ethics, management and accountability and forge new partnerships--particularly with faith-based and community organizations--that leverage resources and improve HUD's ability to be effective on the community level.

VA mortgage

A mortgage that is guaranteed by the Department of Veterans Affairs (VA).

Veterans Administration (VA)

An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans.

WhiteFence

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zoning

Zoning categories and symbols vary among communities. A C-1 zone in one city is not necessarily the same as a C-1 in another. Typically, jurisdictions use letters of the alphabet as code abbreviations to identify the use allowed in a physical geographic area -- such as R for residential, C for commercial, and I for industrial. These symbols are usually paired with some number. The number can specify the level of use, or it may indicate a certain amount of acreage or square footage for that particular property. Read more