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Real Estate Glossary; Every Real Estate Term Explained

Buying a home can be exciting. It also can be somewhat daunting, even if you’ve done it before. You will deal with real estate terms like mortgage options, credit reports, loan applications, contracts, points, appraisals, change orders, inspections, warranties, walk-throughs, settlement sheets, escrow accounts, recording fees, insurance, taxes…the list goes on. No doubt you will…

Buying a home can be exciting. It also can be somewhat daunting, even if you’ve done it before. You will deal with real estate terms like mortgage options, credit reports, loan applications, contracts, points, appraisals, change orders, inspections, warranties, walk-throughs, settlement sheets, escrow accounts, recording fees, insurance, taxes…the list goes on. No doubt you will hear and see words and terms you’ve never heard before. Just what do they all mean?

The real estate sector, like any other, is based on a bevy of terminology that are frequently misinterpreted. You’re not alone if you’ve ever looked up amortization, right of refusal, or transfer tax. Certain real estate terms and phrases used in the mortgage application, property search, and house purchase process are unfamiliar to some people.

When speaking with industry professionals, such as agents, and associating with friends who are also homeowners, you may proudly demonstrate how much you know if you have a basic comprehension of real estate terms like these.

Are you ready to take your real estate knowledge to the next level? Take a look at some of the most important real estate terminology to understand, especially if you’re a first-time buyer

1. Appraisal

To determine the approximate worth of a piece of real estate, an appraisal is required. The mortgage lender sends out an appraiser during the home sale to seek a professional assessment on the property’s valuation. This information assists the lender in determining if the property is worth the loan amount requested by the potential buyer.

2. Assessed value

The assessed value of a property is used to determine the appropriate tax rates. In making final decisions, an assessor includes sales of similar properties as well as home inspection findings.

The assessed value is the most frequently accepted worth of your home when it comes to selling it. It is the most reliable metric for determining the value of a home.

3. Asset

A resource with economic worth that an individual, corporation, or country possesses or controls with the hope of future gain is referred to as an asset. Assets are bought or developed to raise a company’s value or benefit its operations, and they are reported on the balance sheet. Whether it’s manufacturing equipment or a patent, an asset can be looked at as something that can create cash flow, cut expenses, or increase sales in the future.

4. Buyer’s agent/listing agent

A buyer’s agent, also referred to as a selling agent, is a registered real estate professional whose job it is to find a buyer’s next home, represent their interests by negotiating on their behalf to get the best pricing and purchase scenario possible. This agent is the buyer’s fiduciary.

5. C of O

The Certificate of Occupancy, often known as a C of O, is a document issued by various Nigerian state governments to landowners and property buyers as a genuine confirmation of ownership once all conditions have been satisfied.

6. Condominium

A unit in a building with multiple units. The owner of a condominium unit owns the unit itself and has the right to use the common areas with other owners, but the condominium association owns the common features such as the outside walls, floors, and ceilings, as well as the structural systems outside of the unit. Building maintenance, property upkeep, taxes and insurance on shared areas, as well as reserves for renovations, are normally covered by condominium association fees.

7. Debt-to-income ratio

This is a measure of how much debt you have compared to the amount of your debt expenses, including your monthly housing payment, divided by your gross monthly income and multiplied by 100, is the debt-to-income, or DTI, ratio used by mortgage lenders. This allows lenders to calculate affordability based on their available loan programs and estimate how much you can afford to pay for a mortgage on a monthly basis.

According to Investopedia, lenders look for borrowers who spend 28 percent or less of their total monthly income on housing and less than 36 percent of their income on loan payments. If either percentage is large and you want to buy a house, you may need to make some adjustments to your budget.

8. Deed of Assignment

Deed of assignment is one of the most popular real estate terms in Nigeria today. Simply explained, a deed of assignment is a document that states the transfer of ownership of a piece of land from one person to another. A Deed of Assignment, also known as a Conveyance, is only required in transactions where the original recipient of state-allocated land desires to transfer his claim on the asset to another individual or if repeated transfers of ownership have happened.

A proper Deed of Assignment must include the name of the C of O holder who wishes to transfer ownership as well as the party to whom the assets’ rights will be allocated. Perfection at the state’s Land Registry is essential to ensure that a Deed of Assignment meets all legal criteria.

9. Easement

An easement is a non-possessory right to use and/or enter onto someone else’s real property without actually owning it. It’s “best exemplified by the right of way that one landowner, A, may have over another’s land, B.” It’s comparable to real covenants and equitable servitudes.

10. Encumbrances

A claim against a property by someone who isn’t the owner is known as an encumbrance. An encumbrance can affect the property’s transferability and limit its free use until the impediment is removed. Mortgages, easements, and property tax liens are the most frequent types of encumbrances on real estate. Non-financial encumbrances, such as easements, are an example of non-financial encumbrances. Personal property, as opposed to real property, can be encumbered.

11. Land Title

A land title, also known as a certificate of title, is a legal document that outlines a person’s or group’s ownership rights in a piece of land. A title can help prospective purchasers and land owners learn more about existing liens, usage rights, easements, natural resource rights, and other rights, in addition to confirming ownership of the property.

12. Omo onile

This actually refers to the offspring of the original landowners, who claim land ownership based on their ancestors’ ties to the land. They act like land hijackers, employing force, trickery, and intimidation to acquire access to and control of increasingly scarce land.

13. R of O 

A right of occupancy (R OF O) is merely an offer, whereas a certificate of occupancy (C OF O) certifies your ownership of the property. A Local Government Authority normally grants the right of occupancy, which is defined as a conventional right of possession.

Real estate is full of jargon (“DOM”, “HOA”, “pre-qual”, etc), and it can add layers of confusion to an already convoluted process. Whether you’re buying or selling a home, we created this resource to help you learn the vocabulary on the most popular real estate terms

Related: 5 unpopular property investment trends in Nigeria

Author: admin-pwanmaxblog