Real Estate Dictionary: Let's Define Some Real Estate Terms
Real Estate, like other major markets, has a lot of terminologies that may be unfamiliar, or vague in concept. This is especially true if you’re not a professional working within the industry.
When you’re looking into properties, it’s important that you understand the various terms that may come up in the process. Here are some Real Estate terms to familiarize yourself with
An affidavit is a statement, sworn by one party as a statement of fact to be used in legal agreements or documentation.
In real estate, an affidavit is primarily used in the sales process. An affidavit is sworn by the seller, which guarantees that the seller, is, in fact, the owner of the property in question, and has the legal title of ownership to the property.
This is often called an ‘affidavit of title.’ This statement is also expected to provide details about any potential issues that affect either the property or seller themselves.
This also provides buyers with security in knowing that there aren’t any liens or other purchasers to whom the property may be sold.
Amortization is a process that allows a home buyer to pay monthly on the balance of both the principal loan amount as well as interest to lower debt over time.
Amortization is a process used by lenders, which benefits prospective home buyers by allowing them to create more initial equity in their home, and streamline their repayments on their home mortgage or loan while gradually decreasing their debt.
This allows home buyers to make monthly payments that cover part of the initial amount, as well as the interest.
In essence, this process makes it easy for homeowners to make repayments and know what their repayments will be every month, rather than complicated calculations since the interest will change.
Full Disclosure is a legal requirement that ensures that any seller or broker of a property includes all relevant facts that prospective buyers need to know, and that may alter a choice on the purchase of the property.
Full disclosure statements may be made early on in the buying process, although they are nearly always included in the purchasing contract. Any important information about the property must be included, whether negative or not.
If the full disclosure statement hasn’t been included, the seller or broker can face fees and legal penalties.
Power of Sale
Power of Sale is a legal clause included in legal documents such as a trust, deed, or will, which outlines specific situations in which the property may be transferred or sold.
In real estate, a power of sale clause is most often included in contracts between the home buyer and their mortgage lender. This provides security for the lender should mortgage payments not be made, allowing the lending company to sell the property in question.
Any capital gained from the sale of the property is used to cover the outstanding balance of the mortgage.
Unlike foreclosure proceedings, after the sale, the homeowner is responsible for paying any outstanding debt, although they will also receive any money from the sale that goes over the amount they owed on the mortgage.
A subdivision is a planned out space of land that is sectioned off to be developed with public facilities and projects.
Subdivisions are sectioned out areas of land, typically chosen from another larger plot of land to make development quicker and more organized. These areas contain roads, parks, houses, public works buildings, amenities, and anything else required to fully develop a habitable area.
This also facilitates the zoning processes, which allows individual contractors to purchase property and be approved for developing new properties, eventually leading to a much-hastened process of building up an entire area.
When you’re looking at the real estate market, make sure you understand all the terminology being used. Many industry terms that sound like jargon to the uninitiated are actually nuanced legal terms.
If you are unsure, make sure you check with your local real estate professional before you proceed with anything else.