Real estate is an industry full of mind-boggling jargon with its galaxy of unique terminology, abbreviations, and acronyms that can pour even more confusion fuel on the fire of an already complex subject. Learning all the ins and outs of real estate vocabulary can feel like learning another language. Don’t worry – we’ve got you covered.
Whether you’re thinking about buying or selling a home or have just started dipping your toes into real estate waters, we’ve gathered an extensive list of all the essential terms under one roof and wrapped them up in a comprehensive, evergreen real estate glossary to help you cut through the most commonly used industry lingo and learn the ropes.
Oh, and you might want to bookmark this page for future reference – it will certainly come in handy more than once.
Our all-in-one real estate glossary contains over 60 of the most common real estate terms and expressions you are most likely to hear when buying or selling property and will definitely need to know if you’re thinking about starting a real estate career, wondering “How do I talk like a real estate agent?” To simplify things, we’ve organized them in alphabetical order, from A-Z, to easily find any specific terms you might be looking for.
Unfortunately, simply flaunting big words is not enough, as a big portion of the real estate slang phrases and terminology often ends up misunderstood or misused. We’ll explain each real estate wording puzzle by providing their respective definitions to ensure you get a handle on all the new terms we're about to introduce you to and talk the talk.
Ready? Let’s dive right in.
An adjustable-rate mortgage, also known as a floating mortgage or variable-rate mortgage, is a loan with a flexible interest rate that can periodically change over time along with any market fluctuations.
An abbreviation of the real estate term “After Repaired Value”, referring to the value of a property after it has been rehabbed, determined by an appraiser before the repairs take place, based on a list of the proposed repairs. To learn more about financing options for rehabbing a property, see this blog post on Rehab Loans.
In real estate, amortization refers to the process of gradually reducing a mortgage loan debt over time by establishing scheduled monthly loan payments. With an amortized loan, payments made around the beginning of the loan primarily go toward interest, while later on, they will go toward the principal loan amount.
The sum of the annual cost (yearly interest) of a loan to a borrower or investor for a specific year, expressed in percentages. Unlike the interest rate, APR includes fees and additional costs associated with the transaction, such as mortgage insurance, closing costs, discount points, and loan origination fees.
A real estate appraisal is an expert’s estimation of a property’s current value (worth) based on a range of factors, such as the price of similar properties in the area.
The appraised value of a property represents an expert’s approximation of a home's fair market value. Or, in layman's terms, what a buyer might expect to pay for a property listed for sale on the market.
A person who analyzes the current value of a property based on numerous factors, such as the price of similar properties in the area that were recently sold, to provide an objective assessment of the property’s worth.
The increase in a property's value over time. For example, home appreciation refers to the increase in value of a house or investment property over a certain period of time.
A real estate term used to describe a property listed for sale in its current state. This means that any issues with the home will not be addressed or resolved by the seller – the buyer gets it exactly as it is, with no responsibility on the seller to repair the property before the sale.
The value of a property for tax purposes. The assessed value is estimated by an assessor to determine property taxes, which increase along with the assessed value of a property.
Assessments are relative measures of value used to establish how a property will be taxed by the local government based on its worth.
Like an appraiser, an assessor is an individual that determines the fair value of a property on behalf of the local government for tax purposes.
An offer made by a buyer without seeing the property in person.
An acronym that stands for “Back on the Market.” The BOM real estate term is an abbreviation commonly used by real estate agents, indicating that a property that was previosuly in contract to be sold (listed and taken off the market) is now available again for sale.
A party (a person or business) in a real estate transaction taking out a loan or mortgage with the intent to pay it back within an agreed time frame.
A quick, high-interest loan that buyers can use to make a down payment on a new property they want to buy, while the property they currently own is listed on the market, and awaiting sale.
A qualified, licensed real estate agent that represents a seller or buyer in a real estate transaction. Real estate brokers can work independently or under a licensed Broker (brokerage) firm and get paid a commission.
The term brokerage can refer to the business of acting as a broker, a fee or commission charged by a broker, or a company that buys or sells goods or assets for clients.
A real estate agent hired by a property buyer to represent them in a real estate transaction.
Capitalization Rate, or simply Cap Rate for short, is usually calculated for commercial real estate purposes to get the rate of return expected on a real estate investment property, expressed in percentages.
In real estate terms, closing refers to the final step of a real estate transaction, when a property is purchased and the rights to it are legally transferred from the seller to the buyer.
The fees required for finalizing a real estate transaction, such as the purchase of a property.
