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Objective value – The value used in the income and market data approaches of appraisal that can be easily determined using data directly from the market.

Obligatory advances – The disbursements of money over the period of a construction loan which the lender is bound to make under the terms of the loan.

Obligee – The one to whom an obligation (promise) is owned.

Obligor – The one who legally binds (obligates) oneself, such as the maker of a promissory note owes.

Obsolescence – A loss in property value due to reduced desirability or usefulness because its design and construction have become old-fashioned or it has not kept up with current needs or a less costly alternative exists. See Functional obsolescence or Economic obsolescence.

Occupancy – A holding of physical possession.

Occupancy level – See Occupancy rate.

Occupancy permit – A permit issued by the appropriate local government indicating that a property is suitable for people to live in because it meets certain health and safety standards.

Occupancy rate – The percentage of the units currently rented in a building, city, neighborhood, or complex. See Vacancy rate.

Offer – A presentation of a set of terms that is subject to another party’s acceptance that is essential to arrive at a meeting of the minds and which is needed to have a valid contract.

Offer to purchase – A presentation of a set of terms made by a potential property buyer to an owner to purchase his or her property which becomes binding when accepted by the seller.

Offeree – The one who receives an offer.

Offeror – The one who makes an offer.

Office building – A structure that can be large or small that house one or more business concerns which is used to conduct business such as administration, accounting services, and consultation with customers, clients and associates.

Office of Interstate Land Sales Registration, OILSR – A division of the U.S. Department of Housing and Urban Development that regulates offerings of land for sale across state lines. See Interstate Land Sales Full Disclosure Act.

Office of Thrift Supervision, OTS – A bureau of the U.S. Department of the Treasury established in 1989 that is the primary regulator of all federally chartered and many state-chartered thrift institutions including savings banks and savings and loan associations and which is funded by assessments and fees levied on the institutions it regulates.

Office park – A planned development specifically designed for office buildings and their supportive facilities such as restaurants, some of which attract only specialized research or medical services, etc. tenants.

Offset statement – A statement provided by a property owner or a lien holder setting forth the current status of any liens against the property.

Oil and gas lease – An agreement that grants one party the right to explore and to extract oil, gas or other minerals from the ground of another party and which states the lease term and any extensions, surface and subsurface rights and the royalties to be paid.

OILSR – See Office of Interstate Land Sales Registration.

Oligopoly – The control of a market by only a limited number of participants.

One-hundred percent location – A retail business location in a city which commands the highest land value or rent and is considered the best available for attracting businesses.

Open house – A property that is being presented during set showing times that can be seen without the need of an appointment and is available for inspection by potential purchasers.

Open Housing Law – A law passed by Congress in 1968 and 1988 to prohibit discrimination in the sale of real estate due to a buyer’s race, color, religion, sex or handicap.

Open listing – A nonexclusive authorization given to a licensee and which may be given to a number of licensees by a property owner, who retains the right to sell directly, to try to secure a purchaser without any liability to compensate anyone but the one who is the first to produce a ready, willing and able buyer who meets the terms of the listing or the one who gets the seller to accept an offer. Upon the sale of the property, the owner is under no obligation to notify anyone of the fact of the sale.

Open space – The land within a development that is intentionally left undeveloped and which serves as an amenity to its surrounding occupants.

Open-end loan – A loan containing a clause which provides for a method to borrow additional money by having the lender advance additional funds up to loan’s original amount after the loan has been reduced without any need to rewrite the loan. See Closed-end loan.

Operating expense ratio – The percentage that results from having the operating expenses of a property divided by its gross income.

Operating expenses – The periodic expenses necessary to operate a business or property.

Operating profit – The profit arising from the regular operation of a business excluding income from other sources and expenses other than those of direct operation.

Operating statement – A financial report on the operation of a property or business. See Profit and Loss statement and or Income statement.

Opinion of title – An attorney’s written evaluation or opinion, after examining the abstract of title to a parcel of land, that it is an accurate statement of the facts of the condition of the title and that it is clear and marketable or indicating that there are defects that must be cured.

