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observed condition method

is the most detailed method of quantifying accrued depreciation. This method separately accounts for physical depreciation (curable, incurable short-lived, and incurable long-lived), functional obsolescence (both curable and incurable), and economic obsolescence.

offer and acceptance

is an essential element to create a contract valid. Requires that one party (the offeror) makes an offer to a second party (the offeree) who accepts unconditionally and communicates that acceptance to the offeror. A "meeting of the minds"

Office of Thrift Supervision (OTS)

The Office of Thrift Supervision (OTS) is the primary federal regulator of federally-chartered and state-chartered savings associations, their subsidiaries, and their registered savings and loan holding companies. OTS was established as a bureau of the U.S. Department of the Treasury on August 9, 1989, and has five regional offices located in Jersey City, Atlanta, Chicago, Dallas, and San Francisco. OTS is funded by assessments and fees levied on the industry it regulates.

Open buyer agency

A non-exclusive agreement where the buyer agrees to pay a commission to any broker who finds a suitable property. But, should the buyer find the property without any assistance from a broker, and then the buyer has no obligation to pay a commission.

open listing

also known as a nonexclusive listing, the seller retains the right to employ any number of brokers as agents. The seller is only obligated to pay a commission to the broker who successfully produces a ready, willing, and able buyer. If the seller personally sells the property without to aid of any brokers, the seller is not obligated to pay a commission.

operating budget

This is a projection of the income to be derived from the operation of the property and the expenses necessary to operate the property over a one year period. If the property is new, income is based on anticipated revenues and expenses.

operating expenses

include all costs necessary to generate the effective gross income (EGI) of an income producing property. Operating expenses include fixed expenses, variable expenses and reserves for replacement of short-lived components.


an agreement to keep open, for a set period, an offer to sell or lease real property.

option listing

A listing with a provision that gives the listing broker the right, but not the obligation, to purchase the listed property within a certain time.


the individual who receives the option in an option contract.

Example: A builder wants to assemble several pieces of land and receives options from all the homeowners involved before he actually purchases the properties. The builder is the optionee.

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