Earlier this summer we posted an article where we explained what some of the more complicated property terms actually mean. The idea being that when many people enter the property market, they're unsure of what a lot of the complicated jargon that gets thrown around actually means. All this lingo can be pretty confusing and actually puts off many would-be-property-investors from entering the market at all.
In this continued article we're going to have a look at some more common property terms and explain exactly what they mean.
A broker price opinion is the estimated value of a property given by a real estate broker or other qualified property expert. The BPO takes into account the value of surrounding properties, the trends in neighbourhood sales, as well as the cost of getting the property ready for sale. However, the BPO is not the same as a full property appraisal.
A blanket mortgage is a loan that covers several pieces of property. The individual properties can be sold on their own without the whole mortgage being retired. Usually blanket mortgages are taken out by property developers who are building or renovating several properties at once which they want to sell as individual pieces.
An assumable mortgage is a financing agreement where a buyer takes on the mortgage and its agreed terms of the previous owner when they buy the property. By taking on the previous owner's debt, the new buyer can avoid having to take on a mortgage of their own.
These kinds of mortgages are usually popular in times of high interest rates. This is because the new buyer can take on the mortgage terms of the previous owner, which often means they can secure a lower interest rate as the previous owners mortgage would have been secured before interest rates rose.
A property assessor is government appointed official who's responsible for gauging the fair market value of properties in a certain area. The values they calculate are used to determine property taxes.
A property's curb appeal is its general attractiveness from the street where the property is located. There are many factors that can increase a properties curb appeal, such as improvements to the garden or painting the building. Although curb appeal isn't as quantifiable as other valuation factors, like the size of the property, it can still play a major role in the property's overall value.
Collateral refers to an asset used to secure a loan. If the borrower fails to repay the loan they've taken the collateral will be seized by the lender. In the case of a mortgage the property is the collateral that will be taken away by the lender if the borrower fails to make the repayments.