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Panel
A panel is a section or division of a wall, ceiling, or a flat piece of building material that forms the part of the surface of a wall, door, or cabinet. Panels have two main purposes: they may be used to provide extra reinforcement to the surface of which they are a part, or may be used for aesthetic purposes. As an architectural detail, panels are regularly found on interior walls of a home to create a unique appearance, as wood paneling on the walls of a den or library. Panels in a ceiling may be used to disguise the underlying structural ceiling or to provide support and containment for insulation.
Paneling
Paneling refers to the use of strips of wood or wood material applied as a finish to a wall. Decorative paneling may be found in an entryway, hallway, or dining room of a home, commonly located in modern construction on the lower half of the wall it adorns. Heavier and darker wood paneling is a popular aesthetic detail for home offices, studies, dens, and libraries. Decorative paneling is normally considered an upgrade in a home, and is listed regularly as an asset to a house in the listing description. New home builders generally charge extra for the inclusion of paneling in a home, or may promote themselves by advertising no additional fee for the inclusion of desirable paneling details.
Parcel
A parcel is an officially described piece of land. Parcel designations are regularly used in formal real estate documents, such as contracts for sale or purchase of a particular property, as well as for tax assessment purposes and for public records by municipal or county recordation authorities. A parcel is considered to be a contiguous area of land that is one of a number of lots on a plat or a plan, and which is separately owned and able to be separately conveyed by its owner.
Parking strip
A parking strip is a strip of grass located between a sidewalk and a street in front of a house. Depending upon the geographical location of a home, a parking strip may be maintained or controlled by either the owner of the home or by local or county street department authorities. For example, in many locations, it is the responsibility of the homeowner in front of whose property a particular parking strip is located to maintain that parking strip (by mowing, raking, leaves, and so on), and the homeowner usually has the right to do with the parking strip what he or she would do to the rest of his or her property, such as landscaping, planting trees, and the like. However, regulations may be imposed upon how a parking strip is maintained and/or what can be planted or located thereon by a community homeowners´ association or by a local governing authority.
Partition
A partition is any interior wall of a house or other building, or any kind of structure that divides one room or space from another. The simplest type of partition wall is a stud wall that divides an interior space into two separate sections, but which does not bear any load; this type of wall need not be responsible for maintaining the structural integrity of a home because it is incorporated for partition purposes only, and not for load-bearing purposes such as ceiling support. A partition may also be a moveable screen, a two-way bookshelf, or any other structure not attached to a house at all, which serve the purpose of dividing a room or of screening of a section of a room from the rest of the space.
Partnership
A partnership is a venture by two or more people, each of whom is referred to as a partner, to achieve some goal. In the real estate context, there are several partnership options for unmarried individuals to buy a piece of property. Live-in partnerships are partnerships in which two or more buyers, or partners, contribute in shares established in a partnership agreement to the purchase of a residence, and share that residence. A shared-equity partnership is a partnership in which two or more partners pay for a property, but not all reside there; for example, a shared-equity partnership between two property purchasers will involve one partner living in the property as his or her personal residence and the other acting as a non-resident investor in the property.
Passive loss
The term passive loss is a tax term that refers to any loss to a tax payer that results from a passive activity, or one in which the tax payer does not play an active role. An example of a passive activity may be the ownership of a parcel of real property that is rented out to tenants, but not the actual operation of the rental real estate. An owner of property may hire an agent to act as landlord or supervisor of maintenance or operation of the property, paying the person as an employee but making an income him- or herself from the rental payments by the property tenants. The owner´s loss on the investment would be described as a passive loss.
Passive solar system
A passive solar system is a system that supplies solar heat to a home´s interior without the use of any electric fans or pumps. Passive solar systems generally require minimal technology, and are thought to be lower-cost and more efficient than mechanical systems. The simplest example of a passive solar system is a window, strategically placed, with a shade that can be drawn at night to prevent heat loss. More complex passive solar systems may entail solar greenhouses with large heat sink walls. Homes that take advantage of passive solar systems may entitle their owners to a deduction in taxes owed, since many jurisdictions now offer incentives to home owners to invest in more energy-efficient, environmentally friendly products.
