Real Estate General Terms

Real estate is a vast and complex industry with its own set of specialized terminology and jargon. Whether you’re a seasoned real estate professional or a first-time buyer or seller, understanding these real estate general terms can help you navigate the world of property transactions. Here are some fundamental real estate terms:

1. Agent: A real estate agent is a licensed professional who represents either the buyer or the seller in real estate transactions. They facilitate the buying or selling process, including property searches, negotiations, and paperwork. Agents earn a commission based on the sale price of the property they help transact.
2. Amortization: Amortization is the gradual repayment of a loan over time through periodic payments. For instance, in a mortgage, each monthly payment consists of both principal (the loan amount) and interest (the cost of borrowing). Over time, a larger portion of each payment goes towards reducing the principal.
3. Appraisal: An appraisal is a valuation of a property performed by a licensed appraiser. It determines the property’s fair market value based on factors like location, condition, and comparable sales. Lenders use appraisals to assess a property’s worth before approving a mortgage.
4. Assessment: Assessment is the process of determining the value of a property for property tax purposes. Local government assessors use this value to calculate property taxes owed by the property owner.
5. Assessor: An assessor is a government official responsible for determining the assessed value of properties within a specific jurisdiction. They play a crucial role in the property tax assessment process.
6. Buyer: A buyer is an individual or entity interested in purchasing real estate or property. Buyers seek out properties that meet their needs and budget, and they negotiate with sellers to complete the purchase.
7. Seller: A seller is an individual or entity looking to sell real estate or property. They list their property for sale and work with buyers or their agents to negotiate a sale price and terms.
8. Broker: A real estate broker is a licensed professional who has completed additional education and licensing requirements compared to an agent. Brokers can work independently or lead a team of agents. They often oversee transactions, manage agents, and may have more experience.
9. Closing: Closing is the final step of a real estate transaction where ownership of the property officially transfers from the seller to the buyer. During closing, legal documents are signed, and the buyer pays the remaining purchase price, while the seller receives the proceeds.
10. Commission: A commission is a fee paid to real estate agents or brokers for their services in facilitating a real estate transaction. It is typically a percentage of the property’s sale price and is typically split between the buyer’s agent and the seller’s agent
11. Condominium: A condominium, or condo, is a type of housing where individuals own their individual units and share ownership of common areas and amenities with other unit owners. Condos are often managed by a homeowners association (HOA).
12. Contract: A contract is a legally binding agreement that outlines the terms and conditions of a real estate transaction. It includes details like the sale price, closing date, and contingencies that must be met for the transaction to proceed.
13. Deed: A deed is a legal document that transfers ownership of a property from the seller (grantor) to the buyer (grantee). It includes a legal description of the property and is recorded in public records.
14. Down Payment: The down payment is an initial, upfront payment made by the buyer when purchasing a property. It is a percentage of the property’s purchase price and is typically paid from the buyer’s funds.
15. Equity: Equity is the difference between the current market value of a property and the outstanding mortgage balance. It represents the owner’s financial stake in the property.
16. Escrow: Escrow is a financial arrangement where a neutral third party (an escrow agent) holds funds and important documents on behalf of the buyer and seller during a real estate transaction. The funds are released when all conditions are met.
17. Fair Market Value: Fair market value is the estimated price at which a property would sell in a competitive and open market. It is determined by appraisers or market analysis and serves as a basis for pricing a property.
18. Financing: Financing refers to obtaining a loan or mortgage to purchase a property. Buyers work with lenders to secure the necessary funds for their property purchase.
19. Foreclosure: Foreclosure is a legal process in which a lender repossesses and sells a property when the borrower fails to make mortgage payments. This typically happens after a period of delinquency.
20. Home Inspection: A home inspection is a professional evaluation of a property’s condition, systems, and components. It helps buyers identify any issues or needed repairs before finalizing the purchase.
21. Interest Rate: The interest rate is the cost of borrowing money for a mortgage or loan, expressed as a percentage. It significantly impacts the total cost of borrowing over the life of the loan.
22. Listing: A listing is a property that is advertised for sale by a real estate agent or broker. Listings include details about the property’s features, price, and location.
23. Mortgage: A mortgage is a loan used to finance the purchase of a property. The property itself serves as collateral for the loan, and borrowers make regular payments to repay the loan plus interest.
24. Multiple Listing Service (MLS): The Multiple Listing Service is a database used by real estate professionals to share property listings and cooperate in buying and selling real estate. It provides a central repository of property information.
25. Offer: An offer is a proposal made by a buyer to purchase a property. It includes the price they are willing to pay, any contingencies, and other terms and conditions.
