REAL ESTATE
TERMINOLOGY

Appraisal

• A formal estimate or opinion of value supported by an anaysis of relevant property data.
• Federal standards adopted by Florida apply to ALL real property appraisals and valuations.
• Federal Law required that appraisals of real property, including mineral rights, be performed by a licensed or certified appraiser.
• All appraisals must comply with USPAP - Uniform Standards of Professional Appraisal Practices.
• Appraiser compensation may not be tied to a percentage or a result.

Appraiser

• Works on behalf of a lender and provides a market analysis of the subject property.
• An appraiser’s finding is subjective and combined with market findings of sold properties within the surrounding neighborhood.

CLOSING/SETTLEMENT/TITLE AGENT

• Performs title searches to ensure a clear title so a title insurance policy can be issued.
• In some states, they facilitate the transfer of real estate.

D

DISCLOSURE (SELLER'S)

• Sellers often resist filling out the disclosure form, thinking that saying too much may jeopardize the closing.  In my experience, full transparency creates trust between the customers, and providing it up front will allow the Buyer time to process the information as opposed to overthinking it. Ultimately, the closing often becomes much easier.  
• Additionally, disclosing the bare minimum often results in many unhappy phone calls to the Realtors/Seller after the closing. Avoid the headaches and disclose up front.

E

Escrow

• A term that describes the neutral third-party handling of funds, documents, and tasks specific to the closing (or settlement, as it is also known), as outlined
  on the real estate purchase agreement or sales contract.
• The purpose of escrow is to facilitate the transaction by managing the disbursement of funds.

ESCROW/CLOSING OFFICER

• A non-biased third party who works with all participants to facilitate a successful closing of a real estate transaction.
• At closing, the closing officer will collect the purchase money funds from the buyer and lender as well as the settlement costs from each party.
• They disburse the funds in accordance with the closing documents and record the necessary documents to transfer ownership of the property.

HOME INSPECTOR

• Objectively and independently provides a comprehensive analysis of a home’s major systems and components.

INSURANCE AGENT

• Helps a homebuyer determine the homeowner’s protection coverage needed and then finds the right insurance policy to fit those needs.

LOAN OFFICER 

• A representative of a bank or other financial institution.
• They help customers identify their borrowing options and help them understand the terms of their loan.

LOAN POLICY

• When you purchase a new home or other piece of real property by securing a mortgage, you may be required by your lender to purchase a Loan Policy of title insurance.
• This policy insures the lender against covered title defects up to the amount of insurance.
• This coverage in favor of the lender lasts for the life of the loan under limited circumstances stated within the policy.

M

Market Value

• Value in exchange for cash or its equivalent. 
• The highest price in exchange for cash or its equivalent that a willing and informed buyer and willing seller acept when the property is exposed on the open market for a reasonable time;
• both parties are familiar with the property's uses, defects, and advantages;
• neither is under abnormal pressure to sell or buy;
• the parties are unrelated (arm's length transaction)

O

OWNERS POLICY

• You will also have the option of purchasing an Owner’s Policy of title insurance, which provides insurance directly to the insured owner listed in the policy, and describes the type of real property interest owned.
• The insurance in both an owner’s and a Loan Policy is subject to the policy provisions, which include the covered risks, exclusions from coverage, the conditions and the exceptions to title listed on a schedule to the policy.

P

Price

• The amount of money or its equivalent for a good is actually sold.
  
  

Premium

• You will pay a one-time premium for both the Loan Policy and the Owner’s Policy at the close of your transaction, based on the total value of your home and the amount of your loan.
• This is another way in which title insurance differs from other insurance models, where premiums are paid on an ongoing basis.
• The purchase of a home or other real estate may be the largest financial investment you ever make.
• Title insurance can give you added peace of mind in knowing that the title to your investment is insured.
  

PROPERTY INSURANCE 

Property Insurance

• Lenders require property insurance which is frequently referred to as "Homeowners Insurance", for all homes purchased with "Financing".
• Lenders require adaquate insurance coverage on the property so that if the home is damaged or destroyed by fire or storm, the insurance will cover the coast to repair or replace the home.
• These policies usually provide the homeowner with liability coverage to protect the owner if someone is injured on the property.

