Home inspections are required once a potential buyer makes an offer. Typically they cost a few hundred dollars. The purpose is to check that the house’s plumbing foundation appliances and other features are up to code. Issues that may turn up during an inspection may factor into the negotiation on a final price. Failing to do an inspection may result in surprise costly repairs down the road for the home buyer.

This is the cost of borrowing money for a home. Interest is combined with principal to determine monthly mortgage payments. The longer a mortgage is the more you will pay in interest when you have finally paid off the loan.

A contract under which the agreement of the parties is demonstrated by their acts and conduct.

A method of creating an easement. One party may be using another’s property for the benefit of both parties.

Improvements on land: any structure, usually privately owned, erected on a site to enhance the value of the property; 2. Improvements to land: usually a publicly owned structure.

Incomplete right, such as a wife’s dower interest in her husband’s property during his life.

The process of estimating the value of an income-producing property by capitalization of the annual net income expected to be produced by the property during its remaining useful life.

A nonpossessory right in real estate.

The principle that applies when increased expenditures for improvements to a given parcel of land yield an increasing percentage return on investment.

One who is retained to perform a certain act but who is subject to the control and direction of another only as to the end result, and not as to how he or she performs the act. Unlike an employee, an independent contractor pays all of his or her expenses, pays his or her income and Social Security taxes, and receives no employee benefits. Many real estate salespeople are independent contractors.

Lease that allows the rent to be increased or decreased periodically, based on changes in the a selected economic index, such as the Consumer Price Index.

All land and buildings used or suited for use in the production, storage, or distribution of tangible goods.

A method of reporting gain received from the sale of real estate when the sale price is paid in two or more installments over two or more years. If the sale meets certain requirements, a taxpayer can spread recognition of the reportable gain over more than one year, which may result in tax savings.

A title to land that a title company will insure.

The indemnification against loss from a specific hazard or peril through a contract (called a policy) and for a consideration (called a premium).

A charge made by a lender for the use of money.

A short-term loan usually made during the construction phase of a building project, often referred to as a construction loan.

The condition of a property owner who dies without leaving a will. Title to such property passes to his or her heirs as provided in the state law of descent.

Having no force or effect.

To render null and void.

Money directed toward the purchase, improvement, and development of an asset in expectation of income or profits. A good financial investment has the following characteristics: safety, regularity of yield, marketability, acceptable denominations, valuable collateral, acceptable duration, required attention, and potential appreciation. Real estate terms that begin with J