Units 16-21

amenity

some extra that contributes to owner satisfaction: clean air, view, etc.

appraisal

an estimate of a properties value by someone who has specific training as an appraiser

appraiser

independent person trained to estimate value

capitalization rate

 the rate of return a property produces the owners investment

comparables

properties listed in an appraisal report or a CMA that are substantially equivalent to the subject property

cost approach

the process of estimating the value of property by adding to the estimated land value the appraisers estimate of the reproduction or replacement cost of the building, less depreciation

depreciation

in appraisal, a loss of value in property due to any cause including physical deterioration, functional obsolescence, and locational obsolescence. For income tax purposes, yearly write-off of a percentage of the cost of a building as an expense

external obsolescence

reduction in a properties value caused by factors outside the subject property such as social or environmental forces or objectionable neighboring property. Locational obsolescence or economic obsolescence

function obsolescence

a loss of value to an improvement to real estate due to becoming outdated, often caused by age or poor design

gross income multiplier(GIM)

a figure used as a multiplier of gross annual income of a property to produce an estimate of the properties value; usually used for commercial property

gross rent multiplier(GRM)

a figure used as a multiplier of the gross rental income of a property to produce an estimate of the properties value

highest and best use

inthat possible use of land that would produce the greatest net income and thereby develop the highest land value

income approach

the process of estimating the value of an income-producing property through capitalization of the annual net income expected to be produced by the property during its remaining useful life

market price

the price a ready willing and able buyer who is not forced to buy would pay a seller who is not forced to sell

market value

p the probable price a ready, willing, able, and informed buyer would pay and a ready, willing, and informed seller would accept, neither being under any pressure to act, and after allowing for a reasonable exposure on the market

physical deterioration

loss of value due to wear and tear or action of the elements

reconciliation

the final step in the appraisal process, in which the appraiser reconciles the estimates of value received from the direct sales comparison, cost, and income approaches to arrive at a final estimate of value for the subject property

replacement cost

the construction cost at current prices of a property that is not necessarily an exact duplicate of the subject property but serves the same purpose or function as the original

reproduction cost

the construction cost at current prices of an exact duplicate of the subject property

sales comparison approach

the process of estimating the value of a property by examining and comparing actual sales of comparable properties

situs

sthe location of land for legal purposes; the jurisdiction in which land is located

subject property

the property reference to any particular document or transaction

substitution

an appraisal principle stating that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable property

value

the power of a good or service to command other goods in exchange for the present worth of future right to its income or amenities

Adjusted basis:

original cost plus improvements minus depreciation

Appreciation:

an increase in the worth or value of a property

Basis:

the cost of a property that the IRS uses to determine annual depreciation and gain or loss on the sale of an asset

Bill of sale:

a written instrument given to transfer title of personal property

boot

money or property given to make up the difference in value or equity between two properties in exchange

Bulk Transfer Act:

article 6 of the uniform Commercial code which sets conditions in order to prevent the Commission of fraud when a business is sold

Capital gain:

profits realized from the sale of assets like real estate

Depreciation:

for income tax purposes, yearly write-off of a percentage of the cost of a building as an expense

Exchange:

a transaction in which all or part of the consideration for the purchase of real property is the transfer of like kind property(real estate for real estate)

Income property:

property held for current income as well as potential profit upon its sale

Installment sale:

a method of reporting income received from the sale of real estate when the sales price is paid in two or more installments over two or more years

Leverage:

the use of borrowed money to finance investments

Marginal tax rate:

the rate at which the investors top dollar is taxed

Pyramiding:

the process of acquiring additional property by refinancing property already owned and investing the loan proceeds in additional properties

Real estate investment syndicate:

business venture in which a group of people pool their resources to own and/or develop particular piece of property

Real estate investment trust(REIT):

trust ownership of real estate by a group of at least 100 individuals who purchase certificates of ownership in the trust

Return:

the income from a real estate investment, calculated as a percentage of cash invested

Syndicate:

a combination of people or firms formed to accomplish a joint venture of mutual interest

Tax-credit:

direct deduction from tax due

Uniform Commercial Code(UCC):

a codification of commercial law, adopted in most states, that attempts to make uniform laws relating to commercial transactions, including chattel mortgages and bulk transfers

Assemblage:

the combining of two or more adjoining lots into one larger tract to increase their total value

Bureau of Subdivided Land Sales Control:

state agency that approves and registers sales of some out-of-state property

Clustering:

the grouping of homesites within a subdivision on smaller lots than normal with the remaining land used as common areas

Coastal Area Facilities Review Act(CAFRA):

New Jersey's Coastal Area Facilities Review Act, which sharply limits development in environmentally sensitive areas

Construction permit:

a permit issued by a building inspector or other municipal official that the property is current with local building codes, often required before transfer of title in certain municipalities

Dedication:

the voluntary transfer of property by its owner to the public for some public use such as for streets or schools

