New Homes Agents

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A conveyance by an owner of the subsurface rights to his or her property while reserving the surface and air rights to the property.

Member, Appraisal Institute. A professional designation awarded by the Appraisal Institute to persons who have met minimum education, experience, and demonstration requirements in the areas of valuation and appraisal.

The act of keeping a building in general repair. Lack of proper maintenance will result in a loss in value.

The expenditure necessary to keep a building and grounds in general repair. Such costs appear on an income statement as an operating expense and are the responsibility of the property manager. While maintenance costs vary greatly from property to property, there is some degree of uniformity with like-like properties. As such, investors and lenders often examine the history of maintenance costs as an indication of how a specific property has been maintained.

Payment made by the unit owner of a condominium to the homeowner's association for expenses incurred in the maintenance and upkeep of the common areas. The fee is ordinarily collected monthly and failure to pay can lead to liens being placed on the individual unit, attachment, and foreclosure.

Part of a retail shopping area set aside for pedestrian traffic.

An employment contract between the owner of real estate and a property management firm that agrees to oversee the management of the property. As is true in any business agreement, the property manager or management firm and the owner of the property should enter into a formal contract. The management contract should include the responsibilities specified in the employment agreement, the term and period of the contract, the management policies to be followed, the power and authority of the property manager, and the compensation for the management services. Normally, a property manager's compensation is an agreed-upon percentage of gross income. The range can vary from a very small amount, perhaps one percent on a large structure, to as much as ten or fifteen percent on a single-unit house.
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The agreed-upon compensation paid to a property management company for managing a real estate project. The fee is usually based on a percentage of effective gross income.

A written report of what the property management company hopes to accomplish and how it intends to do so. Before assuming the management of a piece of property, a long-range plan should be developed. However, before the plan can be developed, an analysis has to be made of the owner's objectives. Certainly, the property manager has to be confident that these objectives can be met. A physical inspection of the property itself has to be made, and the property manager needs to understand existing market conditions regarding competition, rental structures and operating expenses.

A housing unit primarily constructed in a plant or factory prior to transporting it to the lot where it is set. Manufactured housing can be delivered in various stages of production which offers the purchaser the flexibility of buying the "shell" up to and including purchase of a completely finished unit. Cost per square foot for manufactured housing is normally considerably less than comparable costs for stickbuilt structures.

This trade organization represents the manufacturers and dealers of mobile and modular homes throughout the United States. The institute's headquarters is 1745 Jefferson Davis Highway, Arlington, Virginia 22301; (703) 979-6620.

Land which for one or more reasons is incapable of producing much income given the costs that would be incurred to produce the income. Examples of deficiencies would include poor access, steep terrain, inadequate drainage, and oddshaped lots.

The rate of federal income tax that will apply to the next increment of taxable income.

The addition to total utility of the last unit of a resource.
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A docking and servicing for boats and equipped to provide repair service, gasing, and supplies.

The economic function of bringing buyers and sellers together through the price mechanism.

The amount of money actually paid in a transaction.

The rental income that a property is likely to command in the current market. Market rent, also referred to as economic rent, may be either higher or lower than what the property is actually renting for under the terms of a lease.

The probability that market rental rates will change, affecting the value of a property that is subject to fixed rent.

The identification and analysis of submarkets within a larger market.

An analysis of activities in a market in regard to such influences as location, demand, and competition which may or may not affect the value of property.
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The price in terms of cash or its equivalent upon which a willing buyer and a willing seller will agree, where neither is under any undue pressure and both are typically motivated, have adequate knowledge, and are acting in their own best interest. This concept of value assumes that there is sufficient activity in the marketplace to generate enough buyers and sellers so that no one of them controls the price. Each party is also acting in his or her best interest and is fully informed as to market conditions. Finally, individual financing and taxation consequences are not considered, the property is exposed on the market for a reasonable period of time, and the seller is capable of conveying marketable title. Market value is an ideal standard which is very seldom achieved in real-world real estate markets; nevertheless, this is ordinarily the objective of most appraisals.

Title to property which is free from reasonable doubts or objections and which the courts would compel a purchaser to accept under the terms of a sales contract.

A report detailing the means by which a parcel(s) of real estate will be sold. The plan, if developed properly, will identify the target market, establish how and when the property will be shown and, generally, cover the total marketing of the property. Such a plan, while it may be used for a single parcel such as a home, is very commonly used in association with timesharing and second home sites. The marketing plan should be developed prior to the property being available for purchase.

