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package loan

loans that include both real and personal property.

Example: a model home is sold and mortgaged with all furnishing included.

paired sales analysis

is the process of identifying two properties which differ only in a specific feature being measured.

To illustrate, the value of a basement can be estimated by finding two identical properties except that one has a basement and the other does not. The difference in their sales prices will be the value of the basement. It is not necessary that the sales used for paired sales analysis also appear as comparables in the appraisal.


is the division of cotenant's interests in real party that takes place through court proceedings when the parties cannot voluntarily agree.

party wall

A wall that is located on or at a boundary line between two adjoining parcels of land and is used or is intended to be used by the owners of both properties.

percentage adjustment

Appraisers adjust for property differences using lump-sum dollar amounts, percentage, or unit adjustments. Percentage adjustments are based on a percentage of the sales price of the comparable property. They are helpful in residential appraising when attempting to apply uniform adjustments for broad market preferences, market changes (date of sale adjustments), and for differences in the actual ages of improvements. Typically, percentage adjustments are more common in non-residential appraising.

For example: a neighborhood has a superior amenity package and similar houses in a nearby subdivision sell for 10% less. Since the market values one location over another by 10%, then the appraiser should use the percentage adjustment and adjust any comparables accordingly.

It should be noted that there is an order for making percentage adjustments. Since the percentages are applied to the sales price of the comparable, it is necessary to first adjust the comparable’s sales price for the term and conditions of the sale, then the date of sale, and finally the locational and physical factors.

perfect market

all products or services being bought or sold are homogeneous or identical within a perfect market.

periodic estate

is a recurring estate for some period – usually month to month. However, the period could be from quarter to quarter, year to year, etc. This estate automatically renews for a new period. Notice is required to terminate a periodic estate.

personal property

items, called chattels, that do not fit into the definition of real property; movable objects.

physical depreciation

is the loss in value associated with the gradual wearing and tearing away of a structure or its components as a result of the affects of time, weather, use, lack of maintenance, etc. It is the most common type of depreciation and the kind normally envisioned when depreciation is considered.

physical factors

one of the four broad categories of factors affecting the value of real estate, which are - physical, social, economic and governmental.

Physical factors may contribute to, or detract from, the value of real estate and include topography, views, proximity to neighborhood shopping and neighborhood services, access to transportation, ingress and egress, climate, seasonal factors, etc. Physical factors may be naturally occurring such as rivers, mountain ranges, lakes, oceans, or the eye-catching red rock formations in Sedona, Arizona. Constructed or man-made factors include the interstate highway system, sports stadiums, and attractions such as the Statue of Liberty, Disney World, etc.

physical life

is the period of time that the improvement will likely continue to perform its basic function. Every improvement has a physical life and an economic life. Physical life is almost always longer than economic life. A car may only have an economic life of 5 years before it loses all book value. The physical life of the car may enable you to drive it for 15 years.

Planned Unit Development

is a zoning concept where an owner of a large tract of land can propose a blend of land uses which might include residential, retail, office, and/or industrial uses. Each use would be required to conform to the general zoning provisions for that type of use, and overall densities would be limited by PUD regulations.

plat map

A map of a town, section, or subdivision indicating the location and boundaries of individual properties.


is the incremental increase in value of assembled properties over the sum of the values of the individual sites.

police power

the power or right of the government to control and regulate numerous activities to protect the health, safety, morals and general welfare of the community. This power is exercised by governments at all levels – federal, state, county, and city.

Examples of federal and state regulation would encompass areas such as environmental protection, protected species acts, and protection of wetlands. Local governments concentrate on land use regulations, property use restrictions, and prohibition of certain activities by landowners.

This is one of the four powers of government which institutes public limitations on real property. The four powers are: Police power, Eminent domain, Taxation, and Escheat, remembered by the acronym PETE.

polychlorinated biphenyls (PCBs)

these were used in insulation materials and may be in electrical equipment. They stay in the air for a long period of time and can be the cause of health problems.

potential gross income

is the maximum income the property is capable of generating. It is the income resulting from 100% occupancy of the property at market rent.