26. Property: Property refers to land and any structures or improvements on it, including homes, buildings, and other physical assets.
27. Realtor: A Realtor is a real estate agent or broker who is a member of the National Association of Realtors (NAR) and adheres to a code of ethics. The term is a registered trademark of NAR.
28. Title: Title refers to the legal ownership of a property. When someone holds the title, they have legal rights to possess, use, and transfer the property.
29. Title Insurance: Title insurance is a policy that protects the buyer and lender against any defects or disputes related to the property’s title. It ensures that the title is clear and marketable.
30. Zoning: Zoning refers to regulations and restrictions set by local governments that control how land and property can be used within specific areas. Zoning laws dictate land use, building size, and other factors.
31. Adjustable-Rate Mortgage (ARM): An Adjustable-Rate Mortgage is a type of mortgage loan with an interest rate that can change periodically, typically after an initial fixed-rate period. The interest rate adjustments are usually tied to a specific financial index.
32. Assumption: Assumption is when a buyer takes over the existing mortgage on a property, assuming responsibility for its terms and payments. This can be advantageous if the existing mortgage has favorable terms.
33. Balloon Payment: A balloon payment is a large, one-time payment due at the end of a loan term, often associated with certain types of mortgages. Borrowers usually must refinance or pay off the balloon payment when it becomes due.
34. Bridge Loan: A bridge loan is a short-term loan used to bridge a financing gap. It’s often used when a buyer needs to purchase a new property before selling an existing one. Bridge loans provide temporary funds until the existing property sells.
35. Certificate of Occupancy (CO): A Certificate of Occupancy is a document issued by local authorities to certify that a building or dwelling complies with building codes and is safe for occupancy. It’s typically required before someone can move into a new construction or renovated property.
36. Comparative Market Analysis (CMA): A Comparative Market Analysis is a report prepared by a real estate agent to estimate a property’s market value. It is based on a comparison of the property to recently sold properties with similar characteristics in the same area.
37. Contingency: A contingency is a condition or requirement included in a purchase contract that must be satisfied for the sale to proceed. Common contingencies include home inspections, financing, and appraisal contingencies.
38. Counteroffer: A counteroffer is a response to an initial offer in a real estate transaction. It proposes different terms, often in regard to price or other contract conditions.
39. Curb Appeal: Curb appeal refers to a property’s attractiveness when viewed from the street. A well-maintained and aesthetically pleasing exterior can enhance a property’s value and desirability.
40. Deed Restriction: A deed restriction is a legal covenant that places limitations on how a property can be used. Deed restrictions are often imposed by developers or homeowners associations to preserve property values or maintain a specific community character.
41. Dual Agency: Dual agency occurs when a single real estate agent or brokerage represents both the buyer and the seller in a transaction. This situation can create potential conflicts of interest and should be disclosed to both parties.
42. Encumbrance: An encumbrance is a claim, lien, restriction, or legal burden on a property’s title that may affect its ownership or use. Common examples include mortgages, easements, and property tax liens.
43. Escrow Account: An escrow account is a separate account where funds are held by a third party, typically for purposes such as property taxes and homeowners insurance. The funds are collected along with the mortgage payment and used to pay these expenses when they are due.
44. Exclusive Listing: An exclusive listing is an agreement between a property seller and a real estate agent or brokerage that grants exclusive rights to the agent or brokerage to market and sell the property for a specified period. In this arrangement, the seller cannot work with other agents during the exclusive listing period.
45. For Sale By Owner (FSBO): For Sale By Owner refers to a property that is being sold directly by the owner without the involvement of a real estate agent or broker. FSBO sellers handle all aspects of the sale, including marketing, negotiations, and paperwork.
46. Homeowners Association (HOA): A Homeowners Association is an organization typically formed by residents of a housing development or condominium complex. The HOA manages and enforces rules and regulations for the community, collects dues, and maintains common areas and amenities.
47. Market Value: Market value is the estimated price at which a property would sell in the current real estate market. It is influenced by factors such as location, property condition, supply and demand, and recent comparable sales.
48. Mortgage Broker: A mortgage broker is a financial intermediary who connects borrowers with lenders to obtain mortgage loans. Mortgage brokers work with various lenders and can help borrowers find the most suitable loan products.
49. Open House: An open house is an event where a property is made available for potential buyers to view without the need for an appointment. Open houses are usually hosted by real estate agents to attract potential buyers.
50. Pre-Approval: Pre-approval is a preliminary assessment by a lender to determine how much a borrower can afford and how much they can borrow. It involves a review of the borrower’s credit, income, and financial documents.
51. Real Estate Agent: A real estate agent is a licensed professional who assists buyers and sellers in real estate transactions. They provide guidance, market expertise, and negotiation skills to help clients achieve their real estate goals.