The negotiable commission percentage a real estate agent makes at the closing of a transaction, usually ranging somewhere between 4-6% of the property’s sale price.
An evaluation of recently sold properties (also known as “comparables”) similar to and nearby a property intended to be bought or sold. Buyers, sellers, and real estate agents often perform a CMA before buying or selling a home to determine a price estimate based on current market activity, which can, later on, be used as a guide for pricing the property.
The term “comparables,” as the name implies, refers to the process of comparing the prices of recently sold properties nearby a property currently being evaluated for buying or selling purposes with similar characteristics.
A loan contingency also referred to as a mortgage contingency, is a clause or addendum in an offer contract that allows a buyer to back out of a deal and keep their deposit if they are unable to secure a mortgage with specified terms during the fixed, agreed on period.
A type of home buyer’s loan not backed by a government agency such as the Federal Housing Administration (FHA) but available through or guaranteed by a private lender, ideal for borrowers with strong credit.
An offer made in response to another. In real estate terms, the counter offer refers to a seller’s rejection of a buyer’s offer to enter into a contract and providing a new or adjusted offer with different terms from those in the original offer sent by the buyer.
Many people ask: “What does DOM mean in real estate?” The acronym DOM stands for “Days on Market” - the number of days a particular property has been active in the Multiple Listing Service (MLS) market. A similar abbreviation, CDOM, is short for “Cumulative Days on Market” and offers a more in-depth perspective of how long a property has been actively marketed in MLS.
The percentage resulting from all monthly debt payments divided by gross monthly income (before taxes) used to compare how much a person owes to how much they earn monthly. Generally, a good debt-to-income ratio is considered around 43% or below.
A deed is a written and signed legal document that transfers ownership (title) of a piece of real estate or another property asset from the seller to the buyer (new owner) at closing.
The initial amount of money that a buyer pays upfront for a property or another asset in a real estate transaction and other large purchases. There are usually down payment requirements that need to be met and vary depending on the type of mortgage, the lender, and the buyer’s financial circumstances.
The situation when a single real estate agent represents both the seller and the buyer in a real estate transaction.
Also known as a “good faith deposit”, an earnest money deposit represents the initial funds that a buyer is asked to put down once a seller accepts the buyer’s offer that showcases that the buyer is serious about making the purchase.
An individual’s right to use a property, despite not being the owner. Easements are related to a specific, unique purpose and are limited to it.
The difference between the amount of money owed to the mortgage lender and the amount of money that a property is currently worth on the market. Or, in other words, the amount of money the homeowner would get after selling the property and paying off the mortgage.
The term escrow has multiple meanings. In general, the word escrow refers to a legal arrangement in which a neutral third party temporarily holds assets or funds (in an escrow account), until all the conditions of the contract are met and ensures all payments are timely fulfilled. It serves to protect both the buyer and the seller during the buying process.
A group of government mortgage loans issued by the Federal Housing Administration (FHA).
A type of mortgage loan where the interest rate remains the same for the entire duration of the loan, often available as 10, 15, 20 & 30-year loans.
The legal process of a lender seizing and reclaiming a mortgaged property when the borrower (mortgagor) is unable or fails to meet their mortgage payment obligations.
A general term for an individual with lawful possession of an asset or property. For example, a mortgage holder is an individual or entity who owns the mortgage loan that was extended to a homeowner, while a title holder is the sole and clear owner of a property.
A non-profit, self-governing organization established to help run, manage, and maintain a neighborhood, building, or community. HOA is financed by homeowners (members of the association), which collectively pay fees to the HOA to carry out its association duties and maintain the housing units or neighborhoods. Properties within an HOA are governed by a collective set of rules and laws enforced by the association.
A type of property insurance that provides coverage for any potential losses and damages to a homeowner’s residence, along with furnishings and any other assets or structures on the property. It also includes liability coverage against accidents that occur inside the home or on the property.
A property or home inspection that occurs after a buyer arranges and pays for a licensed inspector to visit the property, examine the property's safety and existing condition, and provide a report including any necessary repairs. The inspection often happens as part of the due diligence period, so buyers can fully assess if they want to buy the home as-is, renegotiate the sale price, request repairs, or cancel the sales contract.
Also known as a “due diligence contingency,” the inspection contingency is a clause sometimes offered in a purchase agreement granting the buyer a pre-determined amount of time during escrow to perform any necessary inspections on the property.
In real estate terminology, interest refers to the cost of borrowing funds due per period, expressed as a percentage rate of the overall borrowed, lent, or deposited amount (also known as the principal sum).
