Dictionary of Terms - B

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Back Assessment: Assessment that should have been made at an earlier time, usually the previous year.
Back Title Letter: A letter from a title insurance company to an attorney authorizing the attorney to examine the title for insurance purposes.
Back-end Ratio: A calculation used by lenders to compare a borrower's total debt to their gross monthly income.
Backfill: Replacement earth returned to areas around a structure where the original earth was removed to facilitate construction.
Balance Sheet: A statement providing the assets, liabilities and net worth of an individual.
Balance: The appraisal principle that states that the greatest value in a property will occur when the type and size of the improvements are proportional to each other as well as the land.
Balloon Loan: A mortgage loan where the monthly payments are not large enough to repay the loan by the end of the term resulting in a lump sum due on the final payment date.
Balloon Payment: A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.
Band Of Investment: A method of developing a discount rate based on (1) the rate of mortgage interest available, (2) the rate of return required on equity and (3) the debt and equity share in the property. A variation of this method is used to compute an overall capitalization rate.
Bankruptcy: A proceeding where an insolvent debtor (person or corporation) can obtain relief from payment of certain obligations.
Bargain And Sale Deed: A deed that carries with it no warranties against liens or other encumbrances but that does imply that the grantor has the right to convey title. The grantor may add warranties to the deed at his or her discretion.
Base Line: The main imaginary line running east and west and crossing a principal meridian at a definite point used by surveyors for reference in locating and describing land under the rectangular (government) survey system of legal description.
Base Loan Amount: The loan amount upon which payments are based. If the borrower chooses to finance closing costs or other fees these costs will be added to the base loan amount and payments adjusted to reflect the larger loan balance.
Base Rent: The minimum rent payable under a percentage lease.
Base Year Value: Value placed on property as of a certain year, i.e., when the last revaluation was completed.
Baseboard: Trim placed along the bottom of an interior wall for appearance as well as to hide the gaps between wall and floor finish.
Basis Point: A basis point is one one-hundredth of one percentage point. For example, the difference between a home loan at 5.25 percent and one at 5.37 percent is 12 basis points.
Basis: The financial interest that the Internal Revenue Service attributes to an owner of an investment property for the purpose of determining annual depreciation and gain or loss on the sale of the asset. If a property was acquired by purchase the owner's basis is the cost of the property plus the value of any capital expenditures for improvements to the property minus any depreciation allowable or actually taken. This new basis is called the adjusted basis.
Batten: Strips of wood or metal used to cover the vertical gaps (joints) between strips of wood or other vertical type of exterior siding.
Bay Window: A window that projects outward from the exterior wall of a structure and forms a bay inside the structure, usually circular in shape.
Before-tax Income: Total income before taxes are deducted.
Benchmark: A permanent reference mark or point established for use by surveyors in measuring differences in elevation.
Beneficiary: (1) The person for whom a trust operates or in whose behalf the income from a trust estate is drawn. (2) A lender in a deed of trust loan transaction.
Bias: A preference or inclination used in the development or communication of an appraisal, review, or consulting assignment that precludes an appraiser's impartiality. (USPAP)
Bilateral Contract: See contract.
Bill Of Sale: A legal document transferring ownership of personal property.
Binder: An agreement that may accompany an earnest money deposit for the purchase of real property as evidence of the purchaser's good faith and intent to complete the transaction.
Binder: A preliminary agreement between buyer and seller.
Blacktop: Asphalt paving used for streets and driveways.
Blanket Loan: A mortgage covering more than one parcel of real estate providing for each parcel's partial
Blanket Mortgage: A mortgage that covers more than one property owned by the same borrower. (very rare)
Blockbusting: The illegal practice of inducing homeowners to sell their properties by making representations regarding the entry or prospective entry of persons of a particular race or national origin into the neighborhood.
Blueprint: A detailed plan of a building and its components.
Blue-sky Laws: Common name for those state and federal laws that regulate the registration and sale of investment securities.
