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“As Is” Condition – Seller will make no repairs on house before settlement and makes no representations as to its condition. Some states limit the effect of “as is” clauses or real estate sales. Term also means the appraisal method of examining the physical aspects of a home, noting any deferred maintenance requirements.
Abstract of Title – The condensed history of a title to a particular parcel of real estate consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certificate by the abstractor that the history is complete and accurate.
Acceptance Period – Typically a fixed period of time (typically 30 to 90 days) during which the offer to buy an employee’s primary residence is valid. Also referred to as the contract marketing period.
Acquisition – The passing of beneficial ownership of a home from an employee to the purchaser.
Adjustable Rate Mortgage (ARM) – Mortgage loans under which the interest rate is periodically adjusted according to a pre-selected index. ARM’s typically adjust every six months, one year, three years, or five years.
(Real Estate) Agent – A person licensed by the state who represents the buyer or the property owner in real estate transactions. Agents must work through a licensed real estate broker.
Agreement of Sale – A contract in which a seller agrees to sell and a buyer agrees to buy, under certain specific terms and conditions, which must be in writing. Known in different states as “Contract of Purchase,” “Sales Agreement,” “Binder.” Every sale of real estate property must be in writing (contract of sale/earnest money contract.)
Amended Value /Guaranteed Offer – The offer by the relocation management company or the employer to purchase an employee’s principal residence, typically based on the average of two appraisals, with a fixed acceptance period.
Annual Percentage Rate (APR) – A term used in the Truth-in-Lending Act to represent the percentage relationship of the total finance charge to the amount of the loan. The APR reflects the cost of your mortgage loan as a yearly rate. It is often higher than the interest rate stated on the note because it includes, in addition to the interest rate, loan discount points and fees, and mortgage insurance.
Area Orientation Services – Research and information provided by relocation services or real estate firms to a relocating family regarding “lifestyle” issues and other concerns in the new area. Examples of information provided include: community resources, volunteer organizations, school information, support groups, service providers, doctors, veterinarians, music instructors, sports programs, churches, study groups, and so forth. Services may include taking the family on a guided tour of the area. Fees may be associated with some or all of these services.
Balloon Mortgage – A mortgage with periodic installments of principal and interest that do not fully amortize the loan. The balance of the mortgage is due in a lump sum at a specified date in the future. The borrower may have the opportunity to refinance the loan with the investor at that time or may have to pay it off.
Beneficial Ownership – The assumption of possession by the purchaser while not holding legal title to a home. This enables the purchaser to act as the “owner” of the property even though title remains in the name of the employee.
Bona Fide – In good faith, without fraud.
Bridge Loan (Interim Financing) – Temporary financing arranged to allow the purchaser to close the new home purchase before sufficient funds have been received either from the mortgage or from the sale proceeds of the former residence. Also known as a swing loan.
Broker – An individual, licensed in a state, who acts as an agent for another in negotiating sales or purchases in return for a fee or commission.
Broker’s Commission – Payment of money and/or other valuable consideration to a real estate broker for services rendered in performance of a contractual agreement.
Broker’s Market Analysis and Strategy Report (BMA) – An Worldwide ERC® developed form to standardize the various BPO/BMA forms for general industry use by real estate brokers/agents. Information includes a written market analysis on recent comparable sales, listings with suggestions for marketing strategies, suggested list prices, and most likely sales prices. A fee may be associated with this service. It differs from an appraisal in that it focuses on a marketing strategy for a property.
Broker’s Price Opinion (BPO) – A written market analysis on recent comparable sales and listings with suggestions for marketing strategies. A fee may be associated with this service.
Buyer – The person or persons who submit a contract of sale on a property and ultimately close on the property at an agreed-to price.
Buyer Broker – A real estate broker who represents, exclusively, the buyer in a real estate transaction. A broker may choose to act solely as a buyer broker, or may do so on a case-by-case basis.
Buyer Incentive – Money and/or other valuable services provided to a buyer in a real estate transaction by the seller, that are normally not required to be paid by the seller. Examples include inspections, closing cost assistance, homeowner warranties, points paid on behalf of the buyer, concessions, and credits at closing.