A land lease, or ground lease, is an arrangement in which a landowner (referred to as the “lessor” in legal terminology) rents out a piece of land to a tenant – the “lessee,” with or without property attached to it.
The act of borrowing money from another person or an institution, such as a bank, to buy a property.
A metric for determining the maximum amount of a secured loan based on the current market value of a property asset, usually used in commercial real estate. The LTV is calculated by a lender or financial institution before approving a loan for purchasing a commercial property. Loans with higher LTVs are riskier and usually have higher interest rates.
A Mortgage Broker is a company or an individual hired to help a property buyer qualify for a loan and takes care of any other obligations or aspects related to getting the loan for the borrower.
There is an old adage, that the three most important words in real estate are “Location, Location, Location”. Well, Multiple Listing Service, also known as MLS, does it justice as it is a collection of 580 regional databases established by cooperating real estate brokers containing all the property listings in an area. It is used by real estate agents to stay on top of the latest information and insights about properties for sale on their market.
The amount of money a buyer offers to a seller to purchase their property as well as any other special terms regarding the transaction. Oral offers are not legally enforceable in real estate sales – they must be put in writing through an estate agent.
In real estate, the principal refers to the responsible party of a real estate transaction with full financial liability. A principal can be any person involved in the contract, such as the seller, buyer, broker, or owner who has hired an agent as a property manager. The term principal can also refer to the amount of money borrowed as a loan, included in the monthly mortgage payments or the initial amount invested.
A type of insurance added to the monthly mortgage payment that a borrower might be required to buy as a condition of a conventional mortgage loan if their down payment on a property is less than 20%. PMI is used to protect the lender in case the borrower is unable to pay the mortgage.
A letter or document(s) that the buyer shows to the seller during a purchase of a property, proving that the buying party (an individual or an entity) has the ability and funds to successfully cover all the purchase costs included in the transaction such as down payment, escrow, and closing costs.
Real estate is defined as a physical property including land and anything permanently attached to or built on it, including natural resources such as water or minerals, buildings, fixtures, roads, structures, and utility systems. It can be used for residential, commercial, or industrial purposes.
You might also be wondering: “What is another word for real estate?” Realty, property, estate, land, lot, plot, and territory are all real estate synonyms, although they all vary slightly by exact meaning.
A classification of properties owned by a lender due to an unsuccessful sale at a foreclosure auction.
A licensed real estate agent that is an offical, federally registered member of the National Association of Realtors® (NAR). A realtor® must uphold to the NAR’s Code of Ethics and is held accountable when serving the public or clients with a high standard of practice and care.
Although the terms “actively licensed real estate agent” and “realtor” are often used interchangeably, don’t be mistaken as every realtor is a real estate agent but not every real estate agent is a realtor, as it’s a trademark.
The process of replacing the old mortgage loan with a new lone from the lender, with more favorable terms such as a lower interest rate or lower monthly payments.
Also known as a “leaseback”, rent-back is an arrangement whereby the buyer (new owner) of a property agrees to allow the seller to stay in the property beyond the close of escrow under previously negotiated and established terms.
A licensed real estate agent hired by the seller to help them list their home on the market and successfully sell it, also known as a listing agent.
A legal document binding sellers to provide previously undisclosed details about the condition of the property that prospective buyers may find unfavorable, also known as a “property disclosure”.
In real estate, a short sale, also known as a pre-foreclosure sale, refers to sales in which a mortgage lender is willing to accept a mortgage payoff amount less than what is still owed on the mortgage to facilitate the sale of the property.
In real estate terminology, a title is a legal document containing information on the history of ownership of a property, giving an individual the right to or ownership of a certain piece of real estate property after a mutual acceptance is reached on an offer.
A type of indemnity insurance that protects lenders and buyers against losses due to problems with the title of a property.
A legal entity employed and empoweredto hold property (legal title to real estate) for the benefit of beneficiaries, and safe-keeping the assets.
The person with the right to manage all funds, property, and assets placed inside of a living trust. When you buy a property in trust, you become the truste, rather than the outright owner of the property.
A VA home loan, also known as a Department of Veterans Affairs home loan, is a government-backed mortgage loan available to Veterans, service members, and their surviving spouses made by private lenders, like mortgage companies and banks, and comes with certain benefits such as competitive interest rates.
A deed (legal real estate document) that protects the buyer against future claims to the title of the property, and in case the home has defects or items that need expensive servicing or replacement.
A set of municipal laws governing how real estate property can or cannot be used in specific areas of jurisdiction. Respectively, properties can be zoned for residential, commercial, or industrial usage or a combination of two or more different uses.
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