52. Real Property: Real property encompasses land and everything permanently attached to it, such as buildings, structures, and natural resources. It is distinguished from personal property, which is movable and not permanently affixed to land.
53. Refinance: Refinancing is the process of replacing an existing mortgage with a new one, often to obtain a lower interest rate, reduce monthly payments, or change the loan term. Borrowers refinance to improve their financial situation.
54. Rent-to-Own: Rent-to-Own is a housing arrangement where a tenant rents a property with the option to purchase it at a later date. Part of the rent payments may be applied toward the future purchase price.
55. Survey: A survey is a detailed measurement and mapping of a property’s boundaries, including the location of buildings, fences, and other improvements. It helps define the property’s legal boundaries and may reveal encroachments or easements.
56. Tax Assessment: Tax assessment is the process by which local government authorities determine the value of a property for tax purposes. The assessed value is used to calculate property taxes owed by the property owner.
57. Title Search: A title search is a comprehensive examination of public records to verify the legal ownership of a property and to identify any liens, encumbrances, or title defects that may affect the property’s title.
58. Walkthrough: A walkthrough is a final inspection of a property by the buyer before closing. It allows the buyer to verify that the property is in the agreed-upon condition and that any repairs or agreed-upon changes have been made.
59. 1031 Exchange: A 1031 Exchange, also known as a like-kind exchange, is a tax-deferred exchange of investment properties that allows real estate investors to defer capital gains taxes by reinvesting the proceeds into a similar property.
60. Buyer’s Market: A buyer’s market occurs when there are more properties for sale than there are buyers. In such a market, buyers have more negotiating power, and property prices may be more favorable to them.
61. Closing Costs: Closing costs are the various fees and expenses associated with the closing of a real estate transaction. They include fees for services such as appraisals, title insurance, and legal services, and are typically paid by the buyer and/or seller.
62. Contingent Offer: A contingent offer is a purchase offer that includes specific conditions or contingencies that must be met for the sale to proceed. Common contingencies include financing, home inspection, and appraisal contingencies.
63. Dual Agency: Dual agency occurs when a single real estate agent or brokerage represents both the buyer and the seller in a transaction. While legal in some states, it can create conflicts of interest and must be disclosed to both parties.
64. Equity: Equity is the portion of a property’s value that belongs to the owner, calculated as the property’s current market value minus any outstanding mortgage balance. It represents the owner’s financial stake in the property.
65. Fixed-Rate Mortgage: A fixed-rate mortgage is a type of mortgage loan with an interest rate that remains constant throughout the loan term. Borrowers have consistent monthly payments over the life of the loan.
66. Home Equity Line of Credit (HELOC): A Home Equity Line of Credit is a revolving line of credit secured by a homeowner’s equity in their property. It allows borrowers to access funds as needed, similar to a credit card and can be used for various purposes.
67. Home Inspection: A home inspection is a professional evaluation of a property’s condition, systems, and components. It helps buyers identify any issues or needed repairs before finalizing the purchase, providing peace of mind.
68. Listing Agreement: A listing agreement is a contract between a property seller and a real estate agent or brokerage. It outlines the terms and conditions under which the agent will market and sell the property.
69. Mortgage Broker: A mortgage broker is a financial intermediary who connects borrowers with lenders and helps them secure mortgage financing. Mortgage brokers work with multiple lenders to find the best loan options for their clients.
70. Purchase Agreement: A purchase agreement is a legally binding contract that outlines the terms and conditions of a property sale. It includes details such as the sale price, closing date, and any contingencies.
71. Rent Control: Rent control refers to laws and regulations that limit how much a landlord can increase rent on residential properties. These laws aim to protect tenants from excessive rent hikes.
72. Short Sale: A short sale is a real estate transaction in which a property is sold for less than the amount owed on the mortgage, with the lender’s approval. Short sales are often used as an alternative to foreclosure.
73. Title Company: A title company is a company that specializes in conducting title searches, issuing title insurance, and facilitating the closing process in real estate transactions. They play a crucial role in ensuring clear and marketable titles.
74. Underwriting: Underwriting is the process used by lenders to evaluate a borrower’s creditworthiness and the risk associated with a mortgage loan application. It involves a thorough review of the borrower’s financial documents and credit history.
75. Assessed Value: The assessed value is the value assigned to a property by a tax assessor for the purpose of calculating property taxes. It may not necessarily reflect the property’s current market value.
76. Brokerage: A brokerage is a real estate firm or company that employs real estate agents and brokers. Brokers and agents associated with the brokerage help clients buy, sell, or rent properties and handle various aspects of real estate transactions.