backup offer
An offer to buy, submitted to a seller, with the understanding that the seller has already accepted a prior offer; a secondary offer. Sometimes the seller accepts the backup offer contingent on the failure of the sales transaction on the part of the first purchaser within a specified period of time. The seller must be careful how he or she proceeds, however, when the time for the buyer's performance, under the first contract, has expired.

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 payment
Under an installment loan agreement, a final payment that is substantially larger than the previous installment payments and repays the debt in full; the remaining balance that is due at maturity (stop date) of a note or obligation.

bidding war  
Offers from multiple buyers for a piece of property.

Blanket Mortgage
A mortgage covering at least two pieces of real estate as security for the same mortgage.

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
One of a set of imaginary lines running east and west used by surveyors for reference in locating and describing land under the government survey method of property description.

basic form homeowner's policy
The most common homeowner's policy is called a basic form. It provides property coverage against fire and lightning; glass breakage; windstorm and hail; explosion; riot and civil commotion; damage by aircraft; damage from vehicles; damage from smoke; vandalism and malicious mischief; theft; and loss of property removed from the premises when it is endangered by fire or other perils.

basis
The dollar amount that the Internal Revenue Service attributes to an asset for purposes of determining annual depreciation or cost recovery, and gain or loss in the sale of the asset. The determination of basis is of fundamental importance in tax aspects of real estate investment. All property has a basis. If 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, reduced by any cost recovery depreciation actually taken or allowable. The basis is also reduced by any untaxed gain "carried over" to the new property in cases where the new property is a replacement of a former residence or is acquired through a like-kind exchange or through an involuntary conversion. This new basis is called the property's adjusted basis.

benchmark
A permanent reference mark or point established for use by surveyors in measuring differences in elevation.

bill of sale
A written agreement by which one person sells, assigns or transfers to another his or her right to, or interest in, personal property. A bill of sale is sometimes used by a seller of real estate to evidence the transfer of personal property, such as when the owner of a store sells the building and includes the store equipment and trade fixtures.

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.

blended rate
An interest rate for a newly financed loan that is higher than the existing rate but lower than the current market rate.

blind ad
An advertisement that does not include the name and address of the person placing the ad, only a phone number or post office box address. Licensed brokers are generally prohibited by state license laws from using blind ads.

blockbusting
An illegal and discriminatory practice whereby one person induces another to enter into a real estate transaction from which the first person may benefit financially by representing that a change may occur in the neighborhood with respect to race, sex, religion, color, handicap famial status or ancestry of the occupants. A change possibly resulting in the lowering of the property values, a decline in the quality of schools or an increase in the crime rate. Also called panic selling or panic peddling.

bona fide
In good faith, honestly, openly, and sincerely and without deceit or fraud. In an attitude of trust and confidence, without notice of fraud.

breach of contract
Violation of any of the terms or conditions of a contract without legal excuse; default; nonperformance. The non-breaching party can usually seek one of three alternative remedies upon a material breach of the contract: rescission of the contract, action for money damages or an action for specific performance.

break-even point
In income property, the figure at which rental income is equal to expenses and debt service.

bridge loan
A short-term loan made to cover the period between the termination of one loan, such as an interim construction loan, and the beginning of another loan, such as a permanent takeout loan.

broker cooperation
Working with outside licensed real estate brokers who have prospective tenants in exchange for a finder's fee or commission split.

broad-form homeowner's policy
Covers falling objects; damage due to the weight of ice, snow or sleet; collapse of all or part of the building; bursting, cracking, burning or bulging of a steam or hot water heating system or of appliances used to heat water; accidental discharge, leakage or overflow of water or steam from within a plumbing, a heating or an air-conditioning system; freezing of plumbing, heating and air-conditioning systems and domestic appliances; and injury to electrical appliances, devices, fixtures and wiring from short circuits or other accidentally generated currents.

budget loan
A loan with payments set up to cover taxes and insurance in addition to interest and principal reductions.

building code
An ordinance that specifies minimum standards of construction for buildings to protect public safety and health.

building permit
Written governmental permission for the construction, alteration or demolition of an improvement, showing compliance with building codes and zoning ordinances.

built-ins 
Appliances, bookshelves, cabinets or other items that are framed into a home or permanently attached.  

burden of proof
The obligation to prove the truth or falsity of a fact.

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.

Buy & Sell contract
The written purchase contract used by Realtors belonging to the Greater Lansing Association of Realtors.

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’s agent 
A real estate agent who exclusively represents the buyer's interests in a transaction.

buyer's market
A slow real estate market in which buyers have the advantage.

buyer's remorse
Buyers of expensive items, like a home or automobile, sometimes regret their decision. They wonder if they paid too much or made the wrong selection. This fear of having made a serious mistake is referred to as "buyer's remorse."