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Earnest money
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A type of deposit arrangement. Funds secured by a potential buyer to show that they are serious about purchasing the property. Earnest money becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal.
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Earthquake insurance
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An insurance policy that provides coverage against damage to a home from an earthquake.
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Easement
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A right created by grant, reservation, agreement, prescription or necessary implication to use someone else's property, usually for public use. For example, the city council may create an easement granting a utility company the right to extend power lines across a private property.
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Economic feasibility
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The feasibility of a building or project in terms of costs and revenue, with excess revenue establishing the degree of viability.
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Economic rent
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The market rental value of a property at a given point in time.
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EEM
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Acronym for “Energy Efficient Mortgage”, an FHA program that helps homebuyers save money on utility bills by enabling them to finance the cost of adding energy-efficiency features to a new or existing home as part of the home purchase.
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Effective date
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The date on which a registration statement becomes effective and the sale of securities can commence.
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Effective gross income (EGI)
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The total income from a property generated by rents and other sources, after subtracting the “appropriate vacancy factor”. EGI is expressed as collected income before expenses and debt service.
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Effective gross rent (EGR)
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The net rent generated, after adjusting for tenant improvements and other capital costs, lease commissions and other sales expenses.
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Effective rent
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The actual rental rate to be achieved by the landlord after deducting the value of concessions from the base rental rate paid by a tenant. Usually expressed as an average rate over the term of the lease.
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EIK
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Acronym for “Eat-In Kitchen”, describing a kitchen with a space for a table and chairs, in the same space or separated by a counter. A common space-saving arrangement, as opposed to a dedicated dining room.
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Electronic Authentication
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Any of several methods used to provide proof that a particular document received by electronic means is unaltered, and was sent by the indicated source.
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Eminent domain
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A power to acquire by condemnation private property for public use, in return for just compensation (fair market value).
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En Suite Bathroom
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A bathroom, usually in the master bedroom, that opens into the bedroom instead of a hallway. A private bathroom for the master suite.
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Encroachment
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The intrusion of a structure that extends, without permission, over a property line, easement boundary or building setback line.
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Encumbrance (1)
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A right to, or interest in, real property held by someone other than the owner, that does not prevent the transfer of fee title.
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Encumbrance (2)
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Any right or interest in property interfering with its use or transfer.
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End loan
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The conversion from a construction loan to permanent financing.
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Entitlement
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The VA home loan benefit is called an entitlement and often referred to as eligibility.
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Environmental impact statement
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Documents required by federal and state laws to accompany proposals for major projects and programs that will likely have an impact on the surrounding environment.
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Equal Credit Opportunity Act (ECOA)
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Federal law that prohibits a lender or other creditor from refusing to grant credit based on the applicant's sex, marital status, race, religion, national origin or age.
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Equifax
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One of the main credit-reporting bureaus. The other two are Experian and Trans Union.
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Equity
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The value of a property calculated by subtracting debts (mortgages) from the fair market value.
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ERISA (Employee Retirement Income Security Act)
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Legislation passed in 1974 and administered by the Department of Labor, that controls the investment activities, primarily of corporate and union pension plans.
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Errors and omissions insurance
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A policy that insures against mistakes made by a builder or architect.
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Escalation clause
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A clause in a lease that provides for the rent to be increased to reflect changes in expenses paid by the landlord, such as real estate taxes and operating costs.
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Escrow
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The procedure of securing funds and/or documents by placing them into an account controlled by an independent third party (escrow agent). Neither the buyer nor the seller have access to the funds or documents until the conditions of the transaction are met.
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Escrow agreement
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A written agreement between an escrow agent and the parties in a contract, that specifies the terms of the transaction, the conditions permitting access to the funds and/or documents deposited in escrow, and the instructions to the escrow agent.
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Escrow Disbursements
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Payments made for recurring expenses (taxes, insurance, property expenses) from an escrow account, as opposed to “regular” payments (from available funds).
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Estate
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The total assets of a person, including real property, at the time of death.
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Estimated closing costs
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An estimate of expenses related to the sale of real estate, including title and appraisal fees.
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Estimated property taxes
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An estimate of property taxes payable on the property according to state and county tax rates. The amount due is based on the property's assessed value, which is based on the most recent sale price plus any assessment updates.
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Estoppel certificate
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A signed statement certifying that certain statements of fact are correct as of the date of the statement and can be relied upon by a third party, including a prospective lender or purchaser.
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Examination of title
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An inspection by a title company of public records and other documents to determine the chain of ownership of a property.
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Excellent
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Interchangeable with the term “mint”, this describes a property that is in an exceptionally good condition and requires no renovation whatsoever.
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Exclusive Listing (1)
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An agreement that makes the selling agent financially responsible for selling the property, and precludes the property owner from selling the property him or herself. The exclusive broker is accountable to the owner of the property and is responsible for seeing the transaction through its conclusion.
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Exclusive Listing (2)
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A property listing that is distributed only to the other agents of the same company or agency, and not to the wide-area MLS. This serves to keep both the seller and the buyer agents’ commissions “in-house”, as well as limiting the buyer pool to “in-house” buyers, who may have already been pre-qualified for a loan.
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Executed contract
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A contract in which all parties have fulfilled their promises.
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Exit strategy
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Strategy available to investors when they desire to liquidate all or part of their investment.
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Experian
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One of the main credit reporting bureaus. The other two are Equifax and Trans Union.
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