Real Estate A-Z

Are you confused and overwhelmed by the technical jargon of real estate terms and words? Every person planning to buy or sell real estate can benefit by referencing our list of common (and maybe not-so-common) terms. The list we have culminated below comes from terms that are used daily in this industry as well as many terms we have been asked to define from clients past!

If you have a word or phrase you are unfamiliar with, feel free to CONTACT US and we will get you a definition!

A-C

A
Active
An active status is the most common for homes listed for sale in the Multiple Listing Service (MLS).
Affidavit
A written statement or declaration, sworn to or affirmed before some officer who has authority to administer an oath or affirmation.
Agency
A legal relationship resulting from an agreement or contract, either expressed or implied, written or oral, whereby one person, the agent, is employed by another, called the principal, to do certain acts in dealing with a third party.
Appraisal
A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby.
Appraiser
An individual qualified by education, training, and experience to estimate the value of real property and personal property. Although some appraisers work directly for mortgage lenders, most are independent.
Appraised Value
An opinion of a property’s fair market value, based on an appraiser’s knowledge, experience, and analysis of the property.
Assessed Valuation
An estimate of value by a unit of government for the purpose of levying real estate taxes.
B
Bank-Owned Property
Properties that are taken into a bank’s inventory, after a foreclosure sale. Bank-owned property is acquired by a financial institution when a homeowner does not make their mortgage payments. These properties then sell at a discounted price, much lower than current home prices.
Bill of Sale
A written document that transfers title to personal property. For example, when selling an automobile to acquire funds which will be used as a source of down payment or for closing costs, the lender will usually require the bill of sale (in addition to other items) to help document this source of funds.
Broker
Broker has several meanings in different situations. A licensed real estate professional who works under a “broker.” Some agents are brokers as well, either working for themselves or under another broker. As a normal definition, an agent is an individual that charges a fee or commission for executing buy and sell orders.
Bungalow
A one-story house, cottage or cabin. Bungalows are generally small in terms of square footage, but it is not uncommon to see very large bungalows. Bungalows were originally designed to provide affordable, modern housing for the working class.
Buyer’s Market
A situation in which supply exceeds demand, giving purchasers (buyers) an advantage over sellers in price negotiations. A type of market where there is more product available than there are people who want to buy it.
C
Certificate of Occupancy
A document issued by the local government that certifies a new home’s compliance with local building codes. Certificates of occupancy prove that a newly constructed home or building is in livable condition.
Closing
The final moment when all documents are executed and recorded and the sale is complete.
Closing Costs
The expenses which buyers and sellers normally incur to complete a transaction in the transfer of ownership of real estate. These costs are in addition to price of the property and are items prepaid at the closing day.
Commission
Most salespeople earn commissions for the work that they do and there are many sales professionals involved in each transaction, including Realtors, loan officers, title representatives, attorneys, escrow representative, and representatives for pest companies, home warranty companies, home inspection companies, insurance agents, and more. The commissions are paid out of the charges paid by the seller or buyer in the purchase transaction.
Common Areas
Those portions of a building, land, and amenities owned (or managed) by a planned unit development (PUD) or condominium project’s homeowners’ association (or a cooperative project’s cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.
Comparable Sales Also referred to as “Comps”
Recent sales of similar properties in nearby areas and used to help determine the market value of a property.
Comparative Market Analysis (CMA)
A service normally provided by real estate agents prior to either listing a property or prior to making an offer to purchase a property on the behalf of a purchaser. The true purpose of a CMA is to establish a current estimated market price of a property. This is accomplished by researching both: the currently listed properties and the most recently sold properties, in the same area, with as similar characteristics as the property in question. This information is usually provided to the homeowner to help them establish a fair market selling price or it may be given to a prospective purchaser to help guide them in a proper offer to make the owner.
Contingency
A condition upon which a valid contract is dependent. Contingency’s are typically conditions included with an offer on a home that must be fulfilled before the deal can close.

D-F

D
Demand
The volume or quantity of a product or service purchased, or willing to be purchased, in relation to price.
Due Diligence
The process of examining a property before purchasing in which the buyer “does their homework.” Reviewing related documents, performing calculations, procuring insurance, walking the property, meeting the neighbors, etc. are all parts of a buyers due diligence.
E
Earnest Money
A deposit made to a seller showing the buyer’s good faith in a transaction upon the signing of the agreement of sale. If the sale goes through, the earnest money is applied against the down-payment.
Escalation Clause
An escalation clause is when a buyer is willing to go over the highest offer, up to a specified amount. General escalation addendum’s have a few basic component including: 1) what is the original offer of purchase price? 2) how much will that price be escalated above any other competitive bid? 3) what is the maximum amount that the purchase price can reach in case of multiple offers?
Exclusions
A section of the offer to purchase designed to exhibit anything the buyer or seller would not like included with the real estate.
Executed Contract
An agreement that has been fully performed.
F
FHA Loan
A mortgage issued by federally qualified lenders and insured by the Federal Housing Administration (FHA). FHA loans are designed for low to moderate income borrowers who are unable to make a large down payment. FHA loans allow the borrower to borrow up to 97% of the value of the home. The 3% down payment requirement can come from a gift or a grant, which makes FHA loans popular with first-time buyers.
Fixtures
Items affixed to buildings or land usually in such a way that they cannot be moved without damage to themselves or the property, such as plumbing, electrical fixtures, trees, etc.
Flipping
A type of real estate investment strategy in which an investor purchases properties with the goal of reselling them for a profit. Profit is generated either through the price appreciation that occurs as a result of a hot housing market and/or from renovations and capital improvements.
Foreclosure
A legal term applied to any of the various methods of enforcing payment of the debt secured by a mortgage, or deed of trust, by taking and selling the mortgaged property, and depriving the mortgagor of possession.
For Sale By Owner (FSBO)
A home that is being sold by the owner of the property without the representation of a broker