Density zoning:

zoning ordinances that restrict the maximum average number of housing units per acre that may be built within a particular area, generally a subdivision

Environmental impact statement(EIS):

engineers report often required before a building permit is insured

Highlands Water Protection and Planning Act:

protect drinking water for over and helps preserve NJ’s dwindling open space

Impact fees:

charges to developers for extra roads, expanded schools, etc

Interstate land sales fill disclosure act:

a federal law that regulates the sale of certain real estate in interstate commerce

Moratorium:

a halt to development often temporary

Percolation test:

investigates a soil absorption and drainage

Planned Real Estate Development Act:

land requiring registration of certain developments in NJ

Planned unit development(PUD):

a planned combination of diverse land uses such as housing, recreation, and shopping, in one contained developement or subdivision

Planning board:

municipal body overseeing orderly development or subdivision

Plat:

a map of a town, section, or subdivision indicating the location and boundaries of individual properties

Plottage:

the increase in value or utility resulting from the consolidation(assemblage) of two or more adjacent lots into one larger lot

Real Estate Sales Full Disclosure Act:

regulation covering the sales of out-of-state property in NJ

Subdivision:

the division of a parcel of land into two or more parcels; a tract of land divided by the owner, known as the subdivider, into blocks, building lots, and streets according to a recorded subdivision plat that must comply with local ordinance and regulations

Warranty and Builders Registration Act:

NJ law which requires the building of new construction to register with the NJ Department of Community Affairs (DCA) before beginning construction and provide certain waranties to buyers lasting up to 10 years

Acknowledgement:

a formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document

Bargain and sale deed:

a deed that carries with it no warranties against liens or other encumbrances but that does not imply that the grantor has the right to convey title

Bargain and sale deed with covenants:

a deed in which the grantor warrants or guarantees the title against defects arising during the period of his or her tenure and ownership of the property but not against defects existing before that time

Benchmark:

a permanent reference mark or point established for use by surveyors in measuring differences in elevation

Covenant:

agreement written into deeds and other instruments promising performance or nonperformance of certain acts or stipulating certain uses or bonuses of the property

Datum:

point from which elevations are measured. Mean sea level in NY harbor or local datum

Deed:

a written instrument that, when executed and delivered, conveys title to or an interest in real estate

Delivery and acceptance:

final action with a deed that transfers title

Grantee:

person who receives a conveyance of real property from the grantor

granting clause:

words in a deed of conveyance that state grantors intention to convey the property. This clause is generally worded as “convey and warrant”, “grant”, “grant, bargain, and sell” or the like

grantor:

the person transferring title to or an interest in real property to a grantee

Habendum clause:

that part of a deed beginning with the words “to have and to hold”, following the granting clause and defining the extent of ownership the grantor is conveying

Legal description:

a description of a specific parcel of real estate complete enough for an independent surveyor to locate and identify it

Metes and bounds:

a legal description of a parcel of land that begins at a well marked point and follows the boundaries, using direction and distances around the tract back to the place of beginning

Monuments:

a fixed natural or artificial object used to establish real estate boundaries for a metes-and-bounds description

Point of beginning(POB):

in metes-and-bounds legal descriptions, the starting point of the survey, situation in one corner of the parcel. Also called place of beginning

Quitclaim deed:

a conveyance by which the grantor transfers whatever interest he or she has in the real estate, if any without warranties or obligations

Rectangular survey system:

a system established in 1785 by the federal government providing for surveying and describing land by reference to principal meridians and base lines, outside the 13 original colonies

Section:

a portion of a township under the rectangular survey(government survey) system. A section is a square with mile-long sides and an area of one square mile, or 640 acres

Township:

the principal unit of the rectangular survey (government survey) system, a square with six-mile sides and an area of 36 square miles

Warranty deed(general warranty deed, full covenant and warranty deed):

a deed in which the grantor fully warrants good clear title to the premises

Administrator:

a person appointed by the court to administer the estate of a deceased person who left no will; who died intestate

Adverse possession:

the actual visible, hostile, notorious, exclusive, and continuous possession of another's land under a claim of title

Descent:

acquisition of an estate by inheritance in which an heir succeeds to the property by operation of law

Devisee:

a person who receives property by will

Executor:

a male person, corporate entity, or any other type of organization designated in a will to carry out its provisions

Heir:

one who inherits property under a will; one who will inherit under the state law of descent when someone dies intestate

Intestate:

the condition of a property owner who dies without leave a valid will

Inverse condemnation:

an action brought by a property owner seeking just compensation for diminished value of land because of an adjacent property’s public use

Involuntary alienation:

the transfer of property without the owners consent

Last will and testament:

a legal document detailing the wishes of the deceased regarding how their assets should be handled after their death

Probate:

the judicial proceeding to confirm the validity of a will

Testate:

having made and left a valid will

Testator:

one who makes and signs a will

Voluntary alienation:

transfer of property with the owners consent