Buyer Value Option (BVO) – A buyer value option transaction is a variation of the amended value transaction in which no appraisals are obtained and usually no initial offer is made to the employee. Although these transactions are sometimes referred to as “amend-from-zero” or “offers prior to appraisal,” there is no initial appraised value offer to “amend.” Rather, the only unconditional offer is made at the “buyer value,” that is, the fair market value as determined by an offer from a potential buyer.
Cap – Refers to the maximum allowable increase, either payment or interest rate, for a specific amount of time for an adjustable rate mortgage.
Capital Improvements – An expenditure that adds to the value or useful life of a property and is considered a permanent investment to be added to the cost basis of the property. Capital improvements are different from the costs of maintenance and repairs. Examples of capital improvements would be the cost of a new roof and the conversion of an unfinished basement into living area.
Carrying Costs – Recurring costs and extraordinary charges of holding a property in inventory. This could include insurance, utilities, mortgage interest, condominium dues, taxes, homeowner association dues, maintenance expenses, assessments, and repairs. All costs of holding and operating a property during the inventory or marketing period should be charged to this category.
Certificate of Occupancy – An inspection of property and fee often required by the local governmental authority at the time of resale or passing of title. It can include plumbing, heating, electrical, and structural inspections. This certificate ensures that local, county, or state code requirements have been met.
Certificate of Title – A statement of opinion on the status of the title to a parcel of real property based on an examination of specified public records.
Chain of Title – Beginning with a conveyance out of an original source of title, such as a government, each succeeding deed, will, or other document that conveys and transfers the title to succeeding owners constitutes a link in the chain of title. The chain of title is the composite of all such links.
Clear Title – Implies that, according to records in the registry of deeds, the title stands fully in the name of the owner (or eligible co-owners) claimed. The employee must present clear title in order to sell his home.
Closing – Usually a meeting between or among the parties to the contract of sale, their attorneys, and others who have an interest in the sale, such as a representative of the company issuing title insurance, if applicable. When all the details have been settled and terms of the contract complied with, the seller signs and delivers the deed to the buyer; and the buyer in turn authorizes payment of the proceeds of the sale to the seller. In relocation, all or parts of a closing may be handled by mail between the purchaser and the employee.
Closing Agent – A firm retained for purposes of processing the closing of the sale of the home.
Closing Costs – Fees and charges associated with the closing, typically include broker’s commission, transfer taxes, legal and title expenses, revenue stamps, recording fees, and any other costs required by the mortgage lender. Usually considered direct costs. Also referred to as Settlement Costs.
Closing Date – The date on which ownership of a property is transferred to a buyer and closing costs are paid. In some instances, it can be the date on which the closing funds were received if that date is different from the date documents are signed.
Closing Fees – Fees charged by an attorney, title company, lender, escrow agent, or trust company to prepare the necessary documents for closing a sale. These fees are separate and distinct from attorney fees, title costs, and lender fees defined elsewhere.
Closing (Settlement) Statement – The statement of financial adjustments between the buyer and seller as of the day of closing to determine the amount of money the buyer must pay to the seller to complete the purchase of the real estate and seller’s new proceeds. Most commonly reflected on a HUD-1 or similar statement.
Comparables or Comparable Sales – Properties listed in appraisal reports that are substantially equivalent to the subject property.
Competitive Offering or Competitive Listing – Homes that are on the market currently and will be in competition with the subject property.
Condominium – A group or complex of residential housing units in which each unit is separately and individually owned and the unit owners collectively own the commonly used appurtenances such as the land, gardens, sidewalks, supporting and dividing elements, elevators, and hallways.
Conforming Loan – Conventional home mortgages eligible for sale and delivery to either the Federal National Mortgage Association (FNMA) or the Federal Home Loan Mortgage Corporation (FHLMC). These agencies generally purchase traditional fixed rate level payment first mortgages up to loan amounts mandated by congressional directive.
Contingency or Contingency Clause – The insertion of language into a contract of sale which requires that a stated event, such as obtaining mortgage financing, must occur before the contract becomes binding on the party protected by the contingency.