G-I

G
General Warranty Deed
A deed which conveys not only all the grantor’s interests in – and title to – the property to the grantee, but also warrants that if the title is defective or has a “cloud” on it (such as mortgage claims, tax liens, title claims, judgments, or mechanic’s liens against it) the grantee may hold the grantor liable.
Good Faith Estimate
A required statement from the lender that shows all of the expected closing costs.
H
Homeowner’s Association (HOA)
An organization in a subdivision, planned community or condominium that makes and enforces rules for the properties in its jurisdiction. HOAs also collect monthly or annual dues to pay for upkeep of common areas like parks, tennis courts, elevators and swimming pools and can levy special assessments on homeowners when the association lacks sufficient reserves to pay for unexpected repairs.
Homeowner’s Insurance
An insurance policy protecting against a variety of hazards.
HUD-1 Form
A form used by a settlement or closing agent itemizing all charges imposed on a borrower and seller in a real estate transaction. This form gives a picture of the closing transaction, and provides each party with a complete list of incoming and outgoing funds.
I
Inclusions
A section of the offer to purchase designed to exhibit any extra items the buyer or seller would like to be included with the real estate (i. e. personal property).
Inspections
The analysis of the home to find defects that may exist.
Investment Property
A real estate property that has been purchased with the intention of earning a return on the investment, either through rent, the future resale of the property, or both. An investment property can be a long-term endeavor, such as an apartment building, or an intended short-term investment in the case of flipping.

J-L

J
Joint Tenancy
Two or more people own or rent a property together, each with equal rights and obligations, until one owner dies. Upon an owner’s death, that owner’s interest in the property passes to the survivors without the property having to go through probate.
K
No terms
L
Legal Description
The geographical identification of a parcel of land which involves a lot and a block and a subdivision name.
Lender
Someone who makes funds available to another with the expectation that the funds will be repaid, plus any interest and/or fees. A lender can be an individual, or a public or private group. Lenders may provide funds for a variety of reasons, such as a mortgage, automobile loan or small business loan.
Listing
A written agreement between a seller and a broker authorizing the broker to procure a buyer or tenant for his/her real estate.
Listing Agent
The broker employed by the principal to market the property.
List Price
The initial asking price for a real estate property, such as a home, as determined by similar properties that have recently sold in the area and is typically set by the sellers and their listing agent.
Living Trust
A trust agreement, which the title to property and assets can be transferred into, thereby avoiding probate. The Living Trust was the first of the Trusts. A Trust is created when a living person (the Trustor) agrees to let someone (the Trustee) hold title to property for the benefit of someone (the Beneficiary).

M-O

M
Market Analysis
An analysis performed to determine the current value of a property based on recently sold comparable properties, comparable properties that are currently for sale, and the current overall market conditions. The factors considered may include: examining market supply and demand conditions, demographic characteristics, and opportunities; identifying alternative locations/sites that meet specific objectives or satisfy various criteria; and assessing the financial feasibility of those locations/sites to facilitate decision making regarding the commercial potential or suitability of various locations/sites to support a given activity or use.
Marketability
The ability to sell or lease a property quickly. Marketability deals with the appeal and demand for a property, good, or service.
Multiple Listing Service (MLS)
A listing taken by a member of an organization of brokers, whereby all members have an opportunity to find a buyer. A service provided by a group of real estate brokers. They band together to create a Multiple Listing Service that allows each of them to list each other’s houses. Under this arrangement, the listing broker and the selling broker split the commission for each sale.
Mineral Rights
A landowner’s right to receive a portion of the profits of any minerals that are extracted from the land. Mineral rights apply to all types of resources, such as oil and gas, ores and metals or other raw materials. The term mineral rights describes the numerous beneficial ways the owner can profit from the resources in the ground.
N
Notary Public
One who is authorized by federal or local government to attest authentic signatures and administer oaths.
O
Open House
A scheduled period of time in which a house or other dwelling is designated to be open for viewing for potential buyers.
Owner-Occupant
A resident of a property who also holds the title to that property.

