Glossary - F

Generally speaking, the term facilitator refers to a person who assists a group of people to realize their mutual aims and helps them to accomplish them without him or her taking any specific position in the discussion. In fact, a facilitator usually help the group in arriving at a consensus on any difference that may be existing from before or arise during the course of the meeting to ensure that it has a strong foundation for any action in the future. The role of a facilitator is often compared to that of a midwife who aids in the process of birth, but is not the producer of the outcome.
In the context of real estate, a facilitator denotes a person who acts along with the buyers and sellers in an endeavor to assist both finalize a real estate deal. It may be noted here that the facilitator in not akin to a traditional broker, as he or she does not act on behalf of or act for the seller or the buyer.
Falls advertising
In matters pertaining to real estate, the term falls advertising refers to constitutional guidelines and general laws that deal with an assortment of concerns of the consumers regarding promotional or advertising procedures. In addition to the government legislations, several professional organizations too have formed their respective codes of conduct with a view to establish higher benchmarks in this matter. For instance, the Canadian Real Estate Association (CREA) Code of Ethics and Standards of Business Practice attend to the issue of fake and ambiguous advertisements. These set of guidelines are accepted and espoused by all members the organized real estate business and is considered to be a basic prerequisite for obtaining the CREA membership, provincial real estate organization and all local real estate boards.
Fee simple
In the context of real estate, the term fee simple, also called fee simple absolute, denotes the highest possible estate or right of ownership of real property, continuing forever. In other words, the term denotes a private ownership of real estate where the owner possesses the right to manage, use, give away, lease, sell and transfer the property at his or her will. In fact, fee simple ownership signifies absolute ownership of real property, but it is restrained by the four fundamental government powers of taxation, eminent domain, police power, and escheat and may also be limited by certain impediments or any condition in the title deed. In this case, the manner in which the ownership of a real estate is restricted by the laws enforced by the government bodies often involves the shift from allodial title to fee simple, for instance when uniting with other property owners acceding to property limitations or municipal guidelines.
Fee tail
The expression fee tail refers to any real estate that can be inherited by lineal descendants (familial progeny) of the original grantee and not by any close relative or some other entity. In other words, the term denotes that the legal interest in a piece of land is only passed on the original owner's direct inheritors and that cannot be passed on to anyone else. In the event the inheritance states that only the males in the family would be entitled to inherit the real property, the fee tail will be mentioned as a fee tail male. On the other hand, if the property is only passed on to female descendants, it would be denoted as a fee tail female. However, it may be noted here that such stipulations practically do not exist any more.
Financial statements
In real estate business, a financial statement denotes fiscal data that perceptibly portrays the economic performance of a brokerage as well as the realty market condition. In fact, updated financial statements are vital for making any decision regarding the purchase or sale of a property. The brokerages are not capable to precisely supervise their sales performance, the profits of their branch offices, their actual production costs and so on without a suitable tracking system. A fundamental idea of bookkeeping is necessary so that appropriate projection and tracking arrangements may be built up and executed.
Finder's fee
Finder's fee denoted a charge paid to an individual who operates as an agent and provides information for a client in a real estate transaction. In fact, there may be various types of finder's fees, also known as referral fees, in real estate transactions and also in helping to arrange funds for finalizing a property deal. The Canadian Real Estate Association (CREA) has set up Code of Ethics establishing principles related to disclosure of such fees or money earned from anyone apart from the client. Actually, the CREA makes such disclosures mandatory.
First right of refusal
This term refers to a contractual right that gives the buyer the option to enter into a business deal with a home owner before the latter is entitled to enter into a transaction with a third party. In brief, a first right to refusal (ROFR or RFR) is an agreement between a home owner and a potential purchaser and similar in concept to a call option. In the case of leasing commercial property, this term is used often to indicate an allowance granted to a tenant or lessee the first privilege to acquire the property when it is being sold. However, this right is given to the tenant only for a precise time frame. Normally, a clause is included in the agreement regarding a tenant who desires to place the first right of refusal on an adjoining tenement with the owner of the land looking for fiscal concern.
Fixed assets
Fixed assets, also known as capital assets, refer to property that enhances the worth of a business and are used for operating the venture. They generally include land, constructions, machinery, equipment, vehicles, leasehold developments, telephone systems, computer hardware and more such items. Generally, fixed assets are not meant for resale, but the owners utilize them in operating their business. However, this does not take away the business owners' right to sell them at a later period, as it was not the main objective when they were originally acquired by the owners. It must be noted here that in accountancy, fixed assets are not regarded as 'Immovable' property, but anything that would remain in use for more than a year is considered a fixed asset. When fixed assets are shown on a balance sheet, they are depicted at their book value - the purchase price minus the depreciation.
