Glossary

An organization devoted to encouraging professionalism in real estate activities. NAR has strong lobbies that protect interests of the real estate community, especially homeowners. It also has affiliates related to appraising, counseling and managing real estate. Members are required to abide by the code of ethics of the NAR.

Interaction of the buyer and seller to arrive at a sales contract including price and sales conditions agreeable to both persons. See deal. Negotiation of a home sales contract starts with an offer from the buyer (complete with earnest money). The seller may accept the offer, make a counteroffer at a higher price or reject the offer outright. Counteroffers go back and forth until one side accepts the offer of the other or negotiations are called off.

The properties surrounding a home. Neighborhoods may have distinctive names. See location. The character of the neighborhood can greatly affect the quality of life derived from a home. Selecting a neighborhood that suits the buyer may be more important than finding the right house.

In real estate, the correct term is now net operating income. In accounting, net income is the actual earnings, after deducting all expenses, including interest and depreciation, from gross sales.

A lease whereby, in addition to the rent stipulated, the lessee (tenant) pays such things as taxes, insurance and maintenance. The lessor’s rent receipt is thereby "net" of those expenses. The responsibility for maintenance costs is shifted to the lessee; the lessor is a passive investor.

A listing in which the broker’s commission is the excess of the sale price over an agreed-upon net price to the seller; illegal in some states. For example, a house is listed for sale at $100,000 net. The broker’s commission is $1 if it sells for $100,001. But if it sells for $150,000, the broker receives $50,000.

Income from property or business after operating expenses have been deducted but before deducting income taxes and financing expenses (interest and principal payments).

Total value of all assets owned minus all outstanding debt. A statement of net worth is often required when applying for a loan.

A use that violates zoning regulations or codes but is allowed to continue because it began before the zoning restriction was enacted. This allows a prior use to continue, but puts restrictions on future uses of the property.

An officer who is authorized to take acknowledgments to certain types of documents, such as deeds, contracts and mortgages, and before whom affidavits may be sworn. Most documents must be notarized as a condition to being recorded.

The document that establishes a debt and specifies how it is to be repaid.

An announcement to a tenant to vacate rented property. The tenant is permitted to complete the term of the lease unless the tenancy is at will or at sufferance.