Contract of Sale– A written agreement between buyer(s) and seller(s) of real property listing the price of the property and terms of the sale. In some areas of the country it is called a “land contract” or “purchase agreement.” For this glossary, contrast with ” offer to purchase.”
Conventional Mortgage – A mortgage loan not insured by FHA, HUD, or guaranteed by the Veteran’s Administration. It is subject to the conditions established by the lending institution and state statutes. The periodic payments for a conventional mortgage are sometimes insured by private mortgage insurance (PMI).
Conveyance – The transfer of the title of land from one person to another.
Cooperative or Co-op – A property, such as an apartment, whose title is held by a corporation with residents owning shares in such corporation that entitle them to occupy a certain amount of living space pursuant to a lease granted by the corporation.
Cost-of-Living Allowance (COLA) – An allowance intended to assist an employee who is moving to a higher cost-of-living area to cover those higher expenses for a given period of time.
Days in Inventory – The time period from the date of execution of the offer to purchase with the employee through the resale closing date. Accurate comparison of one corporation’s days in inventory to another’s requires recognition and appropriate adjustment if different dates are used.
Deductible Expenses – Deductible expenses are those that are included in the employee’s taxable income for which he/she is entitled to claim a federal or state tax deduction.
Deed – A conveyancing instrument given to pass fee title to property at the time of sale. It usually is signed by the seller only and acknowledged by a notary public. Title to the property passes upon signing and delivery of the document. However, if the deed is not recorded and property is subsequently sold to another and that deed recorded first, then the second deed creates paramount title.
Deed of Trust – A deed held in trust by a third party. In such a situation, the borrower transfers the title to a trustee who retains the title until a loan debt is repaid. A form of mortgage in some states.
Deficit equity – An amount of money due from the employee to the purchaser as a result of equity calculation in which balance due on the mortgage and/or other liens is greater than the sales price of the home.
Delinquency – A loan payment that is overdue but within the period allowed before actual default is declared.
Destination Services – A wide array of services to corporations and their relocating employees and families at the destination location. Destination services may include the following: home-finding assistance, area counseling, mortgage financial counseling, rental assistance, temporary housing assistance, spouse-employment assistance, home inspection, and so forth. Some may have fees associated with their provisions.
Direct Costs or Direct Expenses – Typically, those costs charged directly against a specific property, which are then billed back to a corporation by either a third party company or in-house program. Usually, acquisition and carrying costs as well as disposition and selling costs are included.
Direct Reimbursement Program – Typically, a type of homesale program in which the corporation does not guarantee an appraised value nor does it purchase the property from the employee but does reimburse some or all direct selling costs.
Discount Points – A means by which lenders vary the yield/return on a mortgage when maximum rates are fixed by law, such as with FHA insured or VA guaranteed loans. Payment of “points” to the lender at the time the loan is made ensures the same return as the lender would have received if the loan were issued at the current interest rate. Discount points also apply to conventional loans and are a fee charged at closing by the lender to increase the yield or interest rate of the loan. These fees are also sometimes called commitment fees. One point is equal to 1 percent of the face amount of the loan.
Document Preparation Fee – Charges from vendors such as attorneys, title companies, escrow companies, and trust companies, to prepare legal and other papers necessary to acquire property.
Documentary (Tax) Stamps – A state tax, in the form of stamps, required on deeds and mortgages when real estate title changes ownership.
Duplicate Carrying Costs or Duplicate Housing Expenses– Costs experienced as a result of an employee purchasing or leasing a new home before selling or canceling the lease in the old location. Typically, these costs include mortgage interest, property taxes, maintenance, and insurance.
Earnest Money – The deposit money given to the seller or his agent by the potential the purchaser upon the signing of the purchase agreement and typically held in a specific escrow account.
Easement – A right to use another’s real property for a specific purpose, such as providing a utility company a right-of-way for placing and maintaining power lines and poles.
Equity – The interest or value an owner has in real estate over and above the existing liens against it, such as the mortgage balance and assessments owning. Equity equals sales price minus all debts (mortgage balance, assessments, liens, etc.).
