RE Definitons

[Tim G.]

I am creating this post to get a better understanding of the many different terms used in real estate in the hopes to further my knowledge and hopefully anyone else who comes across this site. As a newbie, many times i feel overwhelmed trying to learn the different techniques to REI and also learning the terms involved in each situation.

What I will try to create here is a post the will show the term, a link to a googled definition, possibly a bit of cut and paste from said link, and also I will try to put the definition into words that I hope anyone can understand. If possible, I will also try to give some type of an example.

I also know that as a newb, I will most likely put down how I see things and turn out to be wrong. In cases like these, I hope the communty will help me understand the concept better so that not only will i learn, but I will be able to go back and fix what I wrote. Thank you for any help you all decide to provide me, it will be deeply appreciated.

PS: Yes, I know i cant spell worth a crap :P

Seller Financing http://financial-dictionary.thefreedictionary.com/seller+financing
An agreement between a buyer and a seller of an asset, usually real estate, where the seller directly holds the debt. That is, rather than going through a financial intermediary such as a bank, the seller and the buyer conclude the transaction and the buyer makes payments on the asset at the agreed-upon rate of interest directly to the seller. This is useful for the buyer when he/she could not otherwise obtain financing. It can also be useful because the interest rate is often lower. Likewise, the seller can often receive a higher return on the sale of the house because he does not have to pay commissions or other costs to the financial intermediary.

This does not mean that I( as the seller) am giving you(as the buyer) 100k to buy my house. It means that after you and I negotiate the terms of the financing(downpayment, monthly payments, interest rate, lenght of the "loan"...etc) you begin making payments directly to me.(Although I believe a third party can be invlolved, generally a title or escrow company, that will handle the payments you(the buyer) make. Please help me if I have gotten this wrong so I can get it changed)

Note (If i understand correctly, its actually refered to as a Promissary Note?)
http://homeguides.sfgate.com/real-estate-notes-definition-2712.html

This is a note that basically states what the terms of the sale of the asset(in this case Real Estate) is.
Eg: http://www.usattorneylegalservices.com/promissory-note.html I think this example promissary note will explain it better than I could.

I hope to get one or two definitions done per day. I know some people may think its a silly idea, but if i try to do too many at one time, I end up taking even longer to cement these concepts in my mind.