Welcome to the most comprehensive, up to date site for Colorado Real Estate Terms And Definitions.
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The features and amenities that a resident has access to while living in a neighborhood or complex. Some examples include a fitness center, swimming pool, sauna, dog washing station, etc.
Spreading out your loan into a series of separate fixed payments. A portion of each payment goes toward your interest costs and some goes toward your loan balance. You pay less toward your interest with each payment, which is different from just a simple interest loan.
Any residential unit inside a building (which can be a house, townhouse, large apartment building or a condominium). The key difference between a condo and an apartment is that condos are owned and apartments are rented.
This is ensures that the property is actually valued at the price that was agreed-upon per the contract. If the property ends up appraising for less than the agreed-upon amount, the contract may be terminated by the Buyer.
The difference between the contract price which covers an agreed-upon difference between the purchase price and appraised value. This is often used to accommodate appraised values that aren‘t able to keep up with fair market value.
An AMC works as a middleman between real estate appraisers and lenders. They are an independent management company that acts on behalf of appraisal users.
Assumption is when a seller transfers all terms and conditions of a mortgage to a buyer. The buyer takes on the seller’s remaining debt instead of taking out a new mortgage of their own.
A structure that shares a common wall or walls with another unit. Examples include townhomes, condominiums, row houses, apartment buildings and high-rise residential towers.
A Realtor® real estate agent or real estate broker who works with a buyer and guides them through the process of purchasing a home. A buyer‘s agent works to ensure the buyer is getting the best possible deal and is legally obligated to protect the interests of the buyer.
A rate that helps in evaluating a real estate investment. The cap rate equals the net operating income divided by the current market value (i.e. sales price) of the asset. The cap rate shows the potential rate of return on the real estate investment.
Real estate isn‘t officially sold until the actual transfer of the property has taken place and consideration has been paid. Once that has taken place, the property is closed and belongs to the new owner.
The final step in executing a real estate transaction, which includes finalizing mortgage agreements, paying applicable transaction fees and signing on the dotted line to close the deal.
The fees due at the closing of a real estate transaction. Both the buyer and seller will incur expenses during the closing process including application fees, inspection fees, homeowner‘s insurance, property taxes and the agent commission for the seller‘s portion of the transaction.
If a buyer is having trouble getting approved for a loan due to income requirements, they can have a co-signer on the mortgage. A co-borrower is usually a family member or friend who is added to the mortgage and guarantees the loan. They are listed on the title, have ownership interest, sign loan documents, and are obligated to pay monthly mortgage payments if the buyer is unable to. It should be noted that a co-borrower can not negate a bad credit score of the primary borrower.
The same as any other lease but the commercial part specifies that this is for business activity and not housing. In other words, it‘s a contract for a business to rent an office space or a commercial property.
The payment made directly to a Realtor® real estate agent or real estate broker for the services they provide in the sale or purchase of a property. It‘s usually a percentage of the selling price, but it can also be a flat fee.
An individual unit located within a building that primarily features shared walls. They are very similar to apartment units but are owned instead of rented.
A written and legally binding agreement between a buyer and seller outlining the details of a real estate transaction to change the ownership of a property.
The sale that takes place when the property is owned outright (i.e. there is no mortgage remaining) or when the owner owes less on their mortgage than what the market indicates the owner could sell the property for.
A set of limits and rules established by a builder, developer, homeowners association or neighborhood association that govern residences in a particular neighborhood or condominium building.
What gives someone their first impression of a property or how we judge how attractive a property is from the sidewalk (i.e. before you even step inside).
The number of days from the date on which a property is listed for sale on the local brokers‘ multiple listing services (MLS) to the date when the seller has signed a contract for the sale ofthe property
All your monthly debt payments divided by your gross monthly income. This ratio is one way lenders measure your ability to manage the monthly payments to repay the money you plan to borrow.
When you take out a loan to buy a property, depending on where you live, you‘ll probably sign a mortgage or a deed of trust. A deed of trust transfers the legal title of a property to a third-party (e.g. a bank, escrow company or title company) to hold until you as a borrower can repay the debt to the lender.
A parking space that is deeded to either a townhouse or condominium unit as detailed in the legal description. This space is traditionally transferred to a buyer as a component of the sale; however, the seller can retain the rights to the parking space as a provision of the sale to either be sold or leased outside of the sale.
A single-family home that sits on its own lot and does not share any walls with another home or building. I.e. another term for your traditional stand-alone house or single-family home.
The amount of money that a buyer pays upfront as part of a real estate transaction. It is typically a percentage of the total of the home‘s purchase price.
Doing your homework before buying real estate. It refers to a buyer‘s investigation of the various aspects of a property, either before making an offer or (more often) within a specific time frame between entering into the contract and closing.
One of the biggest perks of homeownership is building equity, which is a measure calculated by taking the market value of a property and deducting the amount that is still owed on the mortgage, if any.
An arrangement in which a neutral third-party provider holds the funds associated with a real estate transaction until a specific condition is met. Note: Colorado is a hard-money closing state meaning that any funds deposited as earnest money are applied to the down payments and all closing costs, deposits, credits, etc. are applied towards the final closing cost the day of closing.
Items that are excluded from the sale of a home or property. These may include appliances, chandeliers, electronics, furniture and/or personal property.
Many agents ask prospective buyers to sign an exclusive right-to-buy agreement before the agent shows the buyer homes. A buyer who signs it promises not to work with other brokers.
An agreement between a seller and a Realtor® real estate agent or real estate broker that gives the agent exclusive rights to sell and market the seller‘s home.
The Fair Credit Reporting Act (FCRA) was enacted in 1970 and ensures fairness, accuracy, and privacy of personal information contained in files maintained by credit reporting agencies. This act was created to protect consumers from having misinformation used against them.