Power of attorney

this allows someone (attorney-in-fact) to act as an agent on behalf of another person.

Prepaid Items

expenses to be prorated (such as fuel oil in tank) that have been prepaid by the seller but not fully used up. They are credits to the seller.

prepayment penalty

Some mortgage notes contain a prepayment clause that requires that the borrower pay a prepayment penalty against the unearned portion of the interest for any payments made ahead of schedule.


is determined by the principle of competition, which states that price or profit is set by buyers in the market competing for the same or similar products or services; or by sellers in a market competing for the same buyers.

Price fixing

An agreement (written, verbal, or inferred from conduct) among competitors that raises, lowers, or stabilizes prices or competitive terms.

primary mortgage market

where consumers can shop for and ultimately receive a home loan.


1. One of the main parties to a transaction. For example the buyer and seller are principals in the purchase of real property.

2. In a fiduciary relationship, the person who hires a real estate broker to represent him or her in the sale of property. The phrase "principals only", often found in real estate ads, is meant to exclude real estate agents from contacting the owners of the property.

3. The capital sum. Interest is paid on the principal. An amortized payment includes interest and principal.

prior appropriation

A concept of water ownership in which the landowners right to use available water is based on a government-administered permit system.

Private mortgage insurance (PMI)

where the buyer purchases an insurance policy that provides the lender with funds in the event that the borrower defaults on the loan.


legal process in which the court determines who will inherit a decedent's property and what the estate's assets are.

procuring cause

the things and actions of someone that leads to the desired outcome (a sale).

Example: activities like holding an open house, placing advertisement online/in newspapers, and showing the house to buyers.

profit and loss statement

Also known as the income statement, this statement shows all income minus all expenses which equals the net operating income.

Prohibited Acts

The Civil Rights Act of 1968 prohibited the following activities and conduct in residential real estate transactions:

  •  giving different terms for loans to buy or repair a dwelling, or deny a loan altogether
  • denying membership in MLS
  • refusing to sell, rent, or negotiate with any person
  • changing terms, conditions, or services for different individuals
  • stating or advertising that the property is restricted
  • telling a person that a property is not for sale or rent when it is.
  • making a profit by inducing owners to sell by telling them that persons of protected class are moving into their neighborhood (blockbusting or panic selling)

Promissory Notes

is the borrower's promise to pay a debt. Usually shows the amount of debt, rate of interest, and time and method of payment.

property manager

They have a longer agreement with the property owner and their job is more involved with the operation of the property after the tenants have occupied the property. Typical property management services include:

  • collecting rent
  • property maintenance and repair
  • managing the tenant mix and relationships
  • create a property management plan
  • create an operating budget
  • prepare monthly accounting including operating income statements
  • prepare year-end tax reports


the division of financial responsibility between the buyer and the seller for such items as loan interest, taxes, rents, fuel and utility bills. They are necessary to ensure that expenses are divided fairly between the seller and the buyer.

Example: the seller may owe current taxes that have not been billed; the buyer would want this item settled at closing. When taxes must be paid in advance, the seller is entitle to a rebate at the closing. If the buyer assumes the seller's existing mortgage or deed of trust, the seller usually owe the buyer an allowance for accrued interest through the date of closing.

prospective appraisal

is a value estimate with an effective date sometime in the future. A prospective appraisal assignment would be one needed to determine value for construction build out purposes.


Exaggerated or superlative comments or opinions not made as representations of fact.

punitive damages

Exemplary court-awared damages to an injured party. The purpose of punitive damages is to punish the perpetrator, not to reward the injured party.

Purchase-money mortgage (PMM)

This always indicates seller financing. A seller may have the desire to take back a note rather than a lump sum payment for their property

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