Equity Advance – Payment of a portion of the available equity in the employee’s home prior to the sale of the home.
Escrow – The delivery of money and/or documents associated with a real estate sale to a neutral party for delivery, exchange, or execution at the closing or some other specified time.
Excludable Expenses – Those moving expenses or reimbursements that the IRS considers non-taxable. They include travel and lodging at the time of the move, as well as household goods shipment and up to 30 days of in-transit storage.
Exclusion Clause – A provision placed in a listing agreement in which the broker acknowledges that he/she will earn no commission if the employee sells the home to the purchaser (typically a relocation management company or an employer). It should be inserted into every listing agreement involving a relocating employee.
Fair (Current) Market Value – The most probable price that a willing and well-informed buyer would be justified in paying and an equally informed seller would accept for a home placed in a competitive and open market for a reasonable period of time
Federal Housing Administration (FHA) – A division of the U.S. Department of Housing and Urban Development (HUD) whose main activity is insuring residential housing loans made by private lenders. It sets standards for building construction and underwriting requirements. FHA does not lend money or construct housing.
Federal Housing Administration Mortgage (FHA Mortgage) – A housing loan insured by the Federal Housing Administration that enables lenders to loan a very high percentage of the purchase price.
Federal National Mortgage Association (FNMA or “Fannie Mae”) – A corporation created by Congress to support the secondary mortgage market. It purchases and sells residential mortgages insured by the FHA or guaranteed by VA, as well as conventional home mortgages. FNMA sets the standards for underwriting residential mortgages.
Fee Simple – The highest degree of ownership that a person can have in real estate. An interest in real estate that gives the owner unqualified ownership and full power of disposition.
Federal Housing Administration Insurance (FHA Insurance) – Insurance required by the FHA to insure FHA mortgages. The insurance premium is usually expressed in points and is paid by either the buyer or seller or shared depending on how the real estate sales agreement is written. Also called Mortgage Insurance Premium (MIP).
Fixed Rate Mortgage – A loan in which the interest rate stays constant for the entire life of the loan. Also known as Fixed Interest Rate.
Fixtures – Property that is attached to real property and is treated legally as real property while it is so attached. Fixtures not specifically excepted from an accepted offer to purchase transfer with the real estate.
Gain on Sale – Actual dollar difference between the appraised value of a property and the higher ultimate sales price after the purchaser (corporation or relocation company) has acquired the property. This is generally shown as a credit to the corporation.
General Warranty Deed – The deed with the highest guarantee of title, which allows the buyer to hold the seller liable if the title later proves to have a “cloud” (defect) on it.
Gross-up – Company-provided tax allowance to offset, in whole or in part, the effect that certain taxable, nondeductible reimbursements or allowances may have on an employee’s gross income.
Guaranteed Offer – The offer by the relocation management company or the employer to purchase an employee’s principal residence, typically based on the average of two appraisals, with a fixed acceptance period.
Hazard Insurance – A contract whereby an insurer, for a premium, promises to compensate the insured for loss on a specific property due to certain hazards. Required by lenders.
Home – The employee’s primary residence that is being sold in a homesale program. Typically, it is defined as real property containing an amount of land customary for the area and may include condominiums, cooperatives, mobile homes, and multi-family properties. Generally, it is neither investment property nor a second home.
Home Equity Loan or Line of Credit – A line of credit that can be drawn upon as needed. The total amount available becomes a lien on the property and is based upon agreement, equity in the home, or ability to meet the payments.
Home Finding Trip – A home or apartment search in the new area, based on an employee’s specific requirements and preferences, taken after the employee has made a decision to relocate. Also referred to as Househunting Trip.
Home Inspection – A report from an independent technician rendering an opinion on the condition of a property. Such reports might include termite, well, septic, plumbing, heating, electrical, structural, roof, radon, or geotechnical exploration. An inspection report may be required on a property at any stage of the homesale process.
