Real Estate Definitions

Question 1

Fixer-Upper

Answer 1

A property that needs renovation

Question 2

FSBO

Answer 2

For Sale By Owner - a property being sold by its owner without a real estate professional’s services

Question 3

Vacancy Rate

Answer 3

A figure representing the annual % of units un-rented or the % of time a single unit remains un-rented during the year

Question 4

Zoning Laws

Answer 4

Regulations governing land use, population density, and building size and use.

Set by local governments, zoning laws typically change as communities develop; you can also request changes or exemptions.

Question 5

Pro Forma

Answer 5

A projected financial statement based on anticipated, not actual, income and expenses

Question 6

Cash on cash return

Answer 6

% figure by dividing the annual cashflow for a property by the actual cash you invested.
(This could include down payment, closing costs, and fix-up expenses)

Annual cash flow
—————————— x 100% = Cash On
Cash invested Cash return

Question 7

Deferred Maintenance

Answer 7

Necessary repairs and upkeep that have been left undone by the seller. Maintenance that has been deferred can present an opportunity in a deal, allowing you to negotiate a lower price.

Question 8

Appraisal

Answer 8

An estimate or an opinion of the value of a property by an impartial person skilled in the analysis and valuation of real estate in a particular market.

Question 9

Contingency

Answer 9

A condition in an offer sheet or contract that must be met before the deal can go forward

Question 10

Counter offer

Answer 10

A response to an offer to purchase a property that introduces new or different terms and conditions

Question 11

Due diligence

Answer 11

A research and verification process that provides accurate and in-depth information regarding the physical, financial and legal attributes of a property.

Question 12

Real Estate Purchase Contract

Answer 12

Also known as an “Agreement of Sale”, a legally binding agreement between buyer and seller stipulating the terms and conditions of a sale of a property.

Question 13

Title

Answer 13

The legal way of saying you own the “Right” to something.

Refers to ownership of the property, meaning you have the rights to use that property.

Question 14

Deed

Answer 14

Are actually the legal documents that transfer title from one person to another. It must be a written document.

Question 15

Seller Carry Back

Answer 15

Owner-provided financing.

Also Seller financing or Owner will carry (OWC)