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Legal Term |
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-O-
Obsolescence
A
loss in property value due to reduced desirability
or usefulness because a property's design
or construction have become old-fashioned
or it has not kept up and a less costly alternative
exists.
Occupancy
permit
A
permit issued by the appropriate local government
indicating that a property is suitable for
people to live in because it meets certain
health and safety standards.
Offer
to Purchase
A
written contract of intent made by a potential
buyer to a property owner to purchase his
or her property.
Open
House
A
real estate property that is being presented
without the need for an appointment that is
available for inspection by potential purchasers.
Open
Listing
A
listing contract under which the broker's
commission is contingent on the broker's producing
a ready, willing and able buyer before the
property is sold by the seller or another
broker.
Option
A
right, given for a consideration, to purchase
or lease a property, with specified terms
and within a specified period of time, and
placing no obligation on the party receiving
the option to purchase the property.
Option
to Purchase
A
contract giving one party the right, but not
the obligation to buy the property of another
party within a certain time, for a stated
amount, and subject to certain conditions.
Original
Principal Balance
The
total amount of principal owed on a mortgage
before any payments are made.
Origination Fee
A
fee charged for the work involved in the
evaluation, preparation and submission of
a proposed mortgage loan. The origination
fee is stated in the form of points. One
point is 1 percent of the mortgage amount.
Other
People's Money, OPM
Industry
lingo used when individuals or corporations
use borrowed funds to increase their investment
returns.
Owner
Financing (aka "carrying a note"
or "seller financing")
A financing
arrangement in which the property seller provides
all or part of the financing. This is commonly
done in situations where the buyer does not
qualify for financing from a lender. There
can be several advantages to the seller to
do owner financing. One is a the tax advantage
in spreading out the time over which an owner
receives the money from the sale of a property.
Many owners like the idea that they can receive
a monthly income from a property they have
sold.
The
owner can charge the buyer interest on the
money being lent. The owner will collect interest
and a monthly mortgage payment on the property
he or she has sold, in effect increasing the
owner's overall sales price of the property.
In
order to protect themselves, some homeowners
may require the buyer to make their monthly
payments into an escrow account held by a
bank, and require the borrower to place a
Quit Claim Deed into the escrow account with
instructions that if a payment is late by
a certain number of days then the escrow officer
will automatically file the Quit Claim Deed,
which will restore ownership to the former
owner instantly.
If
this were to happen, the buyer would not only
lose title to the property but would also
lose any and all payments made on the property.
This is a powerful incentive for the buyer
to make all payments in a timely manner.
Some
reasons for a Seller not to do "Owner
Financing":