Home Marketing Assistance Period – Proactive marketing assistance designed to help the employee market the primary residence by designing a customized marketing strategy and assist with offer negotiations. This assistance may be provided independently or in conjunction with the Homesale Assistance Program.
Home Purchase Companies – Companies that buy and sell homes for corporations on a contractual basis, nationally or regionally. Also known as relocation management companies or third party companies.
Home Sale Assistance – Reimbursement for expenses incurred in selling and/or purchasing a residence.
Home Selling Expenses – Expenses arising out of the sale of real estate such as brokers commission, transfer taxes, attorney and inspection fees, deed and recording fees, escrow or abstract fees, mortgage prepayment penalties, and incentives paid by the seller.
Homeowner Warranty – Private insurance that protects a buyer against defects such as plumbing, heating, and electrical systems in the property he/she is purchasing. The period and coverage of the insurance varies widely, and both new and existing homes may often be insured.
Homesale Program – That part of an employer’s relocation policy designed to facilitate a relatively fast, convenient means by which an employee may sell his/her home with a minimum of time and effort. Usually accomplished through a relocation management company or a corporate in-house program, by appraised value, amended value, buyer value option, or assigned sale transactions.
Household Goods Transportation Insurance – Insurance provided for household goods being packed, in transit, held in storage, or unpacked. Dollar amount of insurance often determined by the total weight of the household goods shipment, with limiting factors.
Home Maintenance Expenses – The cost of keeping an acquired property in condition to perform efficiently the service for which it was intended. It is the upkeep of a fixed asset, which preserves the value but does not increase the value. Examples are cleaning, grass cutting, snow removal, pool servicing, and winterization.
Idemnify – To protect or compensate for damage, loss, or injury.
Initiation – That part of the homesale program in which the steps necessary to authorize relocation services are implemented, including creating files and the record-keeping devices necessary for reporting and tracking.
Insurance – A contract with an insurer providing protection against loss arising from certain risks such as fire, vandalism, theft, life, liability, credit life, flood, and mineral exploration subsidence.
Interest – A charge for the use of funds. The basis of this charge is often the prime rate plus or minus a negotiated amount and may be calculated as simple or compound interest per a negotiated agreement.
Interest on Equity – The interest charges on equity amounts (including equity advances prior to acquisition) paid an employee from the date of disbursement to the closing date.
Inventory – Any property that has been acquired by the purchaser whether an appraised value, amended value, buyer value option, assigned sale, directed offer, or special transaction.
Joint Tenancy – Ownership of real estate between two or more parties who have been named in one conveyance as joint tenants. Upon the death of a joint tenant, his or her interest often passes to the surviving tenant or tenants by the right to survivorship.
Joint Tenants – Two or more persons who hold title to real estate jointly, with equal rights to use it during their respective lives; often contains the provision that on the death of a joint tenant, his or her share in the property passes to the surviving tenants, and so on, until the full title is vested in the last survivor. A joint tenant often cannot sell or encumber his or her interest without the consent of joinder of all of the other joint tenants.
Lease Cancellation Penalty – A fee charged a tenant or lessee in the event the tenant breaks the lease before the stated period of time in the lease has expired. Also known as Lease Termination Penalty.
Lease-Option Agreement – An arrangement by which a renter leases a house with an option to buy at the end of a specific period of time at an agreed-to price.
Legal Fees – Fee paid to an attorney, title, escrow, or mortgage company for services rendered for the acquisition of property. Such fees are often charged to clear a problem with the title or remove a lien from the property.
Lender Fees – Fees charged by the lender to cover the administrative costs of originating a mortgage loan. These fees may include application processing; credit, appraisal, title, and survey review and approval; preparation of the closing package; resale of the loan to the secondary market or entering the loan into the lender’s portfolio.
Lien – An encumbrance against property as security for the payment of a debt; for example, judgments, taxes, mortgages, deeds, or trusts.
Listing Agreement – An agreement between a seller of real property and a real estate broker whereby the broker agrees to attempt to secure a buyer for the property at a certain price and terms in return for a fee or commission.
Listing Broker – The broker in a multiple-listing situation from whose office a listing agreement is initiated, as opposed to the selling broker, from whose office negotiations leading up to a sale are initiated. The listing broker and the selling broker may be the same person.
