Let’s face it – real estate terms are not easy to understand, and are foreign to most. We understand this and have compiled a comprehensive real estate glossary to make sure you’re never left wondering what a foreign term means.
Why Use a Real Estate Glossary?
We created our website to be the Authority on All Things Real Estate, and what type of resource would we be without a glossary? Although we can’t cover everything, we update our real estate terms regularly to ensure you’ll always find the definition you are looking for.
Not only do we list the definition, but use the term in an example. After all, things do make more sense when they are used in the right context. This is just another reason why we should be the first stop for all of your real estate questions.
1099 – A government form that reports total income an contractor receives from a specific person or entity.
1031 Exchange – A type of transaction in which proceeds from a property may be reinvested into another “like kind” property to defer taxes.
24 Hour Notice – Notice a landlord must give a tenant before entering their residence.
A/I – A clause that is written into a purchase contract that allows a buyer to back out if an issue arises with a property appraisal or inspection.
Accompanied Showings – Showings that are conducted along with a third party.
Addendum – A modification to an existing contract changing one or more terms. Lease renewals are commonly used addenda.
Adjustable Rate Mortgage (ARM) – A type of property loan in which the interest rate changes after a pre-determined amount of time.
Agent – A third party hired to represent a client.
Amended Value – Used during company relocations, if an employee finds a buyer to purchase their home for an amount exceeding the company’s pre-determined offer price, the company will amend their offer to reflect this new price.
Annual Percentage Rate – The actual yearly cost of borrowed funds.
Application Fees – Fees that are charged to someone in order to facilitate a screening for a loan or rental.
Appointments – A set date and time on which a pre-scheduled event will occur.
Appraisal – The process in which the value of a property is determined based on current and recent market conditions.
Appraised Price – The valuation of a property at a given point in time that results from the appraisal process.
As-Is – A property being sold without warranties or any promise to fix outstanding items.
Assumable Mortgage – A type of conventional home financing that allows the mortgagor (the person who took out the loan) to transfer the loan to the buyer of their home.
Back on Market – A property that is re-listed after a sale has fallen through.
Back Up Offer – A secondary offer that is submitted and is only accepted if the first accepted offer falls through.
Balloon Mortgage – A property loan that requires the borrower to repay the principal in a lump sum at the end of the loan term.
Bill Of Sale – The legal document through which ownership of personal property is passed.
BMA (Broker’s Market Analysis) – A Comparable Market Analysis prepared by a broker, and includes their opinion on the market conditions along with their interpretation of the data.
Board of REALTORS – An association of local realtors.
Broker – Someone licensed to act as an agent for a third party.
Broker of Record – The licensee acting as managing broker of an office.
Broker’s Price Opinion – Broker’s opinion of the expected sale price, calculated before the sale.
Broker’s Tour – Pre-determined time slots when an agent or broker can tour a listing.
Buyer – Someone buying a property.
Buyer Agency Agreement – A legal document held by a broker defining the party with a fiduciary responsibility to the client.
Buyer’s Agent – The agent who represents the buyer in a real estate transaction.
Carrying Costs – Costs to maintain a property including (but not limited to) insurance, taxes, utilities, etc.
Closing – Final step in a transaction when ownership is transferred by deed and final payment is made.
Closing Cost – Any cost associated with closing a transaction including appraisal fees, credit reports, escrow fees, etc.
CMA – Otherwise known as a Comparative Market Analysis, this establishes the market value of a property by comparing it with similar properties.
Co-Op – A corporation in which residents of a building own shares and common area maintenance costs are determined according to percentage ownership.
Commission – Fee paid to an agent as compensation for representing a third party in a transaction.
Commission Split – The percentage of a commission that is paid to an agent and broker according to a predetermined agreement.
Comprehensive Loss Underwriting Exchange – A consumer-reporting database used by insurance companies to track the last 7 years of claims filed.
Condo Association – An association formed by condo owners to market and sell units and manage the operations of the building.
Condo Budget – A budget prepared by a condo association.
Condo By-Laws – Rules made by a condo association to set expectations for unit owners.
Condo Declarations – Legal document outlining ownership and rules of a property.
Conventional Loan – A loan provided by a private lender not associated with the government.
Continue To Show – A property is still shown even though there is a pending offer on it. This is often done to facilitate back up offers.
Contract For Deed – A promissory note in which the buyer pays the seller back, bypassing traditional bank financing.
Conventional Loan – A loan issued by a traditional financial institution like a bank or credit union.
Cooperating Commission – A commission paid to a broker who finds a buyer, but does not have the property listing.
Corporate Client – A business or company that hires a real estate company to find homes for their employees after they’ve been relocated.
Counter Offer – A new offer made by one party during negotiations after rejecting the other party’s initial offer.
Credit Report – A report composed by Transunion, Equifax, or Experian that recaps a borrower’s financial track record in an effort to determine how creditworthy they are.