Simultaneously appraising a large number of parcels of real estate. Such a technique is sometimes done by appraisal firms employed by a local government to reappraise property for the purpose of estimating assessment values for property tax purposes.

A relationship between two people in which the employer is liable for actions or wrongdoings on the part of the employee. In a principal-agent relationship, the test to determine if a principal will be liable for the actions of an agent is whether the agent is a servant or an independent contractor. If the principal and agent are in a master-servant relationship, the law will impose vicarious liability on the master for torts committed by the servant while in the scope of the master's employment.

The dominant or main lease in a building or development in which a sublease exists.

A program for the future development of a community which serves as the guidelines for capital expenditures.
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An insurance policy that covers a number of parcels of real estate rather than one parcel, as is normally covered with an insurance policy.

A violation of a contract of such nature or importance that the innocent party may rescind the contract as well as recover damages.

Any fact which, if known, would affect the judgment of one or more of the parties to a transaction.

The date when a note or negotiable instrument is due and payable.

The largest dollar figure in terms of how much money can be borrowed under a specific government program, such as a subsidized housing program or an project.

The average of all the high tides as calculated over a long period of time.

A frame of reference assumed to be at zero elevation used in the surveying of land. Elevations above zero elevation are positive and those below zero elevation are negative.
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A measurement used in surveying to denote the boundary line of a stream showing the natural course of the stream.

Statutory liens levied on property by persons who are not compensated after Providing labor (mechanic) or material (materialman) for the improvements to the property. Both types of liens are commonly referred' to as mechanic's liens. The mechanic's lien is justified on the equitable theory that work or materials provided by contractors add to the value of the improvements and increase the value of the land. Because of this theory, work and materials must become permanently attached or incorporated into the land or improvements.

A mutual agreement or assent between the parties as to the terms and conditions of a contract. To form a contract there must be a 'meeting of the minds."

A heavily populated urban area that runs continuously through numerous cities. An example would be the Eastern Seaboard of the United States starting with Washington, D. C., and continuing through Baltimore, Philadelphia, New Y, Boston.

A threat of force or improper action against a person or property in order to induce a party to act.

The absorption of one thing into another.

Imaginary lines running north-south which intersect with base lines to form the reference points in the government survey method of land descriptions.
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The basic unit of measuring length in the metric system. A meter equals 39.37 inches.

A method of land description in which the dimensions of the property are measured by distance and direction. This method is the primary means of legally describing land in some twenty states. To correctly use this method there must be a definite starting point. This starting point must be one that can be located by future surveyors, thus it is necessary that it be as precise as possible. Physical evidence of this point, referred to as a monument, is often an iron pipe set in concrete which in turn can be and often is referenced to a permanent reference point such as a bench mark. Bench marks are bronze discs permanently placed and precisely identified by government survey teams. Monuments, both natural and artificial, also include fences, rivers and streams, trees, wooden stakes and road intersections. However, none of these is as precise as bench marks. Once the point of beginning (POB) on the property has been established, boundary lines are identified and described until the land being surveyed has been "completely enclosed." Boundary lines measure distance and direction. Where two boundary lines cross, referred to as a comer, a monument is often used to identify the intersection. Distance is stated in terms of feet, normally to the nearest hundredth (for example, 212.65 ). Direction is given by its bearing, which shows the direction of one object with respect to another object. The bearing of a boundary line is the acute angle (an angle of less than 90 degrees) the line makes with a meridian (an imaginary line running north to south extending from the North Pole to the South Pole). In land description, the bearings are identified with reference to the quadrants on a compass and are expressed in terms of degrees, minutes, and seconds. A circle contains 360 degrees, 1 degree contains 60 minutes, and each minute contains 60 seconds. The circle is divided into four quadrants, each containing 90 degrees. The quadrants are identified by their boundary lines, namely Northeast (NE), Northwest (NW), Southeast (SE), and Southwest (SW). For each boundary line set in a metes and bounds description, the distance of the line, the direction of the line, and the monument used to mark the end of the distance should be clearly and precisely stated in the legal description.

The land in and around a city. The area may cross both county and state lines, as for example, Washington, D. C., which includes parts of Virginia and Maryland.

A reference to a geographic area which contains at least 50,000 residents within a total metropolitan population of at least 100,000. Historically, such an area has been referred to as a Standard Metropolitan Statistical Area (SMSA).