Loan Commitment – Written notice from the lender stating it will supply mortgage funds in a stated amount for a buyer to purchase a home.
Loan Origination Fee – The amount charged by a mortgage company for handling the initial application and processing of a loan.
Loan-to-Value Ratio (LTV) – A ratio that compares the amount of a mortgage loan against the appraised value of the property. Usually expressed as a percentage. For instance, with an “80% LTV” the amount of the mortgage loan is 80% of the appraised value of the property.
Local Custom – A common practice in an area that is often unwritten.
Loss on Sale – Actual dollar difference between the appraised value of a property and the lower ultimate sales price after the purchaser (employer or relocation management company) has acquired the property. Typically shown as a charge to the employer.
Loss-on-Sale Assistance Program or Provision – An aspect of some homesale programs which calculates the difference between the appraised value offer and either the employee’s purchase price or the employee’s purchase price plus all or some of the subsequent capital improvements. This difference, or some portion thereof, may be paid to the employee.
Management Fee – An amount charged to the corporation by a relocation management company to manage the sale of a transferee’s home. Examples range from simple flat per-case fees and fees calculated as a percentage of the appraised value (or sales price) to more elaborate fees based on a relocation management company’s total cost performance and/or employee service satisfaction.
Market Value – The most probable sales price of real estate established by the relocation appraisal process or, in the case of an amended value program, a bona fide offer from an employee-found buyer.
Marketing Period (By the Employee) – Period of time beginning when the employee lists his/her house for sale and ending when he/she accepts the employer/relocation management company offer or a contract to purchase under a Higher Offer Program. If the employee is required to market the home for a specific period of time before and/or after the Guaranteed Offer has been extended before being eligible to accept the Guaranteed Offer, this is referred to as a “Mandatory Marketing Period.”
Marketing Period (By the relocation management company or employer) – That period of time from the date the purchaser can begin selling a property through execution of a contract of sale.
Miscellaneous Expense Allowance – Generally covers expense items not specifically covered within the relocation policy. Examples of expenses that are considered part of the miscellaneous allowance, while not all-inclusive, include driver and automobile license fees, telephone installation, draperies and carpet removal or installation, pet transportation or boarding, veterinary health certificates, will preparation, baby-sitting fees, dues and fees forfeiture, and laundry and dry cleaning. Also referred to as incidental allowance, intangible allowance, or transfer allowance.
Mortgage – A written and usually recorded document creating a lender’s lien or claim against real estate, given by the buyer as security for money borrowed.
Mortgage Commitment– A formal written communication by a lender agreeing to make a mortgage loan on a specific property, stipulating the amount, length of time, and conditions of loan.
Mortgage Insurance – A policy of insurance that protects the lender against a portion of the financial loss created by the default of the borrower.
Mortgage Insurance Premium (MIP) – Paid monthly by the borrower to HUD to set up a reserve account for protection of the lender against loss in the government -insured loans or to a private mortgage insurer for conventional loans. The MIP is ½ percent of the loan amount and is amortized over the entire mortgage life and added to the interest rate.
Mortgage Interest – The cost of borrowing mortgage money. Mortgage interest rates vary with the term and type of loan required.
Mortgage Interest Differential Allowance – Payment of some or all of the difference between the interest rate on the employee’s mortgage in the origin location and the rate on their mortgage in the new location. Payments are generally made for a limited number of years, i.e. three years.
Non-Conforming Loan – Conventional home mortgages not eligible for sale and delivery to either FNMA or FHLMC because of various reasons, including loan amount, loan characteristics, or underwriting guidelines.
Non-Recurring Carrying Costs – Typically, charges associated with an inventory property, which are generally one time in nature. Examples include repairs, capital improvements, mortgage assumption fees, and assessments.
Offer Period – The period of time from the issuance of an offer to purchase by the purchaser until expiration of the offer. The length of the offer period varies widely.
Offer to Purchase – A contract of sale extended to an employee by the purchaser to buy the employee’s property. The amount is computed according to the corporation’s relocation policies or program relying upon the use of the relocation appraisal process.