Credit Score – The score generated in the Credit Report that lenders use to determine if a buyer will qualify for a loan.
Curb Appeal – Aesthetic improvements done to the exterior of a home to make it more attractive when viewed from the street.
Days On Market – The total number of a days a home has been on the market since it’s been initially listed. The higher the amount of days on market, the less interest there is in the property.
Decree – A declaration made by the courts that a property will be sold to cover a debt.
Deed Contract – A financial instrument that buyers who don’t qualify for traditional loans can use to buy a home. The seller holds title to the property until the loan is paid in full, at which time the deed is signed over to the buyer.
Desk Fees – Fees a brokerage charges agents to cover office overhead.
Destination Services – Services provided to an employee being relocated one they arrive at their destination.
DHSC – Also known as direct home selling costs, these include carrying costs, losses on the sale, utilities, insurance, and other costs that must be paid until the sale closes.
Disclosures – Documents that disclose specific information such as whether or not the property has lead paint, property history, etc.
Down Payment – The percentage of the sale price that is not financed.
Dual Agent – An agent that represents both the buyer and the seller in a transaction.
Ernest Deposit – Something of value that is presented the seller “in good faith” to convey their intent to proceed in a real estate trasaction.
Escrow Account – An account in which pro-rated insurance and tax funds are placed and held until they are due.
Exclusions – Anything in a contract that is not included in the transaction.
Expired Listing – A listing on property that has expired per the terms of the contract.
Fair Market Value – The price at which a buyer and seller can reasonably expect to agree on a sale.
Fee Simple – A type of property ownership in which an owner has unrestricted right to sell the property at their own will.
FHA Loan Guarantee – The guarantee that a percentage of a loan will be backed by the company writing the loan.
Fixture – Something that is permanently attached to a property and is included in a sale.
Flat Fee – A type of commission in which a predetermined fee is paid, regardless of the sale price
For Sale By Owner – The process of a homeowner listing, marketing, and closing on their house without agent representation.
Good Faith Estimates – Documents that list estimated transaction costs due at closing for both sides of a real estate transaction.
Gross Closed Commission – The total amount of commission that an agent has earned for a brokerage throughout the year.
Gross Sale Price – The total dollar amount that a home sells for before commissions and other deductions are applied
Hard Money Loan – A short term bridge loan determined by the price of real estate, not the creditworthiness of the borrower. Typically used in house flips.
Hazard Insurance – Type of insurance that only covers the structure of your home from “hazards” like fire, hail damage, theft, vandalism, etc.
Home Relocation Company – Company that assists employees find new homes as part of their employer’s relocation package
Homeowners Insurance – Type of insurance policy that covers a policy holder (homeowner) from losses to the home itself and the owner’s assets inside
Housing Urban Development – Otherwise known as HUD, this governmental agency is responsible for matters related to housing needs, community improvement, and fair housing opportunities.
Hybrid Adjustable Rate – A loan amortized over 30 years, fixed for 5, and adjusts annually for the remaining 25 years.
Inclusions – Fixtures or personal property (chattel) that are included in an offer to buy or a purchase contract
Independent Contractor – Known as a “1099 Employee,” these are workers who are employed on a contracts basis and do not receive a salary or benefits.
Inspection Rider – Clause in a purchase contract that stipulates the property is being purchased “as is” and the sale is not affected by the inspection results, whatever the outcome.
Installment Land Contract – Contract in which the buyer takes possession of the property while the seller retains title until the terms of the contract are completed in full. Often used in rent to own sales.
Interest Rate Float – When a borrower decides to delay the option to lock in their rate with the expectation of the rate falling.
Interest Rate Lock – The process of a lender and borrower agreeing in advance to “lock in” a rate at a certain time.
Internet Data Exchange (IDX) – A third party service that syndicates information from the MLS to publicly available sources like an agent’s own website.
Inventory – The amount of available homes in a specific marketplace
Listing Agent – The agent representing the seller of a home who creates the property listing.
Listing Agreement – Written agreement that specifies the terms of the seller’s representation, including length, exclusions, and performance expectations of each party.
Listing Broker – The broker of the agent who procures a property listing.
Listing Exclusion – Clause that omits specific terms from a listing contract.
Loan – Borrowed funds (secured or unsecured) given in exchange for consideration, which is often annual interest.
Loan Application – The process in which a borrower provides a lender documents and a credit screening to determine whether or not they qualify for a loan.
Loan Commitment – A group of financial institution employees who collectively determine whether or not a borrower will receive a loan. Often done on complex transaction where underwriting is less objective (i.e. business purchase loans).
Loan Package – A group of mortgage documents that a lender sends to the title or closing company.
Loan Processor – An individual who compiles all necessary documents for a specific loan.
