- Amortization: The process of paying off a debt over time through regular payments.
- Appraisal: An evaluation of a property’s value by a professional appraiser.
- Assessed Value: The value of a property according to a public tax assessor for purposes of taxation.
- Balloon Mortgage: A mortgage that has a large, lump-sum payment due at the end of the loan term.
- Bridge Loan: A short-term loan that is used until a person or company secures permanent financing.
- Broker: A person who acts as an intermediary between two parties in a transaction.
- Buyer’s Agent: A real estate agent who represents the buyer in a real estate transaction.
- Capital Gain: The profit from the sale of a property or an investment.
- Closing: The final step in a real estate transaction where the title is transferred from the seller to the buyer.
- Closing