Personal Property – Furniture and other items that are not affixed and can be readily removed without damage to the real property.
PITI (Principal, Interest, Taxes, and Insurance) – The most common components of a monthly mortgage payment.
Prepayment Penalty – A charge imposed on a borrower who pays off a loan early. The penalty compensates the lender for interest that would otherwise be lost. Prohibited on limited time by some state laws.
Pre-qualification – A process whereby a borrower may obtain an estimate of the mortgage amounts for which he/she would qualify prior to making formal mortgage application.
Primary Residence – A residence which the employee occupies as his/her principal residence.
Private Mortgage Insurance (PMI) – Insurance on a conventional mortgage loan written by a private company protecting the lender against loss in case of mortgage default. Typically, this insurance is
Property Tax – A mandatory charge by a government levied on any kind of property that is either real, personal, or both. Normally, it is a charge at a fixed rate per hundred or per thousand dollars of assessed value.
Prorate – To apportion between a home seller and home buyer their proportionate share of an obligation paid or due (such as proration of taxes, condominium fees, etc.), usually fixed by varying local customs.
Purchaser – Either a relocation management company or the in-house program of an employer. The purchaser is the party responsible for issuing an offer to the employee to purchase his or her home according to the terms of the employer’s relocation policy. The offer as based on an appraised value or by the offer of a potential buyer.
Qualified Buyer – A person or persons, as distinguished from the purchaser, who submits a contract of sale on a property and ultimately closes on the property at an agreed-to price.
Radon – A colorless, odorless, naturally occurring radioactive gas produced from the decay of natural radioactive minerals in the ground. Radon gas surfaces to the earth through pores in the soil and rocks and escapes harmlessly into the atmosphere. However, it poses a risk of lung cancer if inhaled in concentrated amounts. Problems can occur when radon seeps into houses through cracks and openings in basements and crawl spaces and accumulates in living areas.
Real Estate Tax – A tax assessed by the local government against real property.
Realtor® – A professional designation given to a real estate broker who is a member of the National Association of Realtors.
Recording Fees – Charges for filing legal documents pertaining to real estate to make them a matter of public record.
Recurring Carrying Costs – Frequently reoccurring costs of holding a property in an employer’s or relocation management company’s inventory. Examples include insurance, utilities, mortgage interest, condominium dues, taxes, and homeowner association dues.
Referral Fees – A fee that is a portion of the broker’s commission that is paid to another broker, pursuant to an agreement, which provided either a listing prospect or selling prospect. Also, any other fee or rebate paid to the purchaser for services rendered to the employee or property including payments from movers, title companies, carpet and paint suppliers, lenders, inspectors, appraisal firms, etc.
Relocation Appraisal – The process by which the Anticipated Sales Price of a residential housing unit, using the market data approach to value, is established. Also, the form by which the Anticipated Sales Price is reported. The purpose of this appraisal is to establish the Anticipated Sales Price for a relocated employee’s residence and assumes an arm’s length transaction. Most often done according to the procedures in the Worldwide ERC® Summary Appraisal Report.
Rental Management Fee – A fee paid to an independent firm to oversee rental or leasing of a property. Technically, it could be a fee to manage any aspect of a rental property.
Renters – Either employees who rent their primary residence, or tenants who are leasing the employee’s residence.
Repairs – Costs incurred to mend or restore deterioration brought about by decay, wear or tear, or partial destruction. A repair is intended to maintain the utility of the property. Repairs include expenses to correct items expected to be in working order. Examples include repainting the inside and outside, tuck pointing, mending leaks, plastering, and conditioning gutters on buildings.
Replacement Cost – The construction cost at current prices of a property which is not necessarily an exact duplicate of the subject property, but which serves the same purpose or function as the original. This term also refers to the cost of a new item purchased to replace a damaged one, such as during the transportation of household goods.
Resale – The marketing, selling, and closing of an inventory property.
Sale Price – The agreed-to selling price of a property. Usually, the result of negotiation between seller and buyer and reflects the total amount of money to change hands at closing.