Loan Underwriter – The person who reviews documents to determine if a borrower qualifies for a loan. Usually these documents are compared to pre-determined internal guidelines and rules.
Lockbox – A secure box in which a copy of a property key is kept, and is used to grant access to agents and prospects.
Managing Broker – The person who is listed with the state as the managing broker of a real estate company, and also oversees the actions of all agents and employees.
MLS – The Multiple Listing System is a database in which property listings are housed. Agents can find past and present listing information in order to find houses for sale along with information to help them accurately determine market values of listings.
Mortgage Banker – A lender who uses the firm’s own funds to issue mortgages to borrowers.
Mortgage Broker – A firm that brings lenders and borrowers together for a fee.
Mortgage Loan Servicing – A company that receives monthly mortgage payments on behalf of a lender.
National Association of Realtors – A nationwide association of real estate professionals, usually broken down by local chapter
Net Sales Price – The total sales price minus commissions and expenses
Off Market – A listing that has been removed from the market, either permanently or temporarily
Offer To Purchase – An offer presented to a seller that outlines specific terms a buyer is willing to meet
Open House – The process of opening a listing’s doors to the public on a specific date and time to allow the public to walk through the property
Owner Financing – An alternative to conventional financing where an owner will extend a loan to a buyer in order to facilitate the sale of a property
Parcel Identification Number – The unique number a taxing authority uses to track a property
Payoff Letter – A document from a lender stating that a borrower has paid off their loan in full
Pending Contract – An offer that has been accepted but on which the sale has not yet closed
PITI – Typically used when describing mortgage payments, this includes monthly principal, interest, taxes, and insurance
Preapproval – The process a buyer undergoes when they are pre-screened by a lender to determine how much of a loan a buyer qualifies for. Official approval is conditional on the buyer meeting the claims of their preapproval application
Prepaid Interest – Funds the borrower owes at closing based on the number of days left in the month
Prepayment Penalty – A fee charged by the lender to the borrower if they pay off a loan prior to its due date
Prequalification – When a mortgage company tells a borrower in advance how much they can borrow. Essentially the same thing as preapproval
Preview Appointment – An agent walking thorough a property without their customer to determine if it fits the client’s wants and needs
Principal – The balance left on a loan
Private Mortgage Insurance – Extra insurance required by lenders when a borrower puts less than 20% down on a property
Professional Real Estate Designation – Any additional non-licensed certifications or educational programs that an agent undergoes
Promissory Note – A legal contract in which one party enters into a contract to buy an asset with installment payments
PUD (Planned unit development) – A mixed use development that includes residential, commercial, and public spaces
R&I – Estimated and actual repair and improvement costs
Real Estate Agent – A licensed individual who represents an individual as a third party in a property purchase or sale transaction
REALTOR – A trademark of the National Association of Realtors that can only be used by its members
Release Deed – A document stating that a borrower has completed their debt obligation, and is usually recorded in county records
Relist – A property that was taken off the market and is now being marketed by another broker
RESPA (Real Estate Settlement Procedures Act) – The consumer protection act that is designed to require residential real estate lenders to make specific disclosures about the loan process in an effort to fully inform consumers what they are obligating themselves to
Rider – An attachment to a document that modifies or changes it
Salaried Agent – Though uncommon, this is a type of compensation agreement in which an agent is not paid commission, and is instead paid a salary
Sales Price – The total price at which a property sells
Secondary Market – An investment market in which third parties buy real estate securities (like mortgages) from banks and lending institutions
Seller – The party exchanging their house for compensation
Seller Carry Back – A form of owner financing where the seller retains his mortgage, and the buyer pays the seller directly. This can be dangerous, because the buyer holds possession of the home, but the seller is still obligated to pay the mortgage.
Showing – A walk through of a property during which an agent highlights the pros and cons
Sign Rider – A smaller sign that is added to a standard real estate sign. These usually include phrases like “coming soon” or “sold”
Skip Tracing – The process of locating someone who has “skipped town” or defaulted on a debt obligation
Special Assessment – An amount charged by a HOA that exceeds the standard fee. Typically used to fund capital expenses like roof replacement or plumbing repairs
Temporarily Off Market – When a listed property is taken off the market
Temporary Housing – The place where someone being transferred lives until they find a permanent home
Transaction Fee – The amount of charged to a seller
Transaction Management Fee – A fee charged by a listing broker
Under Contract – The status of a home after an offer has been made an accepted
VA – The Department of Veterans Affairs. As it pertains to real estate, this department backs loans made to veterans
VA Guarantee- The guarantee made by the VA that compensates a lender if the borrow defaults, and ultimately allows veterans to receive better loan terms
Vacate Date – The date on which an occupant will leave a property
Virtual Tour – A digital walk through of a property, facilitated with services like Matterport
W2 – A form an employee must fill out that allows the employer to report compensation and deductions to the IRS
W9 – An IRS form requesting a taxpayer ID number