P-R

P
Party Wall
A shared wall that separates housing units. Party walls are most commonly found in apartments, condominiums and office complexes where different tenants share a common structure. Party walls can be a non-structural wall, but laws in various jurisdictions outline requirements for how party walls must be constructed.
Personal Property
All property that is not land and is not permanently attached to land; everything that is moveable.
Plot
A map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land and easements.
Pre-approval
A pre-commitment from a lending institution to a buyer based on background checks, hard credit reports and review by an underwriter.
Pre-qualifying
The lender’s process of judging if a borrower is creditworthy and capable of making payments on a loan.
Property Lien
A property lien is a legal claim on a tract of real estate granting the holder a specified amount of money upon the sale of the property. Such liens are often used to ensure the payment of a debt, with the property acting as collateral against the amount owed.
Q
Quitclaim Deed
A quitclaim deed usually includes a legal description of the property, the name of the person who is transferring his/her interest, the name of the person who is receiving that interest (the grantee), the date and both parties’ notarized signatures.
R
Real Estate
Land and everything permanently attached to land; sometimes used interchangeably with the terms real property and realty.
Real Estate Broker
A person or organization who negotiates real estate sales, exchanges, or remittals for others for compensation or a promise of compensation.
Recording Deed
Entering the deed (owner’s title) in public records to protect against subsequent claimants.
Real Estate Agent
A licensed person who works under the direction of a broker selling and buying real estate.
Realtor
A real estate broker holding membership in a real estate board affiliated with the National Association Of Realtors.

S-U

S
Seller’s Market
More buyers than sellers.
Settlement Statement
A statement that summarizes all the fees and charges that both the homebuyer and seller face during the settlement process of a housing transaction. This form, which is under the jurisdiction of the U.S. Department of Housing and Urban Development, is also known as the HUD-1.
Setback
The distance from the front or interior property line to the point where a structure can be located.
Survey
A map or plot made by a licensed surveyor showing the results of measuring the land with its elevations, improvements, boundaries, and its relationship to surrounding tracts of land. A survey is often required by the lender to assure him that a building is actually sited on the land according to its legal description.
T
Tenancy In Common
A way for two or more people to have equal ownership interests in a property. Each owner has the right to leave his or her share of the property to any beneficiary upon the owner’s death. Each party (owner) in a tenancy-in-common agreement has the right to use the property even if the physical size of the stake is different.
Tenancy At Sufferance
An agreement in which a property renter is permitted to live in a property after a lease term has expired, but before the landlord demands the tenant vacate the property. If a tenancy at sufferance occurs, the original lease conditions must be met, including the payment of any rents. Otherwise, the tenant can be evicted at any time without notice.
Tenant
A person or entity who has possession of the property though a lease.
Title
Possessing ownership of real estate. As generally used, the rights of ownership and possession of particular property. In real estate usage, title may refer to the instruments or documents by which a right of ownership is established (title documents), or it may refer to the ownership interest one has in the real estate.
Title Insurance
Protects lenders or homeowners against loss of their interest in property due to legal defects in title. Title insurance may be issued to a “mortgagee’s title policy. ” Insurance benefits will be paid only to the “named insured” in the title policy, so it is important that an owner purchase an “owner’s title policy”, if he desires the protection of title insurance. In most cases Title Companies and Escrow Companies are one in the same, both providing the same services. It is simply a different name for the services, used in various parts of the country.
U
Underwriter
The person in the lending institution whose job it is to review loan documentation and evaluate the borrower’s ability and willingness to repay the loan.

V-X

V
VA Loan
A mortgage loan program established by the United States Department of Veterans Affairs to help veterans and their families obtain home financing. The Department of Veterans Affairs does not directly originate VA loans; instead, they establish the rules for those who may qualify, dictate the terms of the mortgages offered and insure VA loans against default.
Vacancy Rate
The vacancy rate is a numerical value calculated as the percentage of all available units in a rental property, such as a hotel or apartment complex, that are vacant or unoccupied at a particular time. It is the opposite of the occupancy rate, which is a calculation based on the percentage of units in a rental property that are occupied.
W
Walk-through
A final inspection of the property before closing to see that all agreed to repairs, etc. have been completed and that the property is in the condition the buyer expects.
Warranty Deed
A document that may be used to legally transfer property. A warranty deed states that the owner can legally transfer the property and that no other entity has a claim or lien on it. These deeds are typically used in property sales and make warranties about the property’s title.
X
No terms

Y-Z

Y
No Terms
Z
Zoning Ordinances
The acts of an authorized local government establishing building codes, and setting forth regulations for property land usage.
Zero-Lot-Line House
A piece of residential real estate in which the structure comes up to or very near to the edge of the property line. Zero-lot-line house are built very close to the property line in order to create more usable space. Rowhouses, garden homes, patio homes and townhomes are all types of properties that may be zero-lot-line homes. They may be attached (as in a townhome) or detached, single story or multistory.

Sources: Realtor.org
Investopedia
Moving.com