A person who brings parties together for the purpose of entering into a contract such as the borrowing of money to finance a real estate project. Normally, the middleman is paid a fee, often referred to as a finders fee, if and when the parties enter into an agreement.

A measure of length equaling 5,280 feet, 1,760 yards, 1,609 kilometers, or 8 furlongs. Such a measurement is a statute mile, whereas a nautical mile contains 6,080 feet.

A clause included in a lease of residential property which allows the tenant to terminate the lease without penalty if and when the tenant is transferred to another location.
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One-tenth of one cent. Property taxes in many jurisdictions are stated in mills.

A tax rate stated in tenths of a cent.

An agreement entered into by an owner permitting another party to explore for and, if found, extract minerals in consideration of the payment of a rent or royalty.

The right to share in the sale of minerals that may be extracted from one's land.

A shopping area consisting of small specialty stores and absent of any anchor tenants, such as one of the national retailers.

A provision of a zoning ordinance stipulating the minimum dimensions of a lot necessary for the construction of a building, for example, two-acre lots for each residence.

Minimum construction and location requirements that must be met before the Federal Housing Administration (FIL4) will underwrite a loan for residential property.
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The least amount of rent due from a tenant under a lease with a varying rental schedule.

A type of percentage lease that provides the lessor (landlord) a minimum rent regardless of the amount of sales. The minimum guarantee is referred to as a 'floor," referring to the fact that the rent cannot fall below that amount.

A one-story structure partitioned into individual units for use by individuals and businesses to store personal belongings. Individual units are normally rented on a month-to-month basis with the rent charged varying with the unit size. Units vary in size from 50 or 60 square feet up to 500 square feet.

An infant or person who has not attained the age of majority and thus does not have the legal capacity to be bound by most contracts. Most contracts entered into by a minor are voidable at the minor's option. However, a minor may choose to ratify a contract after achieving the age of majority. A minor or infant is bound to pay the reasonable value of necessities. Necessities include food, shelter, and clothing which are appropriate for a person in the minor's station of life.

An offense or crime lower or less than a felony.

Mistake in name. Normally, when a mistake in name occurs in a deed a correction deed, also known as a deed of confirmation, is used to correct the error.

An innocent or negligent misstatement of a material fact detrimentally relied upon by an innocent party. If a person makes a misrepresentation and later learns of the mistake, a duty then arises to inform the person who is detrimentally relying on the misrepresentation. Failure to do so is fraud
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An unintentional error or misunderstanding. Certain kinds of mistakes are grounds for rescinding a contract; others are not. Mistakes are classified as unilateral or mutual. A unilateral mistake is a mistake of a material fact involving a contract made by just one of the parties. If only one of the parties is mistaken as to a material fact, the mistake is not a defense unless the other party is chargeable with knowledge of the mistake. Whether or not the mistake is chargeable is judged by a "reasonable man" standard; that is, whether a reasonable person would believe that the other party made a mistake.

A real estate development that contains two or more different uses all intended to be harmonious and complementary. An example would include a high-rise building with retail shops on the first two floors, office space on floors three through ten, apartments on the next ten floors, and a restaurant on the top floor.

A manufactured unit constructed on a chassis and wheels and designed for permanent or semi-attachment to land.

A loan acquired for the purchase of a mobile home. Certain lenders, although not all, make loans on mobile homes. Typically, the amount financed is for much less than the average residential loan, and the amortization period is much shorter, perhaps seven to ten years, even though longer terms are available under both FHA and VA financing. The amortization period is usually shorter since, unlike a permanent home, a mobile home normally depreciates in value, and thus, the lender wants to be repaid over a shorter period of time. A fear of some lenders is that since mobile homes are not permanently affixed to the land, the security for the loan, the mobile home, can be moved by a dishonest borrower. Thus, not all lenders make mobile home loans.

A parcel of land zoned and developed for use by occupants of mobile homes.

A house built and used by a builder to demonstrate quality of construction, floor plans, styles, and amenities that are to be available in other homes available for sale by the builder. Quite often a builder will construct one or more model homes at the entrance to a subdivision. Once the other homes have been built and sold, the model homes are placed on the market and sold as residences.

