Learn Real Estate Terminology

Popular Real Estate Terminology that you should know

1. Appraisal:
An appraisal is an assessment of the value of a property conducted by a licensed appraiser. It determines the fair market value based on various factors such as location, size, condition, and recent sales of comparable properties.

2. Amortization:

Amortization refers to the process of gradually paying off a loan through regular payments over a specific period. Each payment includes both principal and interest, with the goal of fully repaying the loan by the end of the term.

3. Assessed Value

The assessed value is the value assigned to a property by a tax assessor for the purpose of calculating property taxes. It may not necessarily reflect the current market value.

4. Adjustable-Rate Mortgage (ARM):

An adjustable-rate mortgage is a type of mortgage loan with an interest rate that can fluctuate over time based on a predetermined index. The interest rate may change periodically, often after an initial fixed-rate period.

5. Agency:

In real estate, agency refers to the relationship between a client (buyer or seller) and their real estate agent. It outlines the duties, responsibilities, and obligations of the agent towards their client.

6. Agent:

A real estate agent is a licensed professional who represents buyers or sellers in real estate transactions. They help clients navigate the buying or selling process, provide market expertise, and negotiate on their behalf.

7. As-Is:

When a property is listed “as-is,” it means the seller is offering it in its current condition without making any repairs or providing warranties. Buyers are responsible for inspecting the property thoroughly before making an offer.

8. Assumption:

Assumption refers to taking over an existing mortgage by a new buyer. The buyer assumes responsibility for the outstanding loan balance, interest rate, and terms from the original borrower.

9. Appurtenance:

An appurtenance refers to a right or privilege associated with a property that transfers with the property but is not necessarily a physical part of it. Examples include easements, water rights, or shared amenities.

10. Annual Percentage Rate (APR):

The annual percentage rate is the total cost of borrowing expressed as an annual rate. It includes the interest rate, fees, and other charges associated with obtaining a loan, providing a more comprehensive picture of the borrowing cost.

  1. Buyer’s Agent
    A real estate agent who represents the buyer’s interests in a real estate transaction, helping them find properties, make offers, and negotiate terms.

  2. Broker
    A licensed real estate professional who can work independently, run a real estate firm, and hire agents to work for them. Brokers typically have more training and experience than agents.

  3. Balloon Mortgage
    A type of mortgage that has relatively low monthly payments for a specified period, followed by a lump-sum payment for the remaining balance at the end of the term.

  4. Bridge Loan
    A short-term loan used to bridge the gap between the sale of one property and the purchase of another. This type of loan helps buyers finance a new home before selling their current one.

  5. Bidding War
    A situation in which multiple buyers compete to purchase a property, often leading to offers above the asking price.

  6. Build-to-Suit
    A real estate development in which a property is designed and constructed to meet the specific needs of a particular tenant or buyer.

  7. Basis Point (BPS)
    A unit of measure used in finance to describe the percentage change in the value of financial instruments. One basis point is equal to 0.01%.

  8. Breach of Contract
    The failure to perform any term of a contract without a legitimate legal excuse. In real estate, this could involve failing to complete a sale or not adhering to agreed-upon conditions.

  9. Backup Offer
    An offer made on a property that is currently under contract with another buyer. If the primary contract falls through, the backup offer becomes active.

  10. Buyer’s Market
    A market condition characterized by more properties for sale than there are buyers, often leading to lower prices and more favorable terms for buyers.

  1. Capitalization Rate (Cap Rate)
    A metric used to evaluate the potential return on an investment property, calculated by dividing the net operating income by the property’s current market value.

  2. Closing Costs
    Fees and expenses paid by both the buyer and seller at the closing of a real estate transaction. These can include loan origination fees, title insurance, appraisal fees, and more.

  3. Comparative Market Analysis (CMA)
    A report prepared by a real estate agent that compares similar properties in the same area to help determine a fair market value for a specific property.

  4. Contingency
    A condition or clause in a real estate contract that must be met for the transaction to proceed. Common contingencies include financing, inspections, and appraisals.

  5. Condominium (Condo)
    A type of property ownership where individuals own their individual units within a larger complex, while sharing ownership of common areas.

  6. Covenants, Conditions, and Restrictions (CC&Rs)
    Rules and guidelines set by a homeowners’ association or a property developer that homeowners must follow.

  7. Certificate of Occupancy (CO)
    A document issued by a local government agency certifying that a property complies with building codes and is suitable for occupancy.

  8. Commission
    The fee paid to real estate agents or brokers for their services, typically a percentage of the property’s sale price.

  9. Cash Flow
    The net amount of cash being transferred into and out of a property investment, often used to evaluate the property’s profitability.

  10. Credit Score
    A numerical representation of a person’s creditworthiness, based on their credit history. Lenders use this score to evaluate the risk of lending money for a mortgage.

  1. Deed
    A legal document that transfers ownership of a property from one person to another.

  2. Down Payment
    The initial amount of money paid by a buyer towards the purchase price of a property, typically a percentage of the total price.

  3. Dual Agency
    A situation where a real estate agent or broker represents both the buyer and the seller in the same transaction, which can create a conflict of interest.

  4. Depreciation
    The decrease in the value of a property over time due to factors such as wear and tear, age, or market conditions.

  5. Disclosures
    Information that a seller is legally required to provide to a buyer about the property’s condition and any known issues that could affect its value or desirability.

  6. Due Diligence
    The process by which a buyer investigates a property to confirm all relevant information before finalizing the purchase. This can include inspections, title searches, and reviewing financial statements.

  7. Default
    Failure to fulfill a legal obligation, such as missing a mortgage payment or not adhering to the terms of a loan agreement.

  8. Debt-to-Income Ratio (DTI)
    A financial metric used by lenders to assess a borrower’s ability to manage monthly payments and repay debts. It is calculated by dividing total monthly debt payments by gross monthly income.

  9. Discount Points
    Fees paid directly to the lender at closing in exchange for a reduced interest rate on the mortgage. Each point is equal to 1% of the loan amount.

  10. Dominant Estate
    In easement law, the property that benefits from an easement. For example, if one property has the right to cross another property, the benefiting property is the dominant estate.

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