Alligator
A property that eats, producing a large negative cash flow.
Backup
All records and references pertaining to the subject property.
Basis
Represents the taxpayer's investment in the property adjustment for depreciation taken and capital improvements made. Basis equals purchase price plus improvements minus depreciation.
Benefits
Represents tangible and intangible values or advantages associated with a property as perceived by either party to the transaction.
Black Hatter
A person who accentuates only the negative aspects of a situation.
Black Hatting
The act of accentuating the negative to the detriment of the presentation.
Blanket Mortgage
A loan that is secured by more than one property.
Boot
Unlike property, including mortgage relief, cash, paper, and other personal property received in an exchange.
Can Adds
Anything of value that increases a client's equity in a transition.
Carryback
A note that is created in the transaction, secured by the property transferred and retained by the party going out of title.
Cash Generator
Any real or personal property that can be easily converted to cash or refinanced.
Catalyst
An element (cash, property, services, or person) brought into an otherwise impossible or improbable transaction to effect its completion.
Client
A carefully counseled person under contract whose situation has been accepted for representation by the professional.
Counseling
Seeking information which enables one to help a client achieve his goals through intelligent questions and insightful listening.
Couplets
That segment of a multiple party exchange where property is transferred between only two parties at a time. The total exchange transaction may consist of any number of these segments or couplets.
Crank
Cash generated from a property or note.
Created Paper
A note originated by an owner under agreeable terms to owner and used to acquire benefits such as other property without transferring title to the property that is used to secure the note.
Currency Land
Land that is used like money as a down payment on other property.
Customer
An un-counseled person in a transaction with whom the professional has no contractual relationship.
CYA
Cover Your Assets (Assets is sometimes abbreviated). Steps taken to protect yourself.
Dealer
One who buys and sells real estate as a business, as opposed to an investor. The term has importance in relation to taxation of income derived from dealer activities.
Debt Relief
Reduction of a mortgage obligation that may result in a taxable event. For tax purposes, debt relief is considered income to the person being relived of the debt.
Defiance
Reduction of the loan amount on a property designed to increase its equity.
Delayed Exchange
A non-simultaneous transaction where the taxpayer goes out of title on his property before he has completed acquisition of the replacement property.
Depreciation
A tax concept reducing the cost basis of a property.
Don't Wanter
A property owner who is highly motivated to go out of title.
Down and Outer
An owner willing to accept cash or other unlike property without regard to tax consequences.
Downstroke
Another word for down payment; may be cash or other property.
Eat
Any out-of-pocket money over and above the income.
Equity
Equity equals Value minus Debt. That part of the property value not encumbered by loans.
Equity for Equity
An exchange in which the equities are considered equal and no further balancing is needed.
Equity Marketing
The merchandising of properties exclusive of cash, or at least the majority of the values transferred is in the form of unencumbered value in real property.
Escrow
A neutral third party responsible for determining that all agreed-upon terms and conditions have been met prior to the closing of the transaction.
Exchanging
The process of transferring equity in one property for equity in another property. The giving of a deed for a deed.
Facilitator
A knowledgeable third party who assists in structuring a transaction but does not participate in the actual transaction.
Fair Market Value (FMV)
The amount an informed buyer is willing and able to pay, and a seller is willing to accept, for a property after adequate exposure to the market.
Feed
The amount of money required to meet the negative cash flow (eat) requirement of property.
Formula
A model or method for structuring a transaction.
Free and Clear
Without debt.
Front Porch
A term or condition made in an offer as a negotiating ploy that is made without expectation of acceptance and may be readily surrendered by the person making the offer.
Hard Money
Any loan other than purchase money loan. A term often applied to loans made at rates significantly higher than interest rates on loans being offered by traditional lenders, such as banks.
Holding Period
The time a particular taxpayer holds a particular asset. In a "tax-free" exchange, the holding period carries through and goes along with a person to the new property acquired.
Homework
Collecting and analyzing all pertinent information related to a client's situation and property.
Hypothecate
To pledge as collateral for a loan.
Icebox Land
Property having undeterminable value held as a means of preserving equity in a neutral position.
In Acquisition
A term used to describe a property that a person has under contract to acquire and is offered out but is not yet owned by the person making the offer.
In Lieu
Using a property that has been offered to you, without taking title to that property to acquire the desired property.
In Kind Fee
Agent compensation, other than cash or paper, received in the same form as the property, accepted by client, such as real property, or an ownership interest in real property.
Kidney Kicker
An offer consisting of properties deemed to be something other than what the client actually requested. Often used to provide an opportunity for further counseling.
Killer Thought
A remark that destroys the free flow of creative thought.
K.I.S.S. (Keep it Simple Stupid)
Avoid making the transaction more complicated than it needs to be.
