In the real estate world there are lots of terms and phrases that are commonly used to describe different parts of transactions, properties, mortgages, and title work. It’s important to understand what they are in relation to your situation. Use this list of real estate terms to help learn what you need!
List of Common Real Estate Terms
Please note that these are just the basic definitions. Each term can go much deeper into the subject area. If there is a link it will take you to page on this site that has more information about the term.
| Term | Definition |
|---|---|
| 1031 exchange | A tax-deferred exchange of one investment property for another of equal or greater value |
| Adjustable-rate mortgage (ARM) | A mortgage with an interest rate that changes periodically based on an index |
| Adjustable-rate mortgage (ARM) | A mortgage with an interest rate that can change periodically based on an index |
| Amortization | The process of paying off a mortgage loan over time through regular payments |
| Appraisal | An estimation of the value of a property |
| Appraisal | An assessment of a property’s value by a licensed appraiser |
| Assessed value | The value of a property as determined by a tax assessor for the purpose of calculating property taxes |
| Assessment | The process of determining a property’s value for taxation purposes |
| Balloon mortgage | A mortgage with a large final payment (balloon payment) due at the end of the loan term |
| Buyer’s agent | The real estate agent who represents the buyer in a transaction |
| Buyer’s agent | The real estate agent who represents the buyer in a transaction |
| Buyer’s market | A market condition in which there are more properties for sale than there are buyers |
| Closing | The final stage of a real estate transaction when ownership of the property is transferred |
| Closing costs | The fees and expenses associated with buying or selling a property |
| Closing costs | The fees and expenses associated with the purchase or sale of a property paid at closing |
| Closing date | The date on which the transfer of ownership of a property is completed |
| Commission | The fee paid to a real estate agent for their services in buying or selling a property |
| Contingency | A condition that must be met before a real estate transaction can be completed |
| Contingency | A condition that must be met before a real estate transaction can be completed |
| Date of possession | The date on which the buyer takes possession of the property |
| Deed | The legal document that transfers ownership of a property from one party to another |
| Deed | The legal document that transfers ownership of a property from one party to another |
| Dual agency | When a real estate agent represents both the buyer and seller in a transaction |
| Earnest money | The deposit paid by a buyer to show their intention to purchase a property |
| Equity | The difference between the value of a property and the outstanding mortgage on it |
| Escrow | The process of holding money and documents in trust until the completion of a real estate transaction |
| Exclusive right to sell | A type of listing agreement in which the listing agent has the exclusive right to earn a commission by selling the property |
| Fixed-rate mortgage | A mortgage with a fixed interest rate and monthly payments |
| Fixed-rate mortgage | A mortgage with an interest rate that remains the same throughout the life of the loan |
| Home inspection | An evaluation of a property’s condition usually conducted before purchase |
| Home inspection | An evaluation of a property’s condition by a licensed home inspector |
| Homeowner’s insurance | Insurance that protects a property owner from financial losses due to damage or loss of the property |
| Homeowners association (HOA) | An organization that manages and enforces rules for a community or development |
| Homeowners association (HOA) | An organization that manages and enforces rules for a community of homeowners |
| Interest rate | The rate at which a mortgage loan accrues interest |
| Landlord | The person who owns and rents out a property |
| Lease | An agreement between a landlord and tenant for the rental of a property |
| Listing | The agreement between a seller and a real estate agent to sell a property |
| Listing agent | The real estate agent who lists a property for sale |
| Listing agreement | An agreement between a property owner and a listing agent that outlines the terms and conditions for the sale of the property |
| Loan-to-value (LTV) ratio | The ratio of the mortgage loan to the value of the property being purchased |
| Mortgage | The loan used to finance the purchase of a property |
| Mortgage | A loan used to purchase a property with the property serving as collateral |
| Mortgage broker | A professional who connects borrowers with lenders for mortgage loans |
| Multiple listing service (MLS) | A database of properties for sale that is shared among real estate agents |
| Multiple listing service (MLS) | A database of properties for sale that is accessible to real estate agents and brokers |
| Open house | An event in which a property is open for prospective buyers to view |
| Pre-approval | The process of obtaining preliminary approval for a mortgage loan |
| Pre-approval | A lender’s conditional approval for a borrower to obtain a mortgage loan based on a preliminary evaluation of the borrower’s credit and financial information |
| Prepayment penalty | A fee charged for paying off a mortgage loan before the end of its term |
| Private mortgage insurance (PMI) | Insurance that protects the lender in case the borrower defaults on the mortgage loan |
| Property tax | The tax paid on the value of a property |
| Real estate agent | A licensed professional who represents buyers or sellers in real estate transactions |
| Real estate broker | A licensed professional who manages a team of real estate agents and is authorized to negotiate and finalize real estate transactions |
| Real estate investment trust (REIT) | A company that owns or finances income-generating real estate properties |
| Refinance | The process of obtaining a new mortgage loan to replace an existing one |
| Seller’s agent | The real estate agent who represents the seller in a transaction |
| Seller’s agent | The real estate agent who represents the seller in a transaction |
| Seller’s market | A market condition in which there are more buyers than there are properties for sale |
| Term | Definition |
| Title | The legal right to ownership of a property |
| Title | The legal right to ownership of a property |
| Title insurance | Insurance that protects a property owner from financial losses due to defects in the title |
| Title insurance | Insurance that protects the owner of a property against any defects in the title that may arise |
| Underwriting | The process of evaluating a borrower’s financial qualifications for a mortgage loan |
| Variable-rate mortgage | A mortgage with an interest rate that can change over the term of the loan |
| Walk-through | The final inspection of a property before closing to ensure that it is in the condition specified in the contract |
| Zoning | The local government’s regulations regarding land use and development |
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