Below are common terms and their meanings you may hear in the real estate industry.
A
Absorption Rate—The rate at which available homes are sold in a specific market during a given time, usually expressed in months of inventory.
Agent—An authorized person who manages or transacts business for another. Laws governing real estate agents vary by state.
Amortize—To pay a debt in regular installments of principal and interest until it is fully repaid.
Amenities—Features that enhance the value or desirability of a property.
Appraisal—A licensed professional’s opinion of a property’s value, often required by lenders.
Appreciation—An increase in the value of a property over time.
Arbitration—A method of settling disputes outside of court by submitting to a neutral third party’s binding decision.
ARM (Adjustable Rate Mortgage)—A mortgage that has an interest rate which may change periodically, tied to an index.
Assessment / Assessed Value – A valuation placed on property by a public tax assessor for taxation purposes.
As-Is—A term indicating that a property is being sold in its current condition with no repairs or warranties from the seller.
B
Balloon Mortgage/Payment—A loan with small periodic payments and one large payment due at maturity.
Bankruptcy—A legal proceeding declaring an individual or business unable to repay debts, which can affect property ownership.
Bridge Loan—A short-term loan used to finance a new home purchase before selling an existing property.
Broker—A licensed real estate professional who may operate independently, manage an office, and supervise agents.
Buyer Agent—An agent representing the buyer in a transaction.
C
Capital Gains Tax—A tax on profit made from selling real estate or other assets.
Clear Title—Ownership free of liens or other legal claims.
Closing—The final step in a real estate transaction when ownership transfers from seller to buyer.
Closing Costs—Fees and expenses paid at closing, such as title insurance, taxes, lender fees, and recording charges.
CMA (Comparative/Competitive Market Analysis)—A report comparing similar properties to estimate a property’s market value.
Code of Ethics—A standard of conduct followed by members of the National Association of REALTORS®.
Commission—A fee paid to real estate professionals, typically a percentage of the sale price.
Condominium (Condo)—A form of ownership where individuals own their unit and share ownership of common areas.
Contingency—A condition in a purchase agreement that must be met for the contract to become binding (e.g., financing, appraisal, inspection).
Conventional Loan – A mortgage not insured by the government.
Co-operative (Co-op)—A housing arrangement where residents own shares in a corporation that owns the building.
Counteroffer—A response to an offer with modified terms.
CLO (Computerized Loan Origination)—A computerized system for initiating mortgage applications in an agent’s office.
CRS (Certified Residential Specialist)—A designation for experienced agents with advanced training in residential real estate.
D
Debt-to-Income Ratio (DTI)—A measure lenders use to determine loan eligibility, comparing debt payments to income.
Deed—A is a legal document that transfers property ownership.
Deed in Lieu of Foreclosure—When a borrower voluntarily gives property back to the lender to avoid foreclosure.
Default—Failure to meet legal obligations of a loan, such as missed payments.
Disclosure—Legally requires the sharing of relevant facts about a property.
Down Payment – Cash paid upfront toward the purchase price.
Dual Agent—An agent representing both buyer and seller in a transaction (legal only with written consent in some states).
Due Diligence – The buyer’s investigation period for inspections and reviewing documents before closing.
E
Earnest Money—A deposit showing the buyer’s good faith to purchase.
Encroachment—A structure or improvement that intrudes on another’s property.
Equity—The difference between a property’s value and the mortgage debt owed.
Escrow—A neutral third party that holds funds or documents until all conditions of a transaction are met.
Escrow Account—An account maintained by the lender to pay property taxes and insurance.
Exclusive Listing—An agreement giving one broker the right to sell the property but allowing the owner to sell it independently without paying commission.
Exclusive Right of Sale Listing—An agreement giving the broker the exclusive right to earn commission, regardless of who sells the property.
F
Fannie Mae (Federal National Mortgage Association)—A government-sponsored entity that buys mortgages to increase lender liquidity.
Federal Fair Housing Law—A law prohibiting housing discrimination based on race, color, religion, sex, disability, family status, or national origin.
FHA (Federal Housing Administration)—A government agency that insures loans to qualified buyers.
Fixture—Personal property that becomes real property when permanently attached to land or a structure.
Forbearance Agreement—A repayment plan between borrower and lender to avoid foreclosure.