Laundry List
A compilation of all properties, real of personal, being represented currently by the exchange broker.
Leg
That portion of a multiple party transaction associated with one of the parties.
Letter to Santa Claus
A list of the client's highest priorities or type of properties "wanted" by client.
Leverage
The ratio of equity to value.
Like Kind Property
Property (real or personal) eligible for a tax deferred exchange. The term does not refer to the physical similarity of the properties, but to the purpose and intent (investment) of the owner.
M.O.L. (More or Less)
A term used to disclose that the figures are not exact, also (+/-).
Missouri
A 3-way transaction in which two "legs" are exchanged and one "leg" receives cash.
Moderator
The person who directs a formal presentation at a marketing meeting. Through a series of questions, the Moderator assists the Presenter in making an effective presentation.
Mortgage Relief
A tax consideration resulting when a property owner acquires another property in an exchange, with a debt that is lower than the debt on the property transferred.
Multiple Exchange
A series of three of more exchanges to complete one transaction.
Neutral Vehicle
A property that does not require any attention: i.e., management, debt service, etc. (Example: free & clear land).
Offsetting Paper
A note received in a transaction that produces an income stream used to offset a negative cash flow in a property.
Option
A contractual agreement granting the right, but not the obligation, for a party (optionee) to acquire property for a given period of time and predetermined conditions to.
O.P.M. (Other People's Money)
Borrowed money.
O.V. (Owner's Value)
Client's estimate of what his property is worth.
Overtrade
To give more equity than received.
Package
A presentation form, usually standardized, used exclusively for broker-to-broker communication; often referred to as "Reno format" or "set-up."
Paper
Secured or unsecured notes.
Piggybacking
A thought process that is inspired by a previously expressed idea.
P.F.A. (Pulled From Air)
An unsubstantiated value.
Pot Theory
A method of closing a multiple party exchange transaction in which each owner receives the deed to the property being acquired directly from the former owner simultaneously and through the service of neutral third party such as an escrow officer of closing agent.
Presenter
A person who is representing a client and property in front of an audience of other brokers.
Pyramiding
The process of building a real estate portfolio, often through a series of tax deferred exchanges.
3 R's of Real Estate Ownership
Responsibility, risk, and reward.
Realized Gain
An accounting concept that is the difference between the net sales price and the adjusted basis of the property sold. It may or may not be taxable in whole or in part.
Recognized Gain
An income tax concept which is the portion of the realized gain that is reported as taxable income at the time of closing.
Recourse
The right of the holder of a note to look personally to the borrower or endorser for payment, not just to the security for the note.
Real World
Conditions as they actually exist, as opposed to wishful thinking.
Sequential Deeding
A method of structuring a multiple party transaction by closing the transaction in a series of transfers involving two parties at a time.
Share the Wealth
When cash is generated in a transaction and distributed to more than one party.
Soft Paper
Notes written with easy terms, such as low interest rates, deferred payments, long holding periods, etc.
Solution
A property or situation that satisfies the benefits needed.
Splitting the Fee
Treating the ownership of land and the improvements thereon as two separate entities.
Starker
A generic term for a delayed exchange named after an early and well-known court case related a non-concurrent closing of an exchange.
Taker
One who will accept a property offered but may or may not own a suitable property to complete the exchange with the party to whom the property is offered.
Tax Deferred
Postponement of the requirement to pay taxes until a later date.
Tax Shelter
A property or investment that creates a tax deduction which may be used as a deduction against the taxpayer's ordinary income.
Third Leg
A property that provides the benefits needed to complete a multiple transaction.
Three Way
A term commonly used to refer to a multiple transaction.
Up Leg
The property to be acquired in an exchange that provides an increase in value and an increase in indebtedness.
User
A party who personally has a specific use for the property.
Vehicle
A property, real or personal, that provides an interim step to accomplish the client's ultimate objective.
Walk the Loan
Substituting an alternate security for the existing note, thus removing the obligation from the original property.
Wanter
One who is reluctant to give up ownership in a property for non-economic reasons, making this type of person extremely difficult to motivate to close.
Weasel Clause
A contingency in a contract allowing the offeror to "back out" of the transaction with no personal liability.
WETE
Whatever The Equity (un-priced property). The equity to be determined by the taker of the property based primarily on benefits perceived by the taker.
WETV
Whatever The Value (un-priced property). The value of the property has not been defined by the owner.
Wrap Around (Financing)
A junior loan with a face value equal to both the amount of equity it secures and the balance(s) due represented by the senior loan(s).
YKYIKM
You Keep Yours I Keep Mine. Refers to Single Agency Fee Arrangement where the fee of one owner is not shared with any other broker.
