Real Estate Glossary
Here are some common Real Estate terms and their meanings.
adjustable rate mortgage (ARM) - Mortgage loan on which the interest rate falls and rises with changes in prevailing rates. The mortgage rate is tied to a selected index and may be adjusted annually. Also called a variable rate mortgage.
agency - A special relationship of trust by which one person (agent) is authorized to conduct business, sign papers, or otherwise act on behalf of another person (principal).
agent - One who represents another called a principal and has authority to act for the principal in dealing with third parties . The relationship is referred to as an agency. Someone authorized to act for another (called the principal) in business matters.
annual percentage rate (APR) - Combines the interest rate with other loan costs, such as points and loan fees, into a single figure that shows the true annual cost of borrowing.
appraisal - A formal estimate of property value conducted by a professional qualified to make such an opinion.
appraiser - One qualified by education, training, and experience, who is hired to estimate the value of real and personal property on the basis of experience, judgment, facts, and use of formal appraisal processes.
as is - Said of property offered for sale in its present condition with no guarantees as to quality and no promise of repair or fix-up by the seller; property is purchased in exactly the condition in which it is found.
assessed value - Value placed on property as a basis for taxation.
broker - Licensed individual who acts independently in conducting a real estate brokerage business; also a person who buys and sells for another for a commission.
buyer’s market - Describes an excess supply of homes for sale, in which there are few buyers and many sellers. In such a market, the buyer can typically negotiate more favorable prices and terms.
closing - Process by which all the parties to a real estate transaction conclude the details to a sale or mortgage. The process includes the signing and transfer of documents and distribution of funds.
closing costs - The miscellaneous expenses buyers and sellers normally incur in the transfer of ownership of real property over and above the cost of the property.
commission - An agent's compensation for performing the duties of his or her agency agreement. In the real estate business, it is usually a percentage of the selling price.
comparables (comps) - Recently sold properties in nearby areas used to determine market value of a property.
comparative market analysis (CMA) - An analysis used to provide market information to the seller based on comparable sales and listings, market trends and condition of the home.
condominium (condo) - A system of individual ownership of units in a multifamily structure, combined with joint ownership of common areas of the structure and the land.
condominium association - The organization that manages the operation of a condominium, imposing assessments and arranging for the maintenance of the com mo n are as. The association members are the unit owners, and they usually elect a board of directors.
counter offer - The rejection of an offer by the submission of another offer, different in terms from the original offer. Any purported acceptance of an offer that introduces new terms is a rejection of that offer, and amounts to a counter-offer.
contingency - A condition that must be met or an event that must happen before a purchase contract becomes binding between the parties.
contingent - A status in which a seller has accepted an offer but relies on meeting certain criteria, such as passing a home inspection or appraisal.
conventional mortgage - A mortgage loan not insured by the government or guaranteed by the Veterans' Administration. It is subject to conditions established by the lending institution and State statutes.
conveyance - The transfer of the title of real property from one to another.
deed - A written instrument that when properly executed and delivered conveys title.
down payment - The amount of your home's purchase price you pay upfront.
easement - A right, privilege, or interest that one party has to use the land of another. Example: A right of way. A legal right to use another's land for one 's benefit or the benefit of one's property (right-of-way).
eminent domain - The right or power of government to acquire private property for public use without the consent of the owner, provided fair compensation is provided.
encroachment - A building or other improvement that extends beyond its boundary and intrudes upon the property of another.
encumbrance - Any impediment to a clear title. It can be a claim, lien, zoning restriction, or other legal right or interest in land that diminishes its value. The report of the title search usually shows all encumbrances.
equity - Value an owner has in a piece of property less the debt against it. For example, if the market value of a house is $150,000 and the owner has paid off $10,000 of a $75,000 mortgage, the owner has $85,000 equity.
escrow - Money or documents held by a third party until specific conditions of an agreement or contract are fulfilled.
exclusive-right-to-sell listing - Listing that gives the broker the right to collect a commission no matter who sells the property during the listing period.
Fair Housing Act - A federal law that prohibits discrimination in the sale, rental or financing of housing based on race, color, religion, sex, handicap, familial status or national origin. One of the regulations of this act is that hallways, doorways and common areas are accessible for the width of wheel chairs.
fair market value - The amount of money that would be paid for a property offered on the open market for a reasonable length of time with both the buyer and the seller knowing all uses to which the property could be put and with neither party being under pressure to buy or sell.
Fannie Mae - Common name for the Federal National Mortgage Association, which buys and sells loans in the secondary mortgage market
FHA mortgage - A mortgage that is insured by the Federal Housing Administration (FHA). FHA loans are designed to make housing more affordable.
fiduciary duty - That duty owed by an agent to act in the highest good faith toward the principal and not to obtain any advantage over the latter by the slightest misrepresentation, concealment, duress or pressure.
fixture - Personal property that becomes real property when it is attached to a permanent structure.
foreclosure - A property seized by the mortgage lender due to the homeowner failing to make full payments on their mortgage. In hopes to recover the balance of the home loan, the lender will sell the house.
FSBO - A.K.A. For Sale by Owner. A FSBO is a property that is being sold by the current homeowner without the aid of a real estate agent.
gentrification - Process whereby private or government-sponsored development of certain aging neighborhoods results in the displacement of low- or moderate-income families by the more affluent and leads to an increase in property values.
grantee - Person named in a deed who acquires ownership of real estate; the buyer.
grantor - Person named in a deed who conveys ownership of real estate; the seller.
hand money (earnest money) - A deposit made by the potential home buyer to show that he/she is serious about buying the house.
highest and best use - Use of land that is most logical and productive. Refers to the greatest income it can bring the owner, as well as factors such aesthetics and benefits to the surrounding community.
home inspection - An evaluation of the home in which a professional inspector determines the current condition of the home and its systems.
home owner's association (HOA) - An organization that manages the common areas of a planned development or condominium building at a monthly fee paid by the homeowner.