A form of housing in which construction of the unit takes place at a factory, followed by the assembling of the house on the building site. Cost per square foot is considerably less due in part to the design which allows for little waste of materials and provides efficiency during construction.
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The short-term financial market which brings together investors who wish to invest in assets maturing in a short period of time and users of capital who wish to raise funds by selling short-term instruments. Treasury bills and commercial are examples of money market instruments. MONUMENT Physical evidence, either natural or manmade, which has been established as the boundary(s) for a parcel of land. Land is sometimes described by monuments which serve to identify the boundaries of the subject parcel. This method, while quite common in older descriptions in rural areas, relies on the use of both natural and artificial monuments. Land description by monuments is considered less exact than a description by metes and bounds since the boundaries used are sometimes something not permanent, for instance, a river bed or a pile of rocks. Oftentimes reference is made to land owned by someone else, for instance, a neighbor's farm.

In regard to the development of land, a temporary suspension or delay in the granting or approval of building permits, sewer and water hookups, or rezoning requests. Such action may be initiated by a local government to allow time for a comprehensive growth management study which will be used to assist in formulating future growth plans.

Used in the legal description of land to denote that the total acreage given in the description is an approximation.

An interest created by a person in regards to a particular property to secure the payment of a debt or performance of some other obligation. This interest may be a lien or a conditional title interest subject to defeasance when the debt is paid or the obligation fulfilled. A borrower who gives a mortgage is called a mortgagor and the lender who receives the pledge is called the mortgagee. It is important to realize that the mortgage is given by the borrower, not the lender. The term "mortgage" is derived from the Old French term 'mort' meaning dead and "gage" meaning pledge. Thus, when a mortgage note is paid off, the pledge is canceled or becomes dead.

A financial middleman who, in addition to bringing borrower and lender together, makes loans, packages them, and sells the packages to both primary and secondary investors. If a mortgage banker is not financially strong enough to package the loan, financial help is sought from a lender, typically a commercial bank. The bank becomes a warehouse for mortgage money, and the mortgage banker draws on these funds until payment is received from the investors. Usually the mortgage banker continues to service the loan (collect debt service, pay property taxes, handle delinquent accounts, etc.) even after the loan has been packaged and sold. For this management service a small percentage of the balance paid to the investor goes to the mortgage banker. Obviously, the success of the mortgage banker depends upon the ability to generate new loans. In some geographic areas mortgage bankers are the primary source for financing real estate. All mortgage bankers try to stay in constant touch with investors and are aware of changing market conditions and lender requirements. Quite often the loan origination fee or finder's fee charged the borrower is more than offset by a lower interest rate from a lender not directly accessible to the borrower. Mortgage bankers are involved in both commercial and residential financing and also carry out related activities, such as writing hazard insurance policies, appraising, and investment counseling. As with mortgage brokers, mortgage bankers are regulated by state law.

The Mortgage Bankers Association of America is the primary trade organization of the mortgage bankers and brokers in the United States. The association provides numerous seminars and publications for its membership and sponsors the designation CMB (Certified Mortgage Banker). The headquarters is 1125 15th Street, N.W., Washington, D.C. 20005; (202) 861-6500.

A means of providing financing for real estate through the proceeds of issuing tax-exempt bonds. Since the bonds are tax-exempt, the interest rate paid when the bonds are sold is less than other bond rates. This, in turn, means that the money made available to the ultimate borrowers will be at a below-market rate of interest.
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A person who brings together a user of capital (borrower) and a supplier of capital (lender) and in return is paid a finder's fee. A finder's fee equal to one percent or so of the amount borrowed is normally paid by the borrower. Thus, the financial success of the mortgage brokerage firm depends upon the ability to locate available funds and to match these funds with creditworthy borrowers. Certain sources of funds, particularly insurance companies, do not always deal directly with the person looking for capital; rather, they work through a mortgage broker. Thus, if you wish to borrow from certain lenders you would need to go through a mortgage broker. Normally, the mortgage broker is not involved in servicing the loan once it is made and the transaction is closed.

A multiplier used in certain income property appraisal techniques to compute a capitalization rate. In the Ellwood Technique for appraising property the mortgage coefficient is designated by the symbol "C."

An agreement whereby a mortgage lender agrees to fund a certain mortgage loan and a borrower agrees to comply with its requirements.

The relationship between annual mortgage loan requirements and the initial mortgage loan principal, expressed as a decimal or percentage, for level-payment mortgage loans.

A person authorized to represent a financial institution in a particular geographic area for the purpose of placing loans.