Security Deposit – Fund held to guarantee performance of terms. Most frequently seen in a lease wherein the tenant must deposit funds with the landlord for the life of the lease to guarantee performance and condition.
Seller – That person or persons offering to transfer a property to a buyer at an agreed-to price and terms.
Selling costs – Those costs associated with the marketing and selling of a property. Included in this section are real estate commissions and monetary concessions and incentives.
Spouse Employment Assistance – Career assistance consulting and/or counseling to spouse/partner of relocating employees.
Storage – Placement of household goods in either short- or long-term storage facilities. May be provided in conjunction with the transportation of household goods.
Survey – A plan prepared by an engineer or surveyor showing the boundary lines of the property and location of buildings in relation to the boundary lines. Often required by the lender as a condition of a loan.
Tax Assistance – A payment by a corporation to an employee in recognition of the fact that many of the payments associated with relocation are considered income to the employee and thus are taxable. This payment, which is also taxable, may pay for all or part of the additional taxes incurred.
Temporary Housing – Living quarters provided for an employee on a nonpermanent basis.
Temporary Living Expenses – Expenses incurred by employees who must live in temporary quarters because they are to begin work in the new location before closing on a new home or leasing an apartment.
Title – A document that indicates rights of ownership and possession of a particular property. However, title in the real estate context means the sum of the ownership rights derived from deeds, wills, easements, and other conveyances. It is not normally a document by itself, but is the result of getting a correct, legally enforceable deed with adequate protection from defects.
Title Company – A company that specializes in insuring title to property; in many states will act as the escrow agent in closing real estate transactions.
Title Costs – Fees charged for items such as abstract or title search, title examination, owner’s and lender’s title insurance policies, and any other fee required to ensure the prospective buyer is receiving a fee simple or leasehold estate to the property, as applicable. Also known as Title Fees.
Title Insurance – Insurance that protects the lender or owner against undiscovered title defects that could cause loss of interest in the property.
Title Search – An examination of public records, laws, and court decisions to disclose the past and current facts regarding the ownership of real estate for the purpose of discovering whether there are any mortgages, judgements, easements, tax liens, or other encumbrances on it.
Total Direct Cost – Typically a fee structure is based on the total direct cost of an appraised value home. The total direct cost usually comprises the acquisition/carrying costs, recurring carrying costs, disposition/selling costs (including loss on sale), and may or may not include interest on equity.
Transfer of Title – The act by which the title and ownership of property is passed from seller to buyer. Usually accomplished at settlement on closing.
Transfer Tax – A charge made by some governmental authorities for the purpose of raising revenue on the conveyance of real estate.
Trust Deed – An instrument in the nature of a mortgage that secures the payment of debt. Distinguished from a mortgage in that the title is transferred to, and held by, a trustee for the benefit of the holder of the debt. Also called a Deed of Trust.
Underwriting – The process of reviewing a completed mortgage application file and determining if both the applicant and the property meet the lending guidelines of the investor. Also, the process of reviewing an application for insurance to determine if the applicant and the property to be insured meet insurer’s guidelines.
Utilities – Those services rendered by utility companies such as telephone, electricity, gas, and water.
Vacate Date – The date on which the employee moves out of the property.
Variable Rate Mortgage – A mortgage loan in which the interest rate may increase or decrease at specified intervals within certain limits, based upon an economic indicator. See also Adjustable Rate Mortgage).
Veterans Administration Mortgage (VA or GI Mortgage) – A loan available only to qualified veterans and service personnel, according to their entitlement, which is guaranteed by the Veteran’s Administration. This is a fixed-term mortgage in which the VA sets typically lower than conventional interest rates. No down payment may be required if the cost of the home equals or is less than the VA appraised amount. Buyers may not be charged points.
Wrap-Around Mortgage – A method of financing whereby the homeowner assumes an existing mortgage and obtains additional funds from another source. The mortgagor pays the second lender at a composite interest rate based on the total amount owed. The second lender pays the first lender.
Zoning Ordinances – The laws of the local government establishing building codes and regulations of land usage.