Board Of Equalization: A board that reviews assessments to insure that all districts are assessed at a uniform level of value. Also referred to as Board of Tax Review or Board of Appeals.
Book Value: The value of a property as an asset on the books of account; usually, reproduction or replacement cost, plus additions to capital and less reserves for depreciation.
Boot: Money or property given to make up any difference in value or equity between two properties in an exchange.
Branch Office: A secondary place of business apart from the principal or main office from which real estate business is conducted. A branch office usually must be run by a licensed real estate broker working on behalf of the broker.
Breach Of Contract: Violation of any terms or conditions in a contract without legal excuse; for example failure to make a payment when it is due.
Breakdown Method: (See observed condition depreciation.)
Break-even Point: The point in which the owner's rental income matches expenses and debt.
Break-even Ratio: The ratio of operating expenses plus the property's annual debt service to potential gross income.
Bridge Loan: A short-term loan for borrowers who need more time to find permanent financing.
Broker: Anyone who acts as a go-between between a buyer and seller. For example, a real estate broker is licensed to handle property transactions and negotiate between a buyer and seller. A mortgage broker acts as a go-between with the lender and the borrower.
Brokerage: The act of bringing together two or more parties in exchange for a fee or commission. Common brokerage companies include real estate brokerage and mortgage brokers.
Brownfields Legislation: Provides federal funding to states and localities to clean up brownfields sites.
Brownfields: Defunct, derelict or abandoned commercial or industrial sites; many have toxic wastes.
BTU: Abbreviation for British Thermal Unit. A measure of input and output in heating systems and a measure of capacity in air conditioning.
Buffer Zone: A transition strip of land separating one type of land use from another; sometimes it is a vacant strip left to act as a buffer from land that is incompatibly used or zoned for an incompatible use.
Building Capitalization Rate: The sum of the discount and capital recapture rates for a building.
Building Codes: Rules of local, municipal or state governments specifying minimum building and construction standards for the protection of public safety and health.
Building Line: The distance from the front and/or sides of a lot beyond which no structure can project. It may be controlled by zoning or subdivision restrictions.
Building Permit: Written governmental permission for the construction alteration or demolition of an improvement showing compliance with building codes and zoning ordinances.
Building Ratio [B%]: The ratio of the building value to the total value of the property.
Building Recapture Rate (BR): The annual amount of recapture of the investment in a building divided by the total original value of the building.
Building Residual Technique: A method of capitalization using net income remaining to building after interest on land value has been deducted.
Built Up Roof: Generally a low pitch or flat roof composed of several layers of asphalt felt, laminated with tar, pitch or asphalt and covered with gravel.
Bulk Transfer: See Uniform Commercial Code.
Bundle Of Legal Rights: The concept of land ownership that includes ownership of all legal rights to the land for example possession control within the law and enjoyment.
Bundle Of Rights: A term often applied to the rights of ownership of real estate, including the rights of using, renting, selling or giving away the real estate or not taking any of these actions.
Business Personal Property: tangible personal property that generates income. Examples of business personal property include inventory, office equipment, office furniture, heavy equipment, trucks and cars.
Buydown Mortgage: A home loan program where the lender receives a premium as an enticement to reduce the interest rate during the early years of the mortgage.
Buydown: A financing technique used to reduce the monthly payments for the first few years of a loan. Funds in the form of discount points are given to the lender by the builder or seller to buy down or lower the effective interest rate paid by the buyer thus reducing the monthly payments for a set time.
Buyer Agency Agreement: A principal agent relationship in which the broker is the agent for the buyer with fiduciary responsibilities to the buyer. The broker represents the buyer under the law of agency.
Buyer's Agent: A residential real estate broker or salesperson who represents the prospective purchaser in a transaction. The buyer's agent owes the buyer/principal the common law or statutory agency duties.
Buyer's Broker: A residential real estate broker who represents prospective buyers exclusively. As the buyer's agent the broker owes the buyer/principal the common law or statutory agency duties.
Buyer's Remorse: An emotion felt by first-time homebuyers after signing a sales contract or closing the purchase of a house.

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