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Real Estate Terms and Definitions, Part Three

Below are a few more terms important to buyers and sellers of homes in Fountain Hills, Arizona.

Closing is the term many real estate professionals use referring to the closing of escrow or the consummation of the real estate transaction. Closing is complete when all documents have been recorded.

Cloud on Title is any condition that affects the clear title to real property.

Comparable Market Analysis (CMA) is a comparison of properties recently sold and currently on the market (see comparables) that are used to determine a range of value for a subject property. To be valid, the “comps” must be similar in location, size, age, style and amenities. A CMA is not an appraisal. Is sometimes called competitive market analysis.

Comparables (Comps) are properties used that a substantially equal to a subject property in determination of value.

Escrow is a method of closing in which a disinterested third party is authorized to act as escrow agent who will collect all pertinent documents and coordinate the closing activities in accordance with the contract.

HUD-1 or Uniform Settlement Statement is a financial accounting of all funds received or expended in a residential real estate transaction and is prepared by the escrow agent. This is the required document for any transaction financed by a federally related mortgage loan. Sometimes called Settlement Statement or Closing Statement.

Listing is an agreement for professional services between a seller of property (principal) and a real estate broker. The agreement spells out the authority of the broker to find a buyer for the property as well as the relationship and rights of both parties.

Multiple Listing Service (MLS) is a service organization that real estate professionals belong in order to advertise or “list” properties for sale. The advantage to marketing a property on the MLS, for the seller, is exposure to a larger market of buyers.

Proration is the division of costs proportionally between the buyer and seller in a transaction. This usually refers to the costs of prepaid taxes, insurance(s), interest and homeowner’s association dues. In Arizona, the buyer assumes responsibility for costs on the day of closing.

Settlement Statement (also called Closing Statement and/or HUD-1) is a financial accounting of all funds received or expended in a residential real estate transaction and is prepared by the escrow agent.

Survey is the property’s legal description concerning the exact location and size of the property. It is usual for the survey to “spot” the location of buildings, driveways, fences and other improvements located on the property. A survey should note any existing easements and/or encroachments.

 

John Eberle is a licensed REALTOR® living and working in Fountain Hills, Arizona. For more information on buying a home or selling a home in Fountain Hills, AZ contact John by clicking on the Contact Me tab above this blog.

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