When it comes to buying land, or any property for that matter, there are a number of real estate terms that agents and sellers use in their transactions. The team at Southwest Land Deals puts a priority on making sure our clients have the best experience working with us, and that includes keeping buyers in the know from start to finish. In this post, we gathered our Top 21 Real Estate Terms to Know Before Buying Land in Arizona.
An appraised value is an evaluation of a property’s value by a professional appraiser. This can be done during the mortgage origination process or by the buyer or seller privately to help determine the value of the property. An appraisal can also be used for tax purposes or after a divorce.
The assessed value of a property helps determine how much a land owner will need to pay in property taxes. The property appraiser will take into account location information, inspection information for the property, and recent real estate sales in the area.
The carrying costs are the costs you facing each month to own the land. This includes things like your tax payments, insurance premiums, utility bills, HOA or POA dues, and maintenance costs.
A clear title means that there aren’t any other ownership claims to the property, nor are there any liens against the house.
Comparative Market Analysis
A comparative market analysis, or CMA, provides information to help determine the value of the property. It takes into account recent sales to help you figure out what your house is currently worth.
A contingency is a stipulation in the contract that needs to be met before the contract is legal and binding.
A covenant formal agreement in which one party gives the other certain assurances. An example would be covenants of warranty in a warranty deed.
A delinquency occurs when a property owner defaults on their loan. This is when a lender will actively begin the collections process, even initiating foreclosure.
A disclosure is a document that the seller provides the buyer, letting them know about any problems, defects, or known issues with the property. Failing to disclose a problem with your property can be considered fraud.
An encumbrance is a claim against the property that restricts its transfer or use. A property lien is considered an encumbrance.
A foreclosure occurs when a property owner fails to make their mortgage payment, typically for 90 days. The owner waives all rights to the property and the real estate becomes the possession of the bank.
Inclusions are personal property that is included in the property sale. This can be things like appliances, furniture, or outdoor items. Or in terms of vacant land, these items could include sheds, fencing, trailers, etc.
Market value is a valuation of the property in which the parties are free of pressure to complete the transaction and all details of the property are known. It can be formulated by finding the average between the highest price a buyer would pay and the lowest price a seller would accept.
A mechanic’s lien is a lien against the property which will secure the payment of contractors, laborers, and those who provide materials.
While amortization refers to paying off your loan, negative amortization happens when the payments you are making aren’t enough to cover the interest and the amount you owe becomes greater as opposed to less.
A quitclaim deed transfers the interest in real property from one person to another.
A sale-leaseback occurs when a buyer purchases a property and then leases it back to the occupant.
A short sale occurs when an owner sells their property for less than what is owed, allowing the lender to recoup some of the cost of the loan as an alternative to foreclosure.
The title refers to who has legal ownership and who can legally use the property. Just like a car, it is how you claim ownership of the property.
A title defect is when there is an adverse claim, somewhere in the chain of ownership. It can have an impact on who has legal rights to the property.
Voluntarily giving up a right, claim or privilege. It removes liability for the other party in the agreement.
When buying land in Arizona, you will likely hear a lot of real estate jargon thrown your way. It’s important to know what is being said and how the terms used will impact you. If you have a good understanding of these phrases, you’ll be in a great position when buying land in Arizona.