Foreclosure—Legal process by which a lender sells property to recover a loan when the borrower defaults.
Freddie Mac (Federal Home Loan Mortgage Corporation)—A government-sponsored entity that buys mortgages, primarily from savings and loan associations.
G
Grant Deed—A type of deed in which the seller guarantees they hold clear title and have the right to sell.
Guaranty—A pledge by one party to ensure another fulfills an obligation.
H
HOA (Homeowners Association)—An organization that manages common areas and enforces rules in a condominium, subdivision, or planned development.
HUD (Department of Housing and Urban Development)—A federal department overseeing housing programs and enforcing fair housing laws.
I
Improvements—Additions or upgrades intended to increase property value.
Inspection—An evaluation of a property’s condition, often required before closing.
Intestate—Dying without a legal will, which can affect property inheritance.
L
Lien—A claim or charge against property as security for debt.
Listing—A written agreement authorizing a broker to find a buyer for property.
Listing Agent—The agent representing the seller.
Loan-to-Value Ratio (LTV)—A ratio comparing loan amount to property value, used by lenders to assess risk.
Loss Mitigation—Lender efforts to reduce losses from delinquent loans, often by negotiating with borrowers.
M
Market Value—The price a property would bring to a fair, open market.
MLS (Multiple Listing Service)—A database of properties for sale shared among agents.
Mortgage—A legal document pledging property as collateral for a loan.
Mortgage Insurance (MI or PMI)—Insurance protecting the lender if the borrower defaults, usually required with less than 20% down.
N
NATIONAL ASSOCIATION OF REALTORS® (NAR)—A professional organization of real estate agents who follow a strict Code of Ethics.
NOD (Notice of Default)—A formal notice that a borrower has defaulted on a mortgage and foreclosure proceedings may begin.
Notice of Default – Official filing by a lender to initiate foreclosure proceedings.
O
Offer—A proposal to buy property at specified terms.
Open House—A scheduled time when a home is available for public viewing.
Option to Purchase—A contract giving a buyer the right, but not obligation, to purchase property within a set timeframe.
Origination Fee – A lender’s fee for processing a new loan.
Owner of Record – The person listed in public records as the property owner.
P
Points—Upfront fees paid to a lender to reduce the interest rate, each point equal to 1% of the loan.
Pre-Approval—A lender’s conditional commitment to provide financing, based on full documentation and credit review.
Pre-Qualification—An estimate of how much a buyer may borrow, based on self-reported financials.
Principal—The original loan amount, excluding interest.
Q
Qualified Buyer—A buyer who has been pre-approved or can demonstrate financial ability to purchase.
Quitclaim Deed—A deed transferring ownership without guarantees about title.
R
REALTOR® – A licensed agent who is a member of the NATIONAL ASSOCIATION OF REALTORS®.
Refinance—Replacing an existing loan with a new one, often to obtain better terms.
REO (Real Estate Owned)—A property that has reverted to the lender after an unsuccessful foreclosure auction.
Residential Sales Council—An affiliate of NAR that awards the Certified Residential Specialist designation.
S
Selling Agent—The agent who brings a buyer to a transaction.
Serious Delinquency—A mortgage that is significantly overdue (90+ days past due for single-family).
Short Refinance—A refinancing arrangement that reduces principal balance to avoid foreclosure.
Short Sale – Selling a property for less than the mortgage balance with lender approval.
Subagent—A salesperson working under a broker or agent.
Survey—A professional measurement of property boundaries, structures, and easements.
T
Title – Legal ownership of property.
Title Insurance—An insurance policy protecting against losses from title defects.
Title Search—A review of public records to confirm property ownership and check for liens or claims.
Townhouse—A multi-level attached home that shares common walls with neighboring units.
U
Underwriting—The process lenders use to assess risk and approve or deny a loan application.
V
VA (Veterans Administration)—A federal agency that supports veterans in housing and loans.
VA Loan—A mortgage guaranteed by the VA, offering favorable terms to qualified veterans.
W
Walk-Through—A buyer’s final inspection of a property prior to closing.
Warranty Deed—A deed in which the seller guarantees clear title against all claims.
Z
Zoning—Local laws that regulate how property may be used (residential, commercial, industrial, etc.).