Patent defect
A patent defect is some visible deficiency in a piece of real property. Examples of patent defects include peeling paint, cracked basement slabs, broken windows, or sagging porches. Patent defects are not required to be disclosed in most cases by a seller of real estate to a buyer, because, unlike latent defects, patent defects are readily observable by the buyer him- or herself and responsibility to account for such defects in the determination of whether or not to purchase a particular property is delegated to the buyer. Numerous patent defects may be detrimental to the successful sale of a home; buyers may require a contingency in a property purchase agreement that requires the seller of the property to make certain repairs to patent defects prior to the time of closing.
Patio
A patio is an interior courtyard or a paved backyard area adjacent to a house. Patios may be enclosed, shielded by solid glass or by screens, or may be entirely open to the exterior. Patios are popular extensions of traditional indoor living spaces, providing an additional area that is more open to natural elements for entertainment or relaxation purposes. A patio may be quite simple, as a simple concrete extension from a house leading out to a backyard, or a more developed area with patio furniture, railings, fire pits, decorative details, and the like.
Payment cap
A payment cap is a limit imposed by law on the amount by which a monthly payment on a loan can increase in an adjustable-rate mortgage. Adjustable-rate mortgages typically start out with interest rates that are low at the beginning of the term of the loan, and which rise gradually over the full term. To protect the borrower from massive increases, legal payment caps are required to be specified in loan agreements between a lender and a borrower, notifying the borrower that he or she can face only an increase in his or her interest rate due on a loan up to a certain amount.
Per-diem interest
Per-diem interest is interest that is charged or accrued daily. Because not all closings on real estate transactions occur on the first or last day of a month (in fact, few do), a buyer´s first mortgage payment and attendant interest thereon will not usually be due for payment until the first day (or a day established in a loan agreement) of the following month. However, the buyer of the property and borrower of the loan is still responsible for payment of interest that accrues for the days in the month in which the closing occurs. This interest is charged at a set rate per day prior to the month in which the first mortgage payment is due, and is called per-diem interest, the word diem being Latin for "day."
Percolation test
A percolation test is a type of test of soil on a property that is used to determine the ability of the soil to accommodate a septic system. A percolation test usually involves two steps: a soil evaluation and a site evaluation. A soil evaluation is a determination of whether the soil on the property can function hydraulically (that is, can drain water at a rate established by local and state regulations) and whether it can provide adequate treatment to ensure that groundwater and drinking water are not at risk for contamination. The site evaluation step involves evaluation of the property for its degree of slope, presence of any drainage swales, location of neighboring water wells and septic systems, and other physical site conditions.
Perennial
A perennial is any plant that produces leaves, flowers, and seeds from year to year. A perennial plant lives for two or more years; unlike an annual plant, which completes its germination and flowering cycle within one year and then dies, a perennial continues the cycle for multiple years. Perennials come in three types: evergreen perennials, deciduous perennials, and monocarpic perennials. Examples of evergreen perennials include begonias and bananas; examples of deciduous perennials include mint and goldenrod; examples of monocarpic perennials include some types of aloe and parsley and other herbs.
Pergola
A pergola is an arbor with an open roof of rafters that are supported by posts or columns. A decorative structure, a pergola is commonly used to enhance the aesthetics of a home garden. Often the pergola is interwoven with vegetation, such as ivy. Pergolas may be a variety of shapes (flat or arched) and sizes, as well as made of a number of different materials. For example, sturdy wood pergolas might be constructed by a professional on an individual´s property; some home improvement centers sell the materials required to make a wood or plastic pergola by oneself.
Personal property
Personal property is any moveable property in a house, but not the house itself or anything permanently attached to it. Personal property may include property such as furniture or appliances; it may also include liquid assets, such as cash or certificates of deposit. Personal property, unlike real property, is not considered to be necessarily unique; therefore, where the remedy to a party who suffers damages by the breach of a real estate contract is often specific performance (that is, the property is transferred pursuant to the contract), the remedy for breach of a contract relating to the transfer of personal property is usually money in an amount equivalent to the actual or replacement cost of the personal property.
