BACKUP CONTRACT
a contract to Buy real estate that becomes effective if a prior
contract fails to be consummated.
BALANCE, PRINCIPLE OF in real estate appraisal,
there is an optimal mix of inputs that, when combined with land,
will result in the greatest land value. Inputs, or factors of
production, include labor, capital, and entrepreneurship.
BALANCE SHEET a
financial statement in table form showing assets, liabilities,
and equity, in which assets equal the sum of liabilities plus
equity.
BALLOON MORTGAGE
a mortgage with a balloon payment.
BALLOON PAYMENT
the final payment on a loan, when that payment is greater than
the preceding installment payments and pays the loan in full
BAND OF INVESTMENT
an income property appraisal technique where the overall interest
rate is derived from weighting mortgage and equity rates.
BASELINE part of
the Rectangular Survey or Government Rectangular Survey method
of land description.
BASE PERIOD a point
of time that serves as a benchmark for reflecting the change
in an index.
BASE RENT the minimum
rent due under a lease that has a percentage or participation
requirement.
BASIC INDUSTRY MULTIPLIER
in economic base analysis, the ratio of total population in
a local area to employment in basic industry. Basic industry
is considered to be any concern which attracts income from outside
the local area.
BASIS(TAX) the point
from which gains, losses, and depreciation deductions are computed.
BASIS POINT one
100th of 1%.
BEARER INSTRUMENT
a security that does not indicate the owner; payable to whoever
presents it.
BEDROOM COMMUNITY
a residential community in the suburbs, often near an employment
center, but itself providing few employment opportunities.
BEFORE-AND-AFTER-RULE
in an eminent domain award, many jurisdictions appraise the
property value before the taking, then the property value after
the taking, considering enhancement or injury to the property
that was the result of condemnation.
BEFORE-TAX CASH FLOW
cash flow prior to deducting income tax payments or adding income
tax benefits.
BEFORE-TAX EQUITY REVERSION same as after-tax
proceeds from resale, except it does not consider income taxes.
BELOW-MARKET INTEREST RATE
(BMIR) in some government-subsidized housing, the owner
is charged a low interest rate with the requirement that savings
be passed on to tenants in the form of reduced rent.
BENCHMARK a permanently
affixed mark that establishes the exact elevation of a place;
used by surveyors in measuring site elevations, or as a starting
point for surveys.
BENEFICIARY the
person who receives or is to receive the benefits resulting
from certain acts.
BEQUEATH to specify
by will the recipient of personal property. Compare devise.
BEQUEST that personal
property given by the terms of a will.
BETTERMENT an improvement
to real estate.
BIANNUAL occurring
twice a year. Same as semiannual. Contrast with biennial.
BIENNIAL occurring
every 2 years.
BILATERAL CONTRACT
a contract under which each party promises performance.
BI-LEVEL a house
built on 2 levels in which the main entrance is situated above
the lower level but below the upper level.
BILL OF ASSURANCE
the name given, in some states, to the total collection of restrictive
covenants that apply to a group of contiguous lots.
BILL OF SALE a written
instrument given to pass title of personal property from a seller
to a buyer. Used when furniture and portable appliances are
sold.
BINDER an agreement,
accompanied by a deposit, for the purchase of real estate, to
evidence good faith on the part of the purchaser.
BIWEEKLY LOAN a
mortgage which requires principal and interest payments at two-week
intervals. The payment is exactly half of what a monthly payment
would be. Over a year's time, the 26 payments are equivalent
to 13 monthly payments on a comparable mortgage loan. As a result,
the loan will amortize much faster than loans with monthly payments.
BLANKET MORTGAGE
a single mortgage that covers more than one parcel of real estate.
BLEEDING A PROJECT
1. in new construction, overstating expenses and fees so as
to divert a larger than normal amount of the project costs to
the developer's profit. 2. managing an existing piece of real
estate so as to obtain the highest possible current income from
it, to the extent that many normal operating expenses are forgone.
BLENDED RATE an
interest rate, applied to a refinanced loan, that is higher
than the rate on the old loan but lower than the rate offered
on new loans.
BLIGHTED AREA a
section of a city in which a majority of the structures are
dilapidated.
BLIND POOL an investment
program in which monies are invested into an association without
investors knowing which properties will be purchased.
BLOCKBUSTING a racially
discriminatory and illegal practice of coercing a party to sell
a home to someone of a minority race or ethnic background, then
using scare tactics to cause others in the neighborhood to sell
at depressed prices.
BLUEPRINT a detailed
set of plans used as the guide for construction of a building.
BLUE-SKY LAWS state laws requiring the offeror
of securities to give full disclosure, and register the offering
as required by federal and state law.
BOARD OF EQUALIZATION
a government entity whose purpose is to assure uniform property
tax assessments.
BOARD OF REALTORS
a local group of real estate licensees who are members of the
State and National Association of Realtors.
BOECKH BUILDING VALUATION
MANUAL a book, frequently updated, that offers estimates
of the replacement cost or reproduction cost for different types
of buildings. Address: Boeckh 525 East Michigan P.O. Box 664
Milwaukee, WI 53201-0664
BOILER PLATE standard
language found in contracts. Preprinted material.
