Market Value
This term is used interchangeably with open market value and fair value. It refers to the price at which a property will exchange ownership during the valuation date and where both the buyer and seller acted on their own accord. It is the price at which the asset (or liability) would sell in a competitive market.
Use Value/Net Present Value –
This is the cash flow that the property generates for a certain user which may or may not be the true reflection of the value of the property. It might be that the current user is underutilizing it.
Investment Value –
This is the value an investor attaches to a property. It may or may not be the true market value of the property. The difference between the investor value and the market value of a property determines the motivation for a buyer or a seller to enter into the property’s market place.
The Insurable Value –
This is the value of the property covered under an insurance policy.
Liquidation value –
This is the standard of value attached to a property during the bankruptcy proceeding. The value is usually less than the market value since the seller will be exposed to sell it outside the normal timeframe in order to pay off his creditors.
Rent Abatement –
This is beating down or removal of rent. It is an incentive/lure given by the landlord to tenants. It is usually given to early occupants of a new building.
Adjustable Rate Mortgage (ARM) –
A mortgage is a loan facility offered by the financial institutions to home buyers. An ARM is a loan that attracts varying rates of interest repayments. The adjustment is done based on an adjustment period. The interest rate changes with change in the benchmarking index such as prime rate.
Adjusted Sales Price –
This is the total price on the contract, minus the credit facilities offered to the buyer by the seller of a property.
Capital Gain –
This is a positive change in the value of an asset (including real estate) that is realized after some time. It is mostly used in reference to the gain in value of land and buildings over time. Capital gain is taxable in most countries.
Certificate of Occupancy –
This is a document issued by the local authorities (read government) to person(s) or companies utilizing a building, verifying that the said building comply with building codes and regulations as provided for by the government.
Comparables/Comparative Market Analysis –
This is also referred to as Comps. It is a referencing point that uses a recently sold house that is smaller in size, amenities, location and condition as compared to the property about to be sold. Based on what it fetched, the property at hand’s price will be readjusted to reflect its fair market value.
Convertible Apartment –
This is a one- or two- bedroom apartment whose space is enough to create an extra bedroom. Note that the added bedroom ought to have a window for it to be recognized as an extra room legally.
Defeasance Clause –
This is a clause inserted in a mortgage deed. It gives the borrower a right to redeem ownership of a property at any time before he has defaulted, by paying the contract amount in full.
Disclosure and Informed Consent –
This is a verbal and written consent by a real estate agent explaining the said agent’s position in his agency relations with the client.
Escrow –
This is a situation where one person acts in trust on behalf of the other assuring the other party to an agreement that he will perform as per the agreements in a contract. In such cases, the attorney of the seller acts as the escrow agent where all the money is deposited by the buyer, assuring the seller that the buyer will pay the full contract amount.
Fixed Rate Mortgage –
This usually extends between 15 and 30 years. It is a loan that is secured for real estate and whose repayment interest rate will be fixed until the loan is fully settled.
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