Do you know these common housing terms?

Posted April 1st, 2018

Here’s a list of the most common terms, how they’re used, and what they mean.

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 negotiations.

Appreciation The rise in property value due to market influences. A house might appreciate due to location becoming desirable or renovations 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.

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.

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.

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.