Every industry has its own vocabulary and terms, real estate is no different.
Below you’ll find an extensive real estate vocabulary list and terms to know and practice so you sound experienced when talking to real estate agents, loan officers, sub-contractors, and other industry players.
Agent – A real estate agent is a person who works for a seller, buyer, or both during a real estate transaction.
Amortization – a period in which a loan balance is gradually paid off from a mortgage payment that includes both principal and interest.
Appraisal – The estimation of a property’s market value by a licensed appraiser to assist banks in making loans to home buyers.
Appraiser – The person who visits a property, analyzes it, and determines its approximate value
Appreciation – The annual increase in a property’s market value.
Closing – This refers to the process where the deed of the property is formally transferred from the seller to the buyer.
Closing Costs – the costs associated with completing a real estate transaction such as commissions, inspection fees, title work fees, taxes, and more.
Deed – The legal document that determines who has ownership of a property. This is the document transferred from seller to buyer at closing.
Down Payment – The amount of money paid upfront for the property. Some lenders have a down payment requirement that has to be met such as 20% of the purchase price for example.
Equity – The financial value above what is owed on the property. As a loan is paid off equity is built so when the property is sold all proceeds pay off the remaining loan balance and the left-over money is equity that goes in the owner’s pocket.
Escrow – A neutral third party or attorney that handles the exchange of money and documents between a buyer and seller once a mutual offer has been accepted and the parties move to closing.
Fixed Rate Mortgage – an interest rate that stays constant over the entire life of the loan.
Foreclosure – A property that defaulted on loan payments and failed to make them up over the course of the foreclosure process ultimately leading the bank to reclaim the property from the
Inspection – A thorough inspection of a home by a licensed inspector to discover any issues or repairs that need to be made before buying the home.
Interest – the cost of borrowing money. It is the money owed in addition to the loan amount being paid back.
Listing Agent – a real estate agent who works with the property owner to list their property for sale on the market.
Mortgage – the charging of real (or personal) property by a debtor to a creditor as security for a debt (especially one incurred by the purchase of the property), on the condition that it shall be returned on payment of the debt within a certain period.
Mortgage Broker – the company or person who helps a home buyer qualify for a loan and handles all aspects of getting the loan creating / lending in place for the borrower.
Offer – the price that a buyer offers to the seller to purchase their property as well as any special terms the buyer requires as part of their offer to the seller.
Pre-Approval Letter – a document buyers should obtain from a lender that provides proof they can afford to buy a home up to a certain amount so agents/sellers do not feel like they are being tricked or time wasted.
Principal – The amount borrowed for a mortgage loan. Monthly mortgage payments include both the repayment of the principal and interest owed.
Private Mortgage Insurance – a monthly payment added to the mortgage payment when a buyer has less than 20% as a down payment on the property. It protects the lender (insurance) in case the buyer defaults on the loan.
Property Tax – An annual or semi-annual tax paid to one or more government agencies based on the property value assessment.
Real Estate Broker – A real estate agent who is licensed by the state to represent a buyer or seller in a real estate transaction. A real estate broker gets paid a commission. Most real estate brokers also have agents working for them. Licensing for a broker and an agent are different in case you are confused.
Title – A legal document listing the history of ownership of the home. Buyers get a preliminary title report from an escrow agent or attorney within a week after they reach mutual acceptance on an offer.
Zoning – Laws that govern how a real estate can be used. Properties can be zoned for residential, commercial or industrial usage or a combination of two or more uses.