BOMA Building Owners
and Managers Association.
BONA FIDE in good
faith, without fraud.
BOND a certificate
that serves as evidence of a debt and of the terms under which
it is undertaken.
BOOK VALUE the carrying
amount of an asset, as shown on the books of a company.
BOOT unlike property
included to balance the value of like properties exchanged.
BOTTTOMLAND 1. low
land near a river, lake, stream, which is often flooded 2. land
in a valley or dale.
BOUNDARY same as
property line.
BOY beginning of
year.
BREACH OF CONTRACT
a violation of the terms of a legal agreement; default. Breach
of contract allows the non-breaching party to rescind the contract,
sue for damages, or sue for performance of the contract.
BREAK-EVEN POINT
the amount of rent or the occupancy level needed to pay operating
expenses and debt service. Also called default point.
BRIDGE LOAN mortgagee
financing between the termination of one loan and the beginning
of another loan.
BROKER a state-licensed
agent who, for a fee, acts for property owners in real estate
transactions, within the scope of state law.
BROKERAGE 1. the
business of being a broker. 2. the commission received by a
broker for his services.
BROWNSTONE, BRICK ROW HOUSE,
OR EASTERN TOWNHOUSE a nineteenth-century-style house,
usually having 4 or 5 stories with a stoop leading up to the
first floor. There are common side walls with a house on either
side.
BUDGET MORTGAGE
a mortgage that requires monthly payments for taxes and insurance
in addition to interest and principal.
BUFFER ZONE a transitional
area between 2 areas of different predominant land uses.
BUILDERS AND SPONSORS PROFIT
AND RISK ALLOWANCE (BSPRA) an amount above the cost
of apartments that is allowed to be included in the project
cost for purpose of determining the loan amount in certain government-sponsored
programs.
BUILDER WARRANTY
a guarantee on the quality of construction offered by the developer
or building contractor.
BUILDING CAPITALIZATION RATE
in appraisal, the capitalization rate is used to convert an
income stream into one lump sum value. The rate for the building
may differ from that for the land because the building is a
wasting asset.
BUILDING CODES regulations
established by local governments describing the minimum structural
requirements for buildings; includes foundation, roofing, plumbing,
electrical, and other specifications for safety and sanitation.
BUILDING LINE a
line fixed at a certain distance from the front and/or sides
of a lot, beyond which the building may not project.
BUILDING LOAN AGREEMENT
an agreement whereby the lender advances money to an owner at
specified stages of construction.
BUILDING OWNERS AND MANAGERS
ASSOCIATION (BOMA) an organization of practitioners
who own and manage buildings, notably office space. Address:
Building Owners and Managers Association 1221 Massachusetts
Avenue NW Washington, DC 20005
BUILDING PERMIT
permission granted by a local government to build a specific
structure at a particular site.
BUILDING RESIDUAL TECHNIQUE
an appraisal technique whereby income to land is subtracted
from net operating income to result in the building income.
Building income is capitalized into building value.
BUILDING RESTRICTIONS
provisions in building codes that affect the orientation, size,
and appearance of a building.
BUILD TO SUIT an
arrangement whereby a landowner offers to pay to construct on
his or her land a building specified by a potential tenant,
and then to lease land and building to the tenant.
BUILT-INS appliances,
machinery, and other equipment that are constructed as part
of a building rather than left freestanding and moveable.
BULLET LOAN typically
a loan with a 5- to 10-year term and no amortization. At the
end of the term the full amount is due.
BUNDLE OF RIGHTS THEORY
the theory that ownership of realty implies a group of rights
such as occupancy, use and enjoyment, and the right to sell,
bequeath, give, or lease all or part of these rights.
BUNGALOW a small,
early-twentieth-century-style, I-story house that usually has
an open or enclosed front porch.
BUREAU OF LAND MANAGEMENT
an agency of the U.S. Department of the Interior that oversees
the management of much of the land owned by the U.S. government,
particularly national forests and other relatively undeveloped
land.
BUSINESS DAY a standard
day for conducting business. Excludes weekends and holidays.
BUY-BACK AGREEMENT
a provision in a contract under which the seller agrees to repurchase
the property at a stated price upon the occurrence of a specified
event within a certain period of time.
BUY DOWN 1. the
action to pay additional discount points to a lender in exchange
for a reduced rate of interest on a loan. The reduced rate may
apply for all or a portion of the loan term. 2. a loan that
has been bought down by the seller of the property for the benefit
of the buyer.
BUYER'S BROKER an
agent hired by a prospective purchaser to find an acceptable
property for purchase. The broker then represents the buyer
and negotiates with the seller in the purchaser's best interest.
BUYER'S MARKET a
situation where buyers have a wide choice of properties and
may negotiate lower prices. Often caused by overbuilding, local
population decreases, or economic slump.
BUY-SELL AGREEMENT
a pact among partners or stockholders under which some agree
to buy the interests of others upon some event.
BYLAWS a set of
regulations by which an organization conducts its activities.
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