BACKFILL the
replacement of excavated earth into a hole or against
a structure.
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BACKUP CONTRACT a contract to Buy
real estate that becomes effective if a prior contract
fails to be consummated.
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BALANCE, PRINCIPLE OF in real estate
appraisal, there is an optimal mix of inputs that,
when combined with land, will result in the greatest
land value. Inputs, or factors of production, include
labor, capital, and entrepreneurship.
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BALANCE SHEET a financial statement
in table form showing assets, liabilities, and equity,
in which assets equal the sum of liabilities plus
equity.
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BALLOON MORTGAGE a mortgage with
a balloon payment.
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BALLOON PAYMENT the final payment
on a loan, when that payment is greater than the preceding
installment payments and pays the loan in full
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BAND OF INVESTMENT an income property
appraisal technique where the overall interest rate
is derived from weighting mortgage and equity rates.
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BASELINE part of the Rectangular
Survey or Government Rectangular Survey method of
land description.
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BASE PERIOD a point of time that
serves as a benchmark for reflecting the change in
an index.
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BASE RENT the minimum rent due under
a lease that has a percentage or participation requirement.
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BASIC INDUSTRY MULTIPLIER in economic
base analysis, the ratio of total population in a
local area to employment in basic industry. Basic
industry is considered to be any concern which attracts
income from outside the local area.
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BASIS(TAX) the point from which
gains, losses, and depreciation deductions are computed.
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BASIS POINT one 100th of 1%.
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BEARER INSTRUMENT a security that
does not indicate the owner; payable to whoever presents
it.
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BEDROOM COMMUNITY a residential
community in the suburbs, often near an employment
center, but itself providing few employment opportunities.
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BEFORE-AND-AFTER-RULE in an eminent
domain award, many jurisdictions appraise the property
value before the taking, then the property value after
the taking, considering enhancement or injury to the
property that was the result of condemnation.
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BEFORE-TAX CASH FLOW cash flow prior
to deducting income tax payments or adding income
tax benefits.
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BEFORE-TAX EQUITY REVERSION same
as after-tax proceeds from resale, except it does
not consider income taxes.
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BELOW-MARKET INTEREST RATE (BMIR)
in some government-subsidized housing, the owner is
charged a low interest rate with the requirement that
savings be passed on to tenants in the form of reduced
rent.
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BENCHMARK a permanently affixed
mark that establishes the exact elevation of a place;
used by surveyors in measuring site elevations, or
as a starting point for surveys.
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BENEFICIARY the person who receives
or is to receive the benefits resulting from certain
acts.
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BEQUEATH to specify by will the
recipient of personal property. Compare devise.
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BEQUEST that personal property given
by the terms of a will.
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BETTERMENT an improvement to real
estate.
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BIANNUAL occurring twice a year.
Same as semiannual. Contrast with biennial.
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BIENNIAL occurring every 2 years.
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BILATERAL CONTRACT a contract under
which each party promises performance.
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BI-LEVEL a house built on 2 levels
in which the main entrance is situated above the lower
level but below the upper level.
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BILL OF ASSURANCE the name given,
in some states, to the total collection of restrictive
covenants that apply to a group of contiguous lots.
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BILL OF SALE a written instrument
given to pass title of personal property from a seller
to a buyer. Used when furniture and I>ortable appliances
are sold.
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BINDER an agreement, accompanied
by a deposit, for the purchase of real estate, to
evidence good faith on the part of the purchaser.
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BIWEEKLY LOAN a mortgage which requires
principal and interest payments at two-week intervals.
The payment is exactly half of what a monthly payment
would be. Over a year's time, the 26 payments are
equivalent to 13 monthly payments on a comparable
mortgage loan. As a result, the loan will amortize
much faster than loans with monthly payments.
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BLANKET MORTGAGE a single mortgage
that covers more than one parcel of real estate.
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BLEEDING A PROJECT 1. in new construction,
overstating expenses and fees so as to divert a larger
than normal amount of the project costs to the developer's
profit. 2. managing an existing piece of real estate
so as to obtain the highest possible current income
from it, to the extent that many normal operating
expenses are forgone.
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BLENDED RATE an interest rate, applied
to a refinanced loan, that is higher than the rate
on the old loan but lower than the rate offered on
new loans.
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BLIGHTED AREA a section of a city
in which a majority of the structures are dilapidated.
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BLIND POOL an investment program
in which monies are invested into an association without
investors knowing which properties will be purchased.
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BLOCKBUSTING a racially discriminatory
and illegal practice of coercing a party to sell a
home to someone of a minority race or ethnic background,
then using scare tactics to cause others in the neighborhood
to sell at depressed prices.
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BLUEPRINT a detailed set of plans
used as the guide for construction of a building.
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BLUE-SKY LAWS state laws requiring
the offeror of securities to give full disclosure,
and register the offering as required by federal and
state law.
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BOARD OF EQUALIZATION a government
entity whose purpose is to assure uniform property
tax assessments.
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BOARD OF REALTORS a local group
of real estate licensees who are members of the State
and National Association of Realtors.
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BOECKH BUILDING VALUATION MANUAL
a book, frequently updated, that offers estimates
of the replacement cost or reproduction cost for different
types of buildings. Address: Boeckh 525 East Michigan
P.O. Box 664 Milwaukee, WI 53201-0664
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BOILER PLATE standard language found
in contracts. Preprinted material.
