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Common Housing Terms

Common Housing Terms

Navigating the housing market can be confusing. Even more confusing are the terms used to describe these processes. There are real estate terms, lender terms, and even appraisal terms, oh my! Here’s a list of the most common terms, how they’re used, and what exactly they mean. Addendum A supplement to a document that contains additional information. Appraisers will use addendums to explain items when there was not adequate space on a standard appraisal form. Amenity A feature that increases a properties value or desirability. Examples include location, pools, schools, parks, and other such structures. Appraised Value The estimated fair market value of a property as determined by a certified appraiser following appraisal principles and regulated by an official appraisal board. This is often seen during the selling process and a starter for any negotioations. Appreciation The rise in property value due to market influences. A house might appreciate due to location becoming desireable or rennovations in curb appeal etc. Broker A person or persons who bring together the purchase of a property with the buyer and seller. A broker is not a normal real estate agent, but someone who has extensive education and has a broker license. Capital Accumulated goods and/or money that often generates additional income. Homes, cars, bonds, and even art are considered capital. Comparables An appraisal term referring to properties that are similar in various ways to the property whose value is being determined.  Debt Equity Ratio The amount a mortgagor owes on a property to the amount of equity in the home. Equity is normally the fair market value minus any mortgage debt. Depreciation The natural decline in property value usually due to the market or depletion of resources. Cars are the normal definition of depreciation due to their usefulness wearing out over time. Easement The rights of a non-owner to have control over a portion of or all of the property. Such as an electric company having an easement over residential properties to access power lines. Encumbrance A claim against the property such as easements, liens, or mortgages. Fair Market Value The price for property at which two parties can transact business. Often referred to as the final sale price (before fees etc.) Gross Area The total amount of all floor space including hallways, stairways, and closet areas. Can be measured by external wall lengths or other such measurements. Lien A claim for the property as a result of a debt or other obligation. The IRS can add a lien to property for any unpaid taxes. Loan To Value Ratio The amount owed on a property VS fair market value. Subject Property A property that is being appraised. Your home, for example. Walk-Thru Inspection A process where the appraiser examines the property, usually inside and out, to estimate its value. While a walk-thru inspection is not the same as a home inspection, an appraiser might also check for damage to the property. For any other help regarding appraisals, be sure to visit or call your friends at Aspen Appraisals today.

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