terms and definitions Flashcards
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Amortization
Amortization is when payments divide into equal amounts for the duration of the loan
Ad valorem
The Latin phrase ad valorem means “according to value.”
Appraisal
An appraisal is an estimate of approximate worth of something.
Appreciation
Appreciation is any gain in the value of a property over time from any cause.
Capitalization
Capitalization is the conversion of assets or income into capital.
Capitalization rate
Cap rate is used to indicate the rate of return that is expected to be generated on a property.
Cetris Paribus
A Latin phrase meaning “other things equal” or in plain terms all things remaining constant.
Commission
A commission is a fee paid to an agent for performing a transaction.
Debt
Something owed or promised.
Depreciation
Depreciation is any loss in the value of a property over time from any cause.
Discount points
Discount points also known as mortgage points are prepaid interest.
Double net lease
“Double” means two additional costs will be added to your base rent. Usually, taxes and insurance costs are added to the monthly lease payment.
Equity
Equity is the difference between the market value of your home and the amount you owe the lender who holds the mortgage.
Escrow
Escrow is a way for money and property to be transferred from one party to another through the use of a neutral, third-party agent also known as an escrow agent. Escrow makes it a lot safer for both buyers and sellers to close the sale without worrying about getting snubbed or cheated.
Gross rent multiplier
The ratio of the price of a real estate investment to its annual rental income before accounting for expenses such as property taxes, insurance, and utilities. More specifically its a measure of the value of an investment property that is obtained by dividing the property’s sale price by its gross annual rental income.
Interest
money paid or owed regularly at a particular rate.
Investment
An investment is the legal purchase of something that is not consumed today but will be in the future to create profit.
Market value or market price
The actual selling price of the property. So if your home sells for $200,000. Its market value is $200,000.
Mill rate
The mill rate is the amount of tax payable per dollar of the assessed value of a property. Mill rate is also known as the millage rate.
Net listing
A net listing is when an agent agrees to sell an owner’s property for a set minimum price. Anything over the minimum price belongs to the agent as commission.
Net operating income
The total income of a property minus all operating expenses.
Property tax
Property tax is a real estate ad-valorem tax, calculated by the local government, which is paid by the owner of the property. The tax is usually based on the value of the owned property.
Principal
The amount borrowed (such as the face value of a debt security).
Tax rate
The tax rate is the designated rate the government taxes a person, business, or entity.
Triple net lease
“Triple” means three additional costs will be added to your base rent. Usually, taxes, insurance, and maintenance are all added to the monthly lease payment.