Property Insurance - Structural coverage

• The structural coverage includes a Deductable amount that the property owner agrees to pay "Out-of-pocket", which is subtracted from any insurance claim amount the insurance company pays. 
• Coverage for damage caused by perils such as: Fire, smoke, hail, lighting, vandalism, theft.
• Risk such as these have a predetermined limit on the dollar amounts the insurer will pay for the repairs or replacement. 
• The property owner needs to have enough coverage limits for the cost to rebuild the home in the case of a catastrophe. 

Property Insurance

• Lenders require property insurance which is frequently referred to as "Homeowners Insurance", for all homes purchased with "Financing".
• Lenders require adaquate insurance coverage on the property so that if the home is damaged or destroyed by fire or storm, the insurance will cover the coast to repair or replace the home.
• These policies usually provide the homeowner with liability coverage to protect the owner if someone is injured on the property.

Property Insurance - Structural coverage

• The structural coverage includes a Deductable amount that the property owner agrees to pay "Out-of-pocket", which is subtracted from any insurance claim amount the insurance company pays. 
• Coverage for damage caused by perils such as: Fire, smoke, hail, lighting, vandalism, theft.
• Risk such as these have a predetermined limit on the dollar amounts the insurer will pay for the repairs or replacement. 
• The property owner needs to have enough coverage limits for the cost to rebuild the home in the case of a catastrophe.

R

REAL ESTATE AGENT

• Licensed by the state to represent parties in the transfer of property.

REAL ESTATE ATTORNEY

• Can give advice on all legal aspects of the real estate transaction.
• Additionally, they are able to draft and review contracts, help decide how to take title and assist with the closing process.
• In some states, real estate closings can only be conducted by attorneys.

S

STATE TRANSFER TAXES

STAMPS - Doc-Stamps - Samp tax on "New" notes. 

• The state documentary stamp (i.e. doc-stamp) on a promissory note is calculated at the rate of $0.35 per $100 of value or factional part therefore on the Total Amount of the Note.
• The State Documentary Stamp Tax on the note is paid on BOTH New and Assumed Notes.
• This is NOT payable if the title is taken Subject to the Mortgage. 
• The BUYER usually pays this tax.

STAMPS - Intangible tax on NEW Mortgage "Lien"

• The state intangible tax on mortgages is paid on all NEW mortgages ONLY.
• The state intangible tax on a mortgage is calculated at the rate of 2 mills (.002) on the total amount of a NEW mortgage. 
• The tax is not payable when a mortgage is being assumed ot tile to the property is taken subect to the mortgage. 
• The BUYER usually pays this tax. 
• The tax is collected when mortgage document are recorded in the public record. 

STAMPS - Stamp tax on a NEW DEED

• Before a deed can be recorded in the public records, documentary stamps must be purchased and affixed to the deed.
• Stamps are purchased from the cler of the circut court, usually when the deed is presented for recordation. 
• Currently, the tax on the deed is calculated at the rate of $0.70 per $100 of value, or fractional part thereof, based on the sales price of the property.

T

TITLE SEARCH and EXAM

• That’s where title insurance differs from traditional insurance models.
• When you purchase a policy insuring you for matters relating to your car or health, the insurance company assesses the risk of insuring you, and bases its premium on the risk being assumed.
• With title insurance, the insurer first works to identify the status of ownership, liens and other matters affecting title by collecting documents affecting title from the public records that are statutorily identified for the recording of real estate transactions.
• This process is called the search.
• Once the search is complete, the title insurance underwriter can then determine the insurability of the title and list exceptions from coverage and requirements to insure.

U

UNDISCOVERED RISK

• Of course, even the most skilled title professionals may not find all title problems.
• Other risks include matters that are more difficult to identify, such as title issues resulting from filing errors, forgeries, undisclosed heirs, and other unforeseen problems.
• That’s one reason why your title insurance policy can play a key role in protecting your real estate investment.

Brent Jeansonne MS, GRI, ABR

and

Cindy Oneto GRI

President's Circle Award Recipient and Multi-Million Dollar Producing Team 239.784.9229 | 504.458.1205