Opportunity cost – An economics term used when considering several investments which points to the loss of the value of the return on the second-best investment choice.

Option – A right, given for a consideration, to purchase or lease a property upon specified terms and within a specified time period and placing any obligation on the party receiving the option to purchase the property.

Option listing – A listing that give the listing broker the right or namely the option to purchase the listed property which is considered highly unethical or illegal in most states.

Option to purchase – A contract giving one party the right but not the obligation to buy the property of another party within a certain time, for a stated amount, and subject to specific conditions.

Optionee – The one who receives an option who might be the potential purchaser of real property.

Optionor – The one who gives the option who is usually the owner of the real property.

Or more clause – A clause in a promissory note that permits the borrower to payoff the loan at any time with no penalty.

Oral contract – A verbal agreement which has not been reduced to writing.

Ordinance – A regulation by a municipality governing the use of land within its jurisdiction.

Ordinary income – The income considered a gain for tax purposes that was derived from ordinary sources and not from actions that resulted in capital gains such as the sale of the property.

Ordinary loss – The income considered a loss for tax purposes that is deductible against ordinary income and which is considered more beneficial from a tax point of view than a capital loss which has limitations on deductibility.

Orientation – The placing of a structure on its lot by taking into consideration its exposure to the rays of the sun, prevailing winds, privacy from the street and protection from outside noises.

Original contractor – A contractor who contracts directly with a real estate owner.

Original cost – The initial cost or amount paid by the present owner who may or may not be the first owner to build on or acquire a property.

Original equity – The amount of cash initially invested by a real estate owner. See Sweat equity.

Origination Fee – A fee charged for the work involved in the evaluation, preparation and submission of a proposed mortgage loan.

Ostensible agency – An agency relationship created as a result of the authority which a third person reasonably believes a person (agent) possesses because of the acts or omissions of another person (principal).

Ostensible authority – That authority which a third person reasonably believes an agent possesses because of the acts or omissions of the principal.

Other People’s Money, OPM – The funds borrowed from other people that are invested in a money-making investment plan which are used to maximize profits or minimize risk of personal loss.

Outlawed – A claim that can no longer be pursued in court due to the expiration of the time limit permitted under the statute of limitations.

Outstanding balance – The amount currently owed on a debt.

Overage – The amount in retail stores leases that is to be paid over the base rent that is based on the stores’ gross sales. See Percentage lease.

Overall capitalization rate – A capitalization rate used in appraising income producing properties that is expressed as a percentage and that provides for a return on as well as a return of the capital invested.

Overall interest rate – A rate that includes interest on the land and the building and provides for a recapture of the capital invested.

Overall Rate of Return, OAR – A percentage arrived at by dividing the Net Operating Income of a property by its purchase price to indicate how well the investment is performing. See Capitalization rate.

Overbuilding – The building of more of a specific type of structure than can be absorbed by the market at the present time at prevailing prices.

Overhang – A part of the roof that extends beyond the walls and is used to shade buildings and cover walks.

Overimprovement – An improvement which is not the highest and best use for the site on which it is placed because of excessive size or cost.

Owner – The person who owns property and might be listing it and since he or she has not sold the property would not yet be considered to be a seller.

Owner financing – See Seller financing.

Owner occupant – A resident who also owns the property.

Owner of record – The owner who holds record title and whose name appears on the recorded deed.

Owner’s equity – The value of the property exceeding the claims of all mortgages filed against it or other claims such as real estate taxes which would reduce the owner’s equity.

Owner’s policy – A title insurance policy taken out to protect the interest of a real estate owner rather than the interest of the lender.

Owner’s policy – The standard title insurance policy covering only matters of record that insures an owner of real property against loss occasioned by defects in or liens against or unmarketability of the owner’s title.

Ownership – The right of one or more parties to possess, use, enjoy and to dispose of property and to exclude all others.

Ownership form – The ways real estate can be owned which affect income tax, estate tax, continuity, liability, survivorship, transferability, disposition at death and bankruptcy such as a corporation, joint tenancy, limited partnership, partnership, real estate investment trust, subchapter S corporation, tenancy by the entireties, tenancy in common or tenancy in severalty.

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