Pest-control inspection
A pest-control inspection is an inspection conducted by a professional in the pest-control field to determine whether there is a problem with pests in a structure, or potential for such a problem. One of the most common pest-control inspections conducted on buildings is a termite inspection. Required in many states and strongly recommended in others, a termite inspection is an imperative part of the home inspection process for a buyer before he or she commits to the purchase of a particular property. Termites feed on wooden structures and can thus severely damage the structural integrity of a home.
Pier
A pier is a type of masonry support column. Unlike a regular column, a pier is a solid mass, typically located between doors, windows, and other openings in buildings. Also, while a regular column typically tapers, a pier does not. A pier is usually slender and has a cross-section that is rectangular, round, or polygonal; it may have a base as well as an impost. A compound pier is a pier that has two or more members or supports. Piers are frequently found in Gothic architecture, which is characterized by strong, solid features.
PITI (Principal, Interest, Taxes, Insurance)
PITI is an acronym that stands for Principal, Interest, Taxes, Insurance. When a buyer of real property applies for a loan, the lending institution will calculate the principal, interest, taxes, and insurance associated with the loan. The resulting figure is designed to represent the borrower's actual monthly mortgage-related expenses. Principal is the actual amount of the loan issued to the borrower by the lender. Interest is the percentage charged by the lender to the borrower that the borrower is required to pay on top of his or her payments toward the principal of the loan as a fee for taking advantage of the lender´s money. Taxes and insurance are applicable to every parcel of real property, and their amount depends on a number of factors, including the property itself and the home owner´s equity therein.
Planned communities
Planned communities are neighborhoods that are designed by a developer and then built according to particular pre-planned specifications. The concept of a planned community first began in the 19th century; today, the term is used to describe any neighborhood or even an entire town that is built with a view to certain guidelines and goals. For example, a planned community may be limited in its number of residents to ensure that the amenities and services that are available in an area are sufficient to accommodate all residents. Residents of planned communities are usually subject to certain regulations that are imposed to ensure a level of uniformity among all residents.
Planned-unit development
Planned-unit developments are developments in which residents are home owners who own their individual home and the land on which it is located, but share the use of and the financial responsibility for common areas in the development. Regulations imposed on planned-unit developments attempts to promote large-scale unified development. In many planed-unit developments, dwelling structures are built in clusters, while land is designated for other uses, such as retail, industrial, commercial, or public buildings, and often for space for preserved parkland, forests, agriculture, or other natural resources. Planned-unit development is associated with multiple land uses, increased density of residential structures, and land use efficiency.
Plaster
Plaster, the full name of which is Plaster of Paris (after a large gypsum deposit in Montmartre in Paris), is a type of wall finish. It is considerably more labor-intensive and usually more costly than other types of wall finishes. Plaster is made of calcium sulfate hemihydrate, created by heating gypsum to over 150 degrees Celsius. Plaster is easy to work with, and is often used to add aesthetic detail to a home´s interior; it may be used to simulate wood or stone detailing. Plaster also has fireproofing qualities, and has been incorporated into a number of fireproofing products that are currently on the market, as well as others that are in development.
Pocket door
A pocket door is a type of sliding door that retreats into a wall when opened. Pocket door were particularly common in the early 1900s, and have remained a popular option for many homeowners. A pocket door saves space over a regular hinged door because it does not require the same clearance for the door to swing open and closed; in addition, a pocket door eliminates the need to avoid wall hangings behind a hinged door where they will not be seen. A pocket door slides back and forth, into and out of a wall, on a track. Pocket doors are most commonly found as doors to bathrooms, where space may be too limited to accommodate a hinged door.
Point
A point is a fee that is charged by a lending institution to the borrower at the time that a loan is originated. One point is equal to one percent of the total amount of the loan issued. Each point, or each individual percent of the full loan amount, that a borrower purchases reduces the amount of the borrower´s monthly payment; if a borrower has sufficient financial resources to pay for some points up front, he or she is in a position to pay less in each installment. A points rate is an annual interest rate for a mortgage that has discount points applied to it.
