Real Estate Glossary
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sales comparison approachis one of the three classic approaches to estimating the value of real property. In the sales comparison approach, comparable sales are identified, analyzed, and compared to the subject property (the property being appraised). The sales prices of the comparable properties are adjusted downward to reflect features superior to the subject and upward to reflect the subject’s superior features. The result is that each comparable sale’s adjusted sales price offers an indication of the subject’s value. The separate value indications from each of the sales can then be reconciled into a single value estimate. The concepts and techniques used in the application of the sales comparison approach are the same for residential and non-residential improvements. | |
sales concessionsfinancial incentives or creative financing, or, on occasion, personal property that can be offered to induce a sale. Any sales concessions that influence the price should be adjusted accordingly by the appraiser when determining value. | |
salespersonA person who, for a compensation or valuable consideration, is employed either directly or indirectly by a licensed real estate broker to perform certain acts: to sell, offer to sell, buy, offer to buy | |
scarcityis one of the four essential characteristics that must be present for any product to have value. Products that are in abundance have little or no value. There must be an element of scarcity which means that there is a perception that there is a limitation on the supply of the item. The four essential characteristics or elements of value are: Demand, Utility, Scarcity, and Transferability – a useful tool to remember them is the acronym DUST. | |
scope of workis the type and extent of research and analyses that will be sufficient and necessary to produce a credible or believable value estimate. | |
secondary mortgage marketcreates liquidity for the primary motgage market by purchasing and selling packages of mortages. For example, Fannie Mae or an investment group would purchase loans originated in the primary market by a local bank so that the local bank could turn around and continue lending money to consumers. An individual could not go to Fannie Mae and apply for a single loan. | |
sectionA portion of township under the rectangular (governement) survey system. A township is divided into 36 sections, numbered 1 through 36. A section is a square with mile-long sides and an area of one square mile, or 640 acres. | ||
security agreement | |
security deed | ||
seisinis a deed covenant that makes the assertion and promise that the grantor is in possession of the property and its rightful owner. | |
separate propertyrefers to property excluded from community property ownership interests if it was acquired in the following manner:
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servient estateis a piece of property that is burdened or suffers from a right attached to another piece of property due to an appurtenant easement. | ||
set backis a zoning regulation that requires owners of real estate to build any improvements a designated distance from the property line. | |
setbacksare determined by zoning ordinances and are the open areas necessary between the lot line and the nearest point a building can be constructed. For example, common setbacks will require at least 35 to 50 feet of open space in the front yard, 10 to 15 feet of open space on the side yards, and 35 to 50 feet of rear yard space. | |
Settlement Statement (HUD-1)cash accounting by the person designated to process the sale. This shows all the cash received, all charges and credits made and all cash paid. Also called the closing statement or adjustment sheet. | |
severaltyis ownership of real estate by one party; or severed from all others. | |
severanceis the process of converting an item that is real estate to personal property by detaching it or severing it from the land. | |
Sherman Antitrust ActAntitrust legislation is designed to prohibit monopolies and encourage competition. The Sherman Antitrust Act prohibits price-fixing, group boycotting, allocation of customers or markets, and tie-in-agreements. | |
Single agencythe business limits representations to buyers and tenants; or to sellers and landlords. | |
situsrefers to the preference the market may have for one location over another. This preference is usually measured by the dollars paid for each location or the value difference between locations. Location preferences are driven by factors such as availability of transportation, quality of schools, perceptions of safety, climate, scenery, availability of jobs, taxes, government policies, etc. | ||
social factorsone of the four broad categories of factors affecting the value of real estate, which are - physical, social, economic and governmental. Social factors are changes in social norms, cultural beliefs, population, and family make-up can cause long-term changes in real estate markets. An example is the continual increase in the average age of the population. Markets have identified a demand for a type of housing that might not otherwise have been created. In the last 20 years there has been a proliferation of one-story detached condominiums or zero lot line homes. These accommodate the demand from senior citizens who prefer to have low maintenance one-story homes – that permit some privacy without the cost and trouble of maintaining a large yard. | |
Sole proprietorA business where one person owns the entire business and reports all profits and losses on his or her personal income tax return.