A private insurance company which insures a certain percentage of a conventional loan, thus reducing the lender's risk on a high loan-to-value ratio. MGIC, or 'MAGIC" as it is commonly known, was established in 1957 to offer a borrower on a conventional loan what FHA offers on its insured loans.

A trade association comprised of the nation's private mortgage insurance companies. The address is 1615 L Street, N.W., Washington, D.C. 20006; (202) 785-0767.
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The charge paid by the borrower to cover the cost of a mortgage insurance policy under an FI-L4 insured mortgage. The insurance policy provides protection for all or a certain percentage of the loan amount to the lender in case of default by the borrower. Historically the premium was paid each month as part of the mortgage payment; but, in recent years it has been paid either in cash at closing or financed and repaid as part of the total amount borrowed.

An allowable tax deduction for persons who itemize their federal and state income tax returns. Interest paid on a mortgage loan(s) up to the cost of one's home plus the cost of any improvements is deductible. Any interest on debt above that amount is not deductible unless used for medical expenses, education, or home improvements.

A decreasing-term life insurance policy purchased by a borrower which will pay off the outstanding balance in the event of the death of the borrower (mortgagor). The premium is paid as part of the monthly mortgage payment.

The process of collecting periodic mortgage payments and escrow funds, paying property taxes and insurance, and overseeing the administration of a loan over its life.

The process of reviewing an application for a loan and making a recommendation as to the desirability and risk of the lender making the loan. The underwriting process is an integral part of the lending process.

The total of all mortgages held by a lender.

A technique by which securities backed by the value of specific real estate mortgages are issued in the financial market for investment purposes. Such securities, because they are mortgage-backed, are more marketable and generally are issued with a lower rate of interest than if no such backing existed.
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The value of an asset for purposes of securing a mortgage loan. The term is also used to denote the market value of a mortgage loan.

Securities purchased by investors that are secured by mortgages. Such securities are also known as pass-through securities since the debt service paid by the borrower is passed through to the purchaser of the security.

A technique for estimating the value of income-producing property based on the sum of the mortgage principal added to the discounted present value of the forecasted cash flow and the reversion to equity.

A lender who receives a pledge of property to secure a debt.

A lender or creditor who has taken over property after default for the purpose of collecting rents and conserving the property until foreclosure.

Acquiring 100 percent of the funds necessary to acquire or develop a project; thus, the buyer/developer does not have to put up any up-front cash and has no equity in the property.

A borrower who pledges property through a mortgage to secure a loan.
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The likely price a property will bring, given current market conditions, buyer and seller motivations, and the financing terms that are likely to be employed.

A facility which offers lodging for the general public.

A structure consisting of housing units for a number of different family units. Quite often zoning ordinances require a special zoning classification for multifamily housing.

A structure containing more than two units designed for accommodating households.

A marketing service in which many brokers pool all of their listings and establish procedures for sharing commissions. Generally, multiple listing services (MLS) require that property owners sign an exclusive agency or exclusive right to sell listing with participating listing brokers in order to have access to the marketing pool.

A mathematical technique used in estimating the amount of value for a subject property based on known variables and prices for comparable properties.

A rate to be multiplied by an amount.
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A law or rule such as a zoning ordinance or building code enacted by a municipality for the purpose of conducting the affairs of the municipality.

A local government, commonly referred to as a city or town.

Written evidences of title such as a deed which an owner of land possesses and could use to prove his or her title to the land.

The combination of the offer and acceptance which together form the terms of a contract.

A means of discharging a contract by which each party agrees to release the other party in exchange for his or her own release.

A source of financing real estate for residences. Located primarily in northeastern states, the mutual savings banks are an important supplier of real estate financing. As their name indicates, these banks are owned by their depositors, who receive interest on their deposits. All mutual savings banks are state chartered and typically are less regulated than their closest financing relative, the savings and loan association. The percentage of their assets invested in real estate mortgages is less than the average S&L, although a higher percentage of their total mortgage portfolio is FHA and VA loans. Most mutual banks have a relatively larger percentage of their mortgage loan portfolio invested in multi-family mortgages. Mutual banks also make personal loans and interstate loans, which can result in capital being moved from surplus areas to deficit areas. Over two-thirds of the mutual banks maintain membership in the FDIC. The remaining ones are insured by state savings insurance agencies. These state agencies exercise authority over both the type of investments and the amount of their assets mutual banks can invest in particular types of real estate.