Porch
A porch is a structure attached to the outside of a home. The structure can be a simple covered entrance or as involved as a fully enclosed room. Porches may be located off of the front, back, or side of a home, and may be at ground level or elevated. Although a porch in its entirety is external to the walls of the main house, it may be enclosed in some way, such as by a screen, latticework, windows, or other walls. Alternatively, a porch may be open to the exterior. Decks, verandahs, balconies, and patios are all types of porches, which can be of a variety of styles and sizes.
Porte cochere
A porte cochere is a porch-like roof that extends over a driveway. Also called a carriage porch, a porte cochere is located at either the main or secondary entrance to a building, and a vehicle can pass below it, allowing passengers to emerge while remaining protected from weather elements before the vehicle proceeds. Porte cocheres were particularly popular in the late 18th century and early 19th century in mansions and public buildings. Today, porte cocheres are most often found constructed at entrances to public buildings, including schools, churches, health care centers, or hotels.
Portfolio lender
A portfolio lender is a type of lending institution, usually a bank, that provides loans to borrowers with its own funds and keeps the loans on the company's books. In other words, issued loans are kept inside the institution's "portfolio," or its collection of investments, assets, and liabilities, rather than the loan being sold on the secondary market, as is done with loans issued by lenders such as Fannie Mae and Freddie Mac. Portfolio loans are often easier for a borrower to qualify for, since portfolio lenders are usually more concerned with things other than a borrower´s current credit worthiness, such as his or her savings history.
Portico
A portico is a type of porch that is supported by a row of columns. A portico usually leads to the entrance of a home or other building, or may be extended as a colonnade, with a roof structure over a walkway. There are a number of different types of portico. A tetrastyle portico has four columns. A hexastyle portico has six columns. An octostyle portico is composed of eight columns. A decastyle portico includes ten columns. Porticos were especially popular in ancient Greek and Roman construction, but remain in use today in North America and in Euorpe.
Possession
Possession is the term used to describe an individual´s official physical presence on a property and use of the property. When a buyer or a parcel of real property signs all necessary transaction documents at the closing of the real estate transaction and receives the keys to the house from the property seller, the buyer officially takes possession. At this point, the buyer has the right to occupy and use the property; the seller has given up possession and all rights and responsibilities that are associated with it. Sometimes, a buyer and seller may agree to delay possession, as when a seller is not yet prepared to move and a buyer willingly agrees to wait; these terms must be specified in the purchase agreement and signed by both parties.
Power of attorney
A power of attorney is a designation given to an individual, frequently referred to as an agent, authorizing him or her to act legally on behalf of someone else, who is called the principal. Power of attorney is memorialized in a document, which states specifically what authority that the agent has under the power of attorney, as well as limits on that authority. The power of attorney is by default considered to be revocable by the principal; that is, the principal may at any time for any reason eliminate the power of attorney and extinguish the authority of the agent to act on his or her behalf. In some instances, power of attorney may be irrevocable; this is normally specifically stated in the power of attorney document.
Pre-approval letter
A pre-approval letter is a letter from a lending institution to a seller of real property that informs the seller regarding the amount of money that a potential buyer of the property can obtain through that particular lending institution. A pre-approval letter is issued based on concrete information, including the financial circumstances of a prospective property buyer, confirmation of his or her employment, and the amount a buyer would be able to pay as a down payment. Pre-approval letters are useful in negotiating terms with a property seller, but are not binding upon the lender; they are subject to certain conditions, such as time sensitivity and an official appraisal on the value of the property that the buyer wishes to purchase.
Pre-sold home
A pre-sold home is a home that is sold to the buyer by the builder or its representative before it is physically built. Builders who work in single-builder planned community developments often sell homes based on descriptions on paper and sometimes one or more model homes; the buyer pays part of the purchase price up front and commits to a payment of the balance. Custom homes are almost always treated as pre-sold homes, because they are built to include the unique needs and demands of the buyer and provide less of a guarantee of sale following construction on the open market.
Prepaid expenses
Prepaid expenses are expenses that consist of the costs for taxes, insurance, and assessments paid prior to the date on which they are due. In the real estate context, prepaid expenses may include costs related to real estate taxes, hazard insurance, earthquake or flood insurance, or subsequent monthly deposits made to the lender to cover such costs. In addition, prepaid expenses may include a portion of interest due, referred to as prepaid interest. Prepayment may be useful if a home buyer has the financial resources to cover some expenses prior to when the become due because it decreases interest due on those expenses when paid over a longer term. However, some lenders charge fees for prepayment.
Prepaid interest
Prepaid interest is interest that is paid by a borrower of a loan before it is due. For example, at the close of a real estate transaction, borrowers of mortgages usually pay for the interest applicable to their home loan that falls between the time of closing on the real estate and the first monthly payment due on the property. This allows the payment that will come due to be settled early so that the first monthly payment is equal to what has been calculated for the term of the loan, and not higher due to an additional interest charge.
Prepayment penalty
A prepayment penalty is a fee that some lending institutions impose on a borrower who pays a loan off before its expected end date. Prepayment is an option for borrowers who have the financial resources to eliminate their debt early, and thereby reduce the total amount paid to the lender by reducing interest payments, which accumulate over the term of the loan. A lender often will impose a prepayment penalty because the lender´s income comes from the interest rate due on a particular loan over the term of the loan as established in the loan contract; the lender loses money on a loan if the borrower pays the full amount earlier.
Prequalification
Prequalification refers to the process in which a lending institution pre-qualifies a borrower of a loan; that is, the lender typically issues a letter that provides a general overview of a prospective home buyer´s ability to qualify for a mortgage. Information included in a prequalification document often includes the amount that the borrower could be approved for and what loan options are available to the borrower. A letter of prequalification is usually sent to a buyer´s real estate agent as an assessment of the buyer´s ability to pay for a home; many real estate agents will not begin working with a home purchaser until he or she has pre-qualified for a home loan.
Pressure relief valve
A pressure relief valve is a safety vent that relieves the excess pressure that is produced in a home water heater. Pressure relief valves, also referred to as "breather valves," release water from the water heater, thus relieving pressure, in the event that either the pressure or the temperature in the tank rises above a certain maximum. If a pressure relief valve fails, a water heater can be subject to too much interior pressure and explode. If a pressure relief valve becomes defective, or if the pressure in the water heater tank gets close to exceeding the maximum pressure it can withstand, the valve may begin to leak water, indicating a need for repair or replacement.
Price range
The price range of a particular home buyer is a range of how much he or she is willing to pay for a home. An individual´s price range may be determined by a number of considerations, the most common being the buyer´s financial resources and his or her ability to secure financing for a home; in addition, some buyers establish a price range based on their willingness to invest in a rental property or their desire to save money for a different, non-real estate investment. A price range is usually communicated by the buyer to his or her real estate agent at the beginning of the relationship, to allow the agent to narrow properties available for sale on the market to only those that fit into the buyer´s price range.
Primer
A primer is the initial coat of paint that is applied to a surface before subsequent layers and the final topcoat. Paint primer is necessary when the surface that is to be painted is porous, meaning it has holes into which paint could seep and create an uneven surface, or when the paint to be applied to a surface is incompatible with the existing paint on that surface, for example when latex paint is applied over alkyd paint. A surface that has an existing coat of paint, which is in good condition and is compatible with the finish coat to be applied, may not require an additional primer.
Principal
Principal is the true amount of money that a borrower of a loan owes on a mortgage. Principal is the amount agreed to in the lending agreement between the borrower and the lending institution, and does not include any added costs or fees, or interest due on the loan. Over the term of a loan, a borrower pays installment payments, usually due monthly, to the lender; each payment typically includes a portion of the principal of the loan and an interest charge. The more principal a home purchaser pays off, the more equity he or she accrues in the property for which the mortgage was issued.
Principle of conformity
The principle of conformity is the idea that a property is more likely to see an appreciation in value if its size, age, condition, style, and other characteristics are similar to, or conform to, other houses in the neighborhood in which the property is located. The principle of conformity is based on research that has shown that when buildings in a neighborhood generally conform, the value of each is maximized, because home buyers prefer to purchase properties where their personal preferences are shared by other home owners. The principle of conformity does not mean that houses in a given neighborhood must be identical, or similar to the point of monotony, but rather that they are in general similar to others in the community.
Principle of progression
Principle of progression is a real estate appraisal term. The principle of progression states that the value of real estate that has a lower market value is generally enhanced by the proximity of the property to higher-end properties. The concept is based on the notion that even a property that is older, in worse condition, or otherwise of lower value can offset some of its negative aspects by virtue of its location to newer, more expensive, or generally higher-quality and more desirable properties. Home buyers may be drawn to such a property by its location and be thereby able to overlook some of the factors that contribute to the home´s lower value.
Principle of regression
Principle of regression is a real estate appraisal term. The principle of regression states that the value of higher-end real estate can be brought down by the property´s proximity to a number of lower-end properties. The reverse of the principle of progression, the principle of regression is based on the notion that even an otherwise desirable property, with quality construction and a potentially high market value in another location, may be difficult to sell if its location is a turnoff to potential purchasers, such as proximity to neighborhoods with low-end housing, thus reducing the value of the property.
Privacy fence
A privacy fence is a structure that is erected between two neighboring pieces of property. Privacy fences are used to create some physical separation between one´s property and that of an adjacent home owner. A privacy fence is usually only 6 feet tall, but may be higher depending upon a home owner´s needs. However, the height and other characteristics of a privacy fence are often subject to limitations and restrictions imposed by local zoning regulations or by regulations set by a community homeowners´ situation, and violations may result in a fee to be paid. Privacy fences may be constructed of a number of materials, including wood, vinyl, stone, concrete, or even vegetation such as evergreen bushes or trees.
Private mortgage insurance (PMI)
Private mortgage insurance, or PMI, is a special type of loan insurance that many lending institutions require borrowers to purchase in situations were a particular borrower's down payment is less than 20 percent of the home's purchase price. A lower down payment is an indication that a borrower has limited financial resources, and thus presents a risk of default on a loan. By requiring private mortgage insurance, lenders protect themselves against such potential default. The insurance adds cost to what a home buyer must pay for the purchase of a home, but is spread out into payments that may be more easily managed than a single lump-sum down payment.
Probate sale
A probate sale is a sale of real estate that is triggered by the death of the owner of the property. If a property owner dies without a will (intestate), or if he or she leaves a valid will but does not specify the disposition of any real property he or she has left behind, the real property is sold on the market by a representative of the estate, who has a duty to ensure that the sale is for a fair price and that all legal requirements for the real estate transaction are met. The proceeds of a probate sale are to be divided among the heirs or creditors of the deceased.
Production home
Production homes are homes that are mass-produced by one builder in a particular development. A builder of production homes typically offers a finite number of floor plans from which home buyers can choose; this is in contrast to a custom home, in which the buyer of the home is usually more involved in the architectural design of his or her home. Because the bulk of planning the home has already been taken care of with a production home, and because builders are able to purchase materials and labor in bulk, production homes tend to be less expensive that custom homes. Production home builders vary in their willingness to make changes to established home plans, but often a buyer is able to select from a variety of paint, flooring, and other choices.
Programming
Programming refers to a written summation of the design objectives, constraints, and criteria of a construction project, done by an architect. Programming is crucial to a real estate construction project because it clearly lists and explains the specifics associated with the project. The architect on a project, who is responsible for planning and designing the project, is in the best position to know what the objectives and criteria are, as well as any limitations associated with construction; his or her programming is a useful guide for a builder to follow during the construction process.
Project budget
A project budget is a fiscal outline for a particular construction project. The project budget normally includes the construction budget and all related costs, including costs associated with land, furniture, equipment, financing, professional services, contingencies, and owner-furnished goods and services. The project budget is a comprehensive view of the approximate total cost of constructing a home, and is useful to a home buyer in determining how much money he or she needs to allocate to the construction and in what amount, if any, to take out a loan.
Property line
The property line of a parcel of real property is the official dividing line between one property and a neighboring property. A property line may seem obvious, but its official, legal location can only be determined from a plat, or official map of a properties boundaries and physical characteristics, or by a land survey conducted by a professional surveyor. Knowledge of where a property line falls can be particularly important in situations where one´s property suffers from an encroachment, or a protrusion, usually from a building or other structure, from an adjacent property. In cases of encroachment over a property line, the land owner whose land is being encroached may be paying property taxes on land that he or she is not using.
Property report
A property report is a disclosure that is issued by the state when a time-share project is located or sold. States vary in the information that they require to be disclosed regarding a time-share project in the particular jurisdiction, but common information includes: the name and contact information of the owner and developer of the time-share property; a comprehensive statement of the time-share plan; a legal description of the property and a complete description of the number of buildings, number of units, any common areas, and the like; proof of financial arrangements made to ensure completion of the project; an estimated schedule of development; and other, related information.
Property tax
Property tax is the system of taxes that are applied to real property. Property taxes are calculated as a percentage of the market value of a home, and therefore vary as the property value changes over time. Periodic assessments are made by a taxing authority, often through a county office, and the occurrence of assessments varies among different jurisdictions. Property taxes are applied to offset local public service costs, such as funding for schools, public utilities, and the like. The property tax applicable to a particular parcel of real property can be a serious consideration in a buyer´s decision regarding whether or not to buy the specific home.
Property tax deduction
A property tax deduction is a tax deduction that the United States tax code allows homeowners to deduct on their annual tax return. Property taxes, which are paid to a local taxing authority and not to the federal government, may be deducted in their total amount from a home owner´s federal tax return. Like most tax deductions, property tax deductions are subject to certain conditions and limitations. There is a cap on the amount that can be deducted, and there are restrictions on claiming a property tax deduction on an investment property or subsequently-financed property in addition to the property on which the tax payer holds a primary mortgage.
Property value
Property value is the value of a piece of real property that is based on the price a prospective buyer would be willing to pay at a particular point in time. An official property value of a parcel of real estate is determined by a government agent known as an assessor; in some cases, a home owner´s personal opinion of his or her home´s value will differ from that of an assessor, and in such instances most jurisdictions provide for an appeals process in which the home owner can present his or her case. Property value can increase or decrease based on age and condition of a property and on changes in the surrounding area.
Proration
Proration is a percentage of certain expenses that are associated with a parcel of real property that must be paid by the buyer or the seller at the time of closing on the property. The proration of expenses for a particular property is agreed to between the buyer and the seller, and is typically based on the benefit each receives from the property for a specific time period. For example, if a closing occurs in the middle of a month, the costs associated with occupying the property for that month, including any property taxes or other expenses, may be prorated so that the seller is responsible for payment for the period between the closing and the buyer is obligated to account for post-closing expenses.
Punch list
A punch list is a list that is compiled by buyers of real property during their final walk-through of the property that is to be closed on. The punch list details any items that are to be fixed by the seller of the property prior to the closing. Punch lists can include minor imperfections noticed by the buyer during the walk-through or more major issues. There is no legal requirement that a seller fix or modify any items listed on a punch list, but in many cases a contract for a real estate transaction will specify that the seller is responsible for certain maintenance and repairs.
Purchase agreement
A purchase agreement is a written document which details the purchase price and conditions of a real estate transaction. The agreement is a legally binding contract that obligates the buyer and the seller to comply with its terms and conditions. Purchase agreements typically include information regarding the property to be transacted, information regarding the parties to the transaction, the agreed-upon purchase price for the property, any conditions agreed upon by and between the parties, the date selected for closing, and other relevant information. Any amendments to the terms of a purchase agreement can be made legally binding only through a formal written amendment document that is voluntarily signed by both parties. |