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special agentis an agent who is authorized to represent the principal in one specific act or business transaction only and under very detailed instructions. | ||
special assessmentsA tax or levy customarily imposed against only those specific parcels of real estate that will benefit form a proposed public improvement like a street or sewer. | ||
specific lienA lien affecting or attaching only to a certain, specific parcel of land or piece of property. | |
specific performanceis a legal remedy that allows the court to order the breaching party to perform as they agreed to in the contract. This remedy is reserved for contracts involving unique or irreplaceable items. Real estate is considered unique. A seller could be forced to sell their property if they tried to withdraw from or breach the contract. | |
square foot methodis the least detailed of the cost estimating methods and is the one used by appraisers. In this method costs are established on a per unit basis such as the square foot or cubic foot. Appraisers will identify the “cost per square foot” associated with size and style of improvement being appraised and simply multiply the cost per unit times the number of units (square feet) in the structure. When using this method it is important to identify the cost of the main structure (GLA) and identify separately the cost associated with parts of the structure that vary from house to house. For example, not all houses have basements, garages, fireplaces, or screened porches. The cost of those items must be calculated separately so that the square foot method may be applied to variety of structures within a grouping of houses. | ||
Statute of Fraudsrequires certain agreements to be in writing and signed to be enforceable by court action. For example: deeds, real estate sales contracts, and certain leases. | |
statutory lienA lien imposed on property by statute - tax lien, for example - in contrast to an equitable lien, which arises out of common law. | |
steeringthe practice of directing buyers towards or away from certain neighborhoods based on their race or certain properties based on their status as a protected class. This involved two broad classes of conduct:
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step leaseis any gross, net, net-net, or triple lease that contains a “step up” (or step down) in the amount of rent paid based on some time table or event. A common “escalator clause” might call for rent to increase by $2.00 square foot annually on each anniversary of the lease. The step up will be an attempt to provide rent increases as the market rent rises. Naturally, if the step up rate is higher than the increase in market rents, the owner will benefit. If the market rates rise faster than the step up rates, the advantage would go to the tenant. | |
Straight loanLoans that are interest only and have to be paid back in three to five years. The short payback period meant that borrowers had to either pay the loan back in full or refinance the loan at the end of the three or five year term. | |
straight-line methodcan be used to estimate accrued depreciation for a single component or an entire structure. This method assumes that there is generally a uniform decline in value with time. To calculate accrued depreciation using this method, it is necessary to know the economic life, effective age, and cost new of the component or structure. | ||
sub-marketa sub-set or a specific segment of a larger market which share common characteristics unique to that sub-market. Example: Real Estate Market is a very broad market. Lake properties are a sub-market in real estate. Fundamental issues about the size of the lake and recreation available at the lake, factors peculiar to this market include view of lake whether restricted or panoramic; access to the lake; availability of a dock permit; and depth of water at the dock. These factors have a considerable affect on the prices paid for lake properties and distinguish them from other non-lake properties. | |
subagentis someone who is employed by someone else who is already acting as an agent. In real estate salespersons work for a broker who is employed by the client through a listing or buyer contract. The salesperson is an agent for the broker and the subagent for the client. | ||
subordinationrefers to a lesser position of claim held, usually in respect to a right or security. | |
subrogationis the substitution of one legal party for another with the new party acquiring the legal rights and claims of the original party. | |
substitutionThe main or underlying principle attributed to the successful use of the cost approach is the principle of substitution. The principle of substitution applies to the cost approach in the following manner. “The value of real property is set by the cost to construct an equally desirable substitute.” | |
subsurface rightsownership rights in a parcel of real estate for elements below the surface, including: water, minerals, gas, oil or anything that is below the surface. | ||
Superfund Amendments and Reauthorization Act (SARA)This focuses on the cleanup of releases or hazardous substances on property. This also creates legal exposure based on liability for owners, landlords, and, sometimes, lenders. | |
supply and demandThe principle of supply and demand merely expresses the affect on price of changes in supply and demand. All things being equal, as the supply of real estate increases, prices will fall. Conversely, as demand increases, prices will rise. | |
surety bondscover a business for losses as a result of criminal activity of its employees when conducting tasks for the business. | |
surface rightownership rights in real estate that is limited to the surface of the property and does not include the air above (air rights) or the minerals below (mineral rights) the surface. | |
survivabilityparts of a contract that survive past the transaction Examples:
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