Fixed expenses
Fixed expenses are more or less akin to fixed costs with the only exception being that non-cash items like depreciation and depletion are not incorporated. Fixed expenses or fixed costs do not vary with the building's tenancy rate. For instance, the ad valorem taxes, fire insurance premiums and some forms of building maintenance are paid irrespective of the fact whether the property is occupied or vacant. Fixed expenses are not essentially fixed in terms of amount, but are inclined to be somewhat variable and alter from one year to another. In effect, such fixed costs are distinct from the variable expenses that change frequently depending on the level of business. Usually, variable expenses comprise advertising, neon signs, long distance travels, Multi Level Services (MLS) listing charges and others. Generally, this type of expenses goes up when the business is buzzing with activity and subsides when there is less business.
Fixed principal payment loan
Fixed principal payment loan, often referred to as a straight line reduction loan, denote making regular payments towards the principal loan amount as well as the interest due. In such cases, the mortgagor or borrower is told to pay the interest along with the principal payments. The interest is paid only on the balance principal amount of the loan at specific intervals and not the total loan as it was in the beginning. Hence, though the amount paid towards the principal amount remains the same, the interest payments lessen with each successive payment. The biggest advantage of this type of mortgage plan is that calculating the interest every payment is simple and hence, most private investors prefer this well accepted arrangement.
In real estate, fixtures denote a part of the property that is fixed enduringly with the home in such a manner that any attempt to more or remove them would dent the property. Fixtures are believed to be a part of the real estate asset provided they share the same utility as the remaining sections of the property. When the property is sold, they ownership rights are transferred to the buyer along with the property unless there are specific clauses in the agreement excluding them from the deal.
Fixed-rate mortgage
This refers to a mortgage loan in which the rate of interest does not alter during the entire mortgage term, usually anything between 15 and 30 years. In this case the monthly mortgage payment will remain constant all through the duration of the loan. It may be noted that a fixed-rate mortgage is also known as a conventional mortgage.
Fixed-term reverse mortgage
This term refers to an understanding whereby a home owner borrows against his or her equity in the property and receives tax-free payments from the lender every month for a preset period of years. While many home owners prefer this type of mortgage as it enables them to meet various expenses, such as new construction, home renovation or pay off their other debts, a fixed-term reverse mortgage may prove to be dangerous and lead to added debts if they are not cautious.
Flat depreciation method
This is among the various techniques utilized by real estate appraisers to gauge the depreciation or decrease in value of a property. This method engages a flat rate, characteristically a proportion, pertaining to a section or the entire structure to find out the depreciated value of a property following the cost method. The flat depreciation rates, especially a rate applicable to the total structure, for example one per cent on residential buildings, is considered to ideal when seen as an error and trial method and proper prudence is recommended. The costing service guidebooks most commonly made use of by the real estate appraisers basically depend on module depreciation for commercial as well as residential buildings. This, in fact, is a reverse of the overall fees.
Flat payment
This is a payment arrangement whereby a borrower does not need to repay any part of the principal loan amount till the loan matures. In the instance of a mortgage loan, the borrower or mortgagor is not required to pay the principal amount until the maturity of the mortgage, but keep paying the interest at specified intervals.
Foreclosure denotes the legal process whereby a lender cancels or forecloses a borrower's right to buy back a mortgaged property through a court order known as the foreclosure order. The procedure includes the court setting up a date till which the borrower is able to redeem the mortgaged property by clearing the total outstanding loan amount, including the costs of foreclosure. Failure on the part of the borrower to redeem the property enables the lender or mortgagee to sell the property and first claim the dues owed by the mortgagor to him or her. If there is any surplus money from the sale, it is handed over to the borrower. In the event of the property remaining unsold, the borrower remains responsible for the due amount. The borrower is also liable for the dues if the property is sold, but the sales proceeds do not cover the entire loan amount due to the lender. On the other hand, the lender is also liable to sell the mortgaged property around the fair market value (FMV).
The term franchise denotes a form of business establishment in which a company that has by now a successful or popular product or service, known as the franchisor, enters into a long-lasting contract relationship with other firms, known as franchisees, functioning under the franchisor's brand name or patented process, logo as well as expertise and generally with the franchisor's supervision in return for a fee or other payment.
For a small business, franchise is very important as it provides an existing brand name, establishment, operational back-up systems as well as technological know-how in marketing the product or service. Here, it may be mentioned that the degree of support available from the franchisor differs in the market and it usually depends on the precise product or service that is being proffered. Franchises that develop fastest are those which present a complete business set-up, comprising training as well as continuing management back-up. When a buyer takes part in the franchised structure, he or she is able to acquire information regarding the internal functioning of the industry, professional help in site location as well as a completely developed working and marketing modus operandi. Many factors are responsible for the success of a franchising business and they include co-operative or joint advertising, combined buying power, quick penetration in the market as well as extensive presence or visibility of the product or service.
Frequency of interest calculations
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