A mortgage that is insured by the Federal Housing Administration (FHA) and issued by an FHAapproved lender. FHA loans are designed for low-to-moderate-income borrowers - they require a lower minimum down payment and lower credit scores than many conventional loans.
When a homeowner fails to pay the mortgage, the home goes to foreclosure. The mortgage lender will then resell the property in an attempt to recover their losses.
A term for basements that aren‘t fully underground but aren‘t on the first-floor either. If you are standing in a garden level unit, you can expect the windows to be at street level.
A protected area that falls under historical governance. Any exterior changes (such as additions, paint color, window replacements, etc.) made to a building that falls within a historical district requires prior approval.
A contract with a home warranty company that insures a homeowner with discounted repair and replacement service on major home functionality, such as plumbing and electric.
A coalition of homeowners in a residential community that establishes rules that the property owners must adhere to. Joining an HOA is a bit like sacrificing some control over your property to regulate that of your neighbor.
Insurance that covers losses and damages to a homeowner‘s home and home assets. It also provides liability coverage against accidents in the home or on the property.
A real estate investment company that specializes in making quick cash offers on homes. Usually the Seller is interested in a fast sale as opposed to receiving top market price.
Conforming loans limit the dollar value that can be backed by government-sponsored programs. A jumbo mortgage exceeds these conforming loan limits, which are tied to local median home values. Qualifications for Jumbo loans are more stringent to mitigate risk to the lender.
A contractual article that gives sellers the ability to continue marketing a house if the offer received contains contingencies or conditions. One of the most common contingencies is that the buyers must sell their current home. A kick-out clause allows the seller to kick out a buyer with contingencies (after a certain period of time) if a better offer comes around. Note: These are rare but they do apply within Colorado neighborhoods. Talk with your Realtor® before submitting an offer to verify the property you have identified is, or is not, part of a kick out clause.
It gives the lessee the ability to lease property with the option to buy. It includes a legal agreement with a monthly rental amount due, while also including an option to buy the property for a predetermined price at any time during the length of the agreement.
A right to keep possession of a property belonging to another person until a debt owed by that person is discharged either from a mortgage or a lien placed on a property for work/updates performed that have not been paid in full.
A measure of how balanced the market is between buyers and sellers. It is expressed as the number of months it would hypothetically take to sell through all the available homes for sale currently, given current levels of home sales. A balanced market ranges from four to six months of supply. A buyer‘s market has a higher number and a seller‘s market has a lower number.
A collaborative digital marketplace where home sellers - through their agents - present their homes for sale to other agents who work with buyers of those homes. The MLS provides accurate, up-to-date information about the status of local listings.
A document outlining the proposed terms and conditions of a real estate transaction. This is where a skilled Realtor® can negotiate the best outcome for their client.
If a basement is partial, means it does not continue beneath the entire home. In other words, the square footage of the basement level does not match that of the floor above it.
Like townhomes, patio homes are connected to other units with shared walls. The main difference between the two is size. While townhomes have at least two stories, patio homes have no more than one and a half stories.
If a sale is pending, it means the offer has been accepted, but the official closing has not gone through. A home may stay in pending status for several weeks.
A property that is on the market without being made public. The National Association of Realtors® has recently banned this practice in the interest of fair housing.
A Post Occupancy Agreement is executed when a buyer closes on a home and then leases back tenancy to the seller. This usually occurs when the seller needs more time to vacate the home, in which case, the buyer becomes a sort of landlord and receives payment from the seller for every day they remain in the home.
A homebuyer status that indicates the buyer‘s documents have been reviewed and they have been approved for a determined amount of money for their loan.
The difference between mortgage insurance and private mortgage insurance is that a PMI is specifically intended to protect the lender and will not cover the borrower if they cannot make payments.
This means that the homeowner died without a will bequeathing the house to an heir. In most cases, an estate attorney or representative has to sell the property to liquidate the asset and distribute the money to family members.
A quitclaim deed is a document transferring ownership of property from one party to another. It transfers the title of the property -- but only transfers what the seller actually owns. This type of transaction is commonly used when property is being transferred between family members not using traditional real estate channels.
A Realtor® helps you navigate a tough market and guides you in making smart, informed decisions whether you‘re looking to buy or sell. Only Realtors® voluntarily subscribe to a Code of Ethics that is founded on professional service and fair treatment. When you‘re working with a Realtor® you can trust their personal and professional commitment to ensure an agreement that is equitable and fair to all parties involved.
Real estate is often a retirement plan as much as anything else, and this is one way to cash out. A reverse mortgage is an option for seniors (62 years or older) to relinquish home equity in exchange for money.
A document presented to the buyer which details all known issues with a home as well as all the home improvement projects they have completed during their ownership.
A home layout that has at least three levels that are staggered. The third level will be directly over the first while the second will be off to the side, connected to both by stairs.
Title - the legal ownership of a property. Title insurance protects both the buyer and the lender if the title of a property is disputed or split between parties.
The process of searching through public records to ensure that the seller of a property has full legal ownership to do so. If deficiencies or defects are found, it will greatly complicate the transaction.
A loan backed by the United States Department of Agriculture available to rural Americans as part of their Rural Development Guaranteed Housing Loan program.
Zillow‘s estimate of a home‘s value. It‘s important to know that Zestimates are not the same as an appraisal and they are not always accurate. According to Zillow, Zestimates are within 20 percent of the final sale price 82.5 percent of the time. This means that a Zestimate could be 20 percent higher or lower than a home‘s actual value.
Based on zoning codes, only certain types of buildings or land usages will be allowed on a lot. (Examples: residential, commercial, agricultural and industrial)
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