1. 1031 Exchange

This process, also called a like-kind exchange, enables investors to postpone capital gains taxes from property sales, provided they reinvest the proceeds in similar properties within a strict timeframe.

2. Acceleration Clause

This contractual provision permits lenders to demand full payment of a loan if particular conditions are not satisfied.

3. Active Contingent

Properties with this status have received offers, but the sale is contingent upon fulfilling specific conditions, like selling the buyer’s existing home or satisfactory inspection reports.

4. Active with Contract

A property that is titled “active with contract” is in negotiations with a buyer but still subject to outstanding contingencies.

5. Addendum

This is an accompanying document that modifies or clarifies elements of an existing contract. For example, a lead-based paint disclosure for homes built pre-1978 is a common addendum.

6. Adjustable-Rate Mortgage (ARM)

An ARM has varying interest rates rather than a fixed one, making it essential for borrowers to consult mortgage professionals for comparisons and implications.

7. Annual Percentage Rate (APR)

The APR offers a comprehensive view of borrowing costs, combining the interest rate with any fees, expressed as a percentage. This is crucial for understanding the total expense of a loan.

8. Appraisal

A professional assessment of a property’s value, used primarily by lenders to determine the loan amount. Should this figure fall below the buyer’s offer, options like renegotiation may arise.

9. Appreciation

This term describes the increase in property value due to various factors, including market trends and property enhancements. Understanding appreciation is essential for clients viewing real estate as an investment.

10. As-Is Sale

When a property is sold in its current state, with no commitments from the seller for repairs or improvements, it is denoted as “as-is,” often appealing to those looking for renovation projects.

11. Closing Cost

These collective fees associated with finalizing a real estate transaction typically range from 3% to 5% of the sale price, covering areas like appraisals and legal services.

12. Commission

This is the fee received by real estate agents upon successful closings, commonly set at around 6% of the property’s sale price, usually divided between the buyer’s and seller’s agents.

13. Contingency

In real estate, a contingency refers to conditions that must be met for a purchase to proceed, often including home inspections and financing approvals.

14. Fair Market Value

This refers to the price that a property would sell for on the open market, reflecting the balance between a willing buyer and seller without undue pressure.