REAL ESTATE TERMINOLOGY Glossary of Commonly Used Words
1031 EXCHANGE
A 1031 exchange is a method enabling property owners to trade an investment property for another investment property (or proper- ties) without paying capital gains taxes on the transaction.
ANNUAL PERCENTAGE RATE (APR)
The borrower’s costs of the loan term expressed as a rate. This is not their interest rate.
APPRAISAL
A report highlighting the estimated value of the property com- pleted by a qualified 3rd party. this is typically done for the benefit of the buyer’s lender to ensure the property is worth the purchase price. In addition to a mortgage, certain housing communities such as townhomes or condos have a monthly fee associated with main- taining the common areas and amenities. A Closing Disclosure form or CD provides disclosures that will be helpful to borrowers in understanding all of the costs of the loan and transaction. This form will be given to the consumer at least three (3) business days prior to the date of closing. When the new title to the property is recorded by the County Recorer’s Office and ownership of the property transfers to the new buyer.
ASSOCIATION FEE/ HOA FEE
CLOSING DISCLOSURE (CD)
CLOSING OR SETTLEMENT
CLOSING COSTS
The buyers and seller have expenses associated with the transac- tion other than that of the actua I cost of the home.
COMMISSION
A percent of the sale price of the home that is paid to agents. The seller pays commission to both the buyer and the listing agent.
COMPARABLES
Homes in the area of interest that have recently sold that have similar features.
CONTINGENCIES
Conditions which must be met in order to close. Contingencies are typically tied to a date, referred to as a deadline. If the contingency is not satisfied the contract may be cancelled.
20 | Colorado Seller Guide
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