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BOMA Building Owners and Managers
Association.
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BONA FIDE in good faith, without
fraud.
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BOND a certificate that serves as
evidence of a debt and of the terms under which it
is undertaken.
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BOOK VALUE the carrying amount of
an asset, as shown on the books of a company.
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BOOT unlike property included to
balance the value of like properties exchanged.
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BOTTTOMLAND 1. low land near a river,
lake, stream, which is often flooded 2. land in a
valley or dale.
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BOUNDARY same as property line.
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BOY beginning of year.
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BREACH OF CONTRACT a violation of
the terms of a legal agreement; default. Breach of
contract allows the non-breaching party to rescind
the contract, sue for damages, or sue for performance
of the contract.
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BREAK-EVEN POINT the amount of rent
or the occupancy level needed to pay operating expenses
and debt service. Also called default point.
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BRIDGE LOAN mortgagee financing
between the termination of one loan and the beginning
of another loan.
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BROKER a state-licensed agent who,
for a fee, acts for property owners in real estate
transactions, within the scope of state law.
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BROKERAGE 1. the business of being
a broker. 2. the commission received by a broker for
his services.
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BROWNSTONE, BRICK ROW HOUSE, OR EASTERN TOWNHOUSE
a nineteenth-century-style house, usually having 4
or 5 stories with a stoop leading up to the first
floor. There are common side walls with a house on
either side.
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BUDGET MORTGAGE a mortgage that
requires monthly payments for taxes and insurance
in addition to interest and principal.
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BUFFER ZONE a transitional area
between 2 areas of different predominant land uses.
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BUILDERS AND SPONSORS PROFIT AND RISK ALLOWANCE
(BSPRA) an amount above the cost of apartments
that is allowed to be included in the project cost
for purpose of determining the loan amount in certain
government-sponsored programs.
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BUILDER WARRANTY a guarantee on
the quality of construction offered by the developer
or building contractor.
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BUILDING CAPITALIZATION RATE in
appraisal, the capitalization rate is used to convert
an income stream into one lump sum value. The rate
for the building may differ from that for the land
because the building is a wasting asset.
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BUILDING CODES regulations established
by local governments describing the minimum structural
requirements for buildings; includes foundation, roofing,
plumbing, electrical, and other specifications for
safety and sanitation.
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BUILDING LINE a line fixed at a
certain distance from the front and/or sides of a
lot, beyond which the building may not project.
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BUILDING LOAN AGREEMENT an agreement
whereby the lender advances money to an owner at specified
stages of construction.
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BUILDING OWNERS AND MANAGERS ASSOCIATION
(BOMA) an organization of practitioners who
own and manage buildings, notably office space. Address:
Building Owners and Managers Association 1221 Massachusetts
Avenue NW Washington, DC 20005
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BUILDING PERMIT permission granted
by a local government to build a specific structure
at a particular site.
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BUILDING RESIDUAL TECHNIQUE an appraisal
technique whereby income to land is subtracted from
net operating income to result in the building income.
Building income is capitalized into building value.
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BUILDING RESTRICTIONS provisions
in building codes that affect the orientation, size,
and appearance of a building.
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BUILD TO SUIT an arrangement whereby
a landowner offers to pay to construct on his or her
land a building specified by a potential tenant, and
then to lease land and building to the tenant.
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BUILT-INS appliances, machinery,
and other equipment that are constructed as part of
a building rather than left freestanding and moveable.
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BULLET LOAN typically a loan with
a 5- to 10-year term and no amortization. At the end
of the term the full amount is due.
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BUNDLE OF RIGHTS THEORY the theory
that ownership of realty implies a group of rights
such as occupancy, use and enjoyment, and the right
to sell, bequeath, give, or lease all or part of these
rights.
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BUNGALOW a small, early-twentieth-century-style,
I-story house that usually has an open or enclosed
front porch.
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BUREAU OF LAND MANAGEMENT an agency
of the U.S. Department of the Interior that oversees
the management of much of the land owned by the U.S.
government, particularly national forests and other
relatively undeveloped land.
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BUSINESS DAY a standard day for
conducting business. Excludes weekends and holidays.
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BUY-BACK AGREEMENT a provision in
a contract under which the seller agrees to repurchase
the property at a stated price upon the occurrence
of a specified event within a certain period of time.
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BUY DOWN 1. the action to pay additional
discount points to a lender in exchange for a reduced
rate of interest on a loan. The reduced rate may apply
for all or a portion of the loan term. 2. a loan that
has been bought down by the seller of the property
for the benefit of the buyer.
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BUYER'S BROKER an agent hired by
a prospective purchaser to find an acceptable property
for purchase. The broker then represents the buyer
and negotiates with the seller in the purchaser's
best interest.
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BUYER'S MARKET a situation where
buyers have a wide choice of properties and may negotiate
lower prices. Often caused by overbuilding, local
population decreases, or economic slump.
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BUY-SELL AGREEMENT a pact among
partners or stockholders under which some agree to
buy the interests of others upon some event.
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BYLAWS a set of regulations by which
an organization conducts its activities.
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