Housing and Urban Development, Department of (HUD) - A U.S. government agency established to
implement certain federal housing and community development programs. This federal agency attempts to assure decent, safe, and sanitary housing for all Americans, and investigates complaints of discrimination in housing.
improvements - Man-made additions to real property. Generally increasing the value of the property.
joint tenancy - Joint ownership by two or more persons with right of survivorship. Four unities must be present: time, title, interest, and possession. Property held by two or more people with right of survivorship
lien - A charge or claim against property as security for payment of a debt or obligation.
listing - A list of information about a home that is currently on the market.
listing agreement - An employment contract authorizing a broker to sell an owner's property.
loan-to-value ratio - Percentage of a loan to a property's appraised value; expressed in terms as to how much the lender will lend.
mechanic's lien - A lien given b y statute to person s supp lying labor, materials, or other services to improve real property. Whenever a contractor, laborer, or materialman provides labor or materials to improve real property and is not paid, that person is entitled to a lien against the property as a means of
securing payment. Certain statutory steps must be taken to file, record, and foreclose the lien.
mineral rights - Rights to the minerals located beneath the surface of a piece of property.
multiple listing - Agreement that allows real estate brokers to distribute information on the properties they have listed for sale to other members of a local real estate organization. Allows the widest possible marketing of those properties. Commissions are split by mutual agreement between the listing broker and the selling broker.
nonconforming use - Use of property that is permitted to continue after a zoning ordinance prohibiting it has been passed.
origination fee - A charge by the lender for granting and processing a new mortgage loan.
PITI - Acronym for “principal, interest, taxes, and insurance.” Frequently used to describe a loan payment that combines all four items.
Planned Unit Development (PUD) - Individually owned houses with community ownership of common areas, such as swimming pools and tennis courts.
PMI (Private Mortgage Insurance) - Required by most lenders for conventional loans with a down payment of less than 20 percent. Insurance is paid by the borrower and guarantees the lender will not lose money if the borrower defaults.
point - Fee charged by a lender to get additional revenue over the interest rate. A point is equal to one percent of the loan amount.
power of attorney - An instrument authorizing a person to act as the agent of the person granting it. A special power o f attorney limits the agent to a particular or specific act, as a landowner may grant an agent special power of attorney to convey a single and specific parcel of property. Under a general power of attorney, the agent may do almost anything for the principal that the principal could do himself or
herself. A document authorizing a person (an attorney-in-fact) to act as an agent.
pre-approval - An evaluation by a lender that determines if the potential buyer qualifies for a loan and, if so, the maximum amount the lender would be willing to lend.
pre-approval letter - A document provided by a lender as proof of the amount of a mortgage the borrower may qualify for.
prepaid items - Expenses paid by borrower-buyer at closing, such as taxes, insurance , and interest.
property tax - Assessment levied by city and county governments on real and personal property to generate the bulk of their operating revenues to pay for such public services as schools, libraries, and roads.
quit-claim deed - A conveyance by which the grantor transfers whatever interest he or she has in the real estate without warranties or obligations.
real estate - Land, including the air above and the earth below, plus any permanent improvements affecting the utility of the of the land; real property; property that is not personal property.
real property - Land and anything affixed, incidental, or appurtenant to it, and anything considered immovable under the law. Land, buildings, and other immovable property permanently attached thereto.
Realtor® - A real estate agent or broker who is an active member of the National Association of Realtors®.
recording - The process of placing a document on file with a designated public official for public notice.
REO - An acronym for "Real Estate Owned." A REO property is owned by the bank due to a foreclosure. REO properties can be purchased from the bank; however, they are often sold "as is".
running with the land - Binding or benefiting the successive owners of a piece of property, rather than terminating when a particular owner transfers his or her interest. Usually said in reference to an easement or a restrictive covenant
seller assist - Money given from the seller to the buyer at settlement to pay for part of the closing costs. The amount varies depending what the mortgage company allows.
seller’s market - One with few sellers and many buyers.
settlement statement - A document that presents a final, detailed accounting for a real estate transaction, listing each party's debits and credits and the amount each will receive or be required to pay at closing. Also called a closing statement.
steering - The illegal practice of directing potential home buyers to or away from certain neighborhoods either to maintain or to change the character of an area, or to create a speculative situation.
title - Evidence of the owner's right or interest in property. (1) The right of ownership. (2) The evidence of a person's ownership or interest in property.
title insurance - Insurance written by a title company to protect a property-owner against loss if title is defective or not marketable.
title search - A professional examination of public records to determine the chain of ownership of a particular piece of property and to note any liens, encumbrances, easements, restrictions, or other factors that might affect the title.
townhouse - A residential unit connected to similar units. Describes a style of architecture , with title to the unit and its lot invested in the individual buyer with an undivided interest in the common area.
VA loan / mortgage - A mortgage that is guaranteed by the Department of Veteran's Affairs (VA)
warranty deed - A deed in which the grantor guarantees that he or she is giving the grantee good title free of encumbrances. Considered to be the best deed a grantee can receive.
zoning - Procedure that classifies real property for a number of different uses: residential, commercial, industrial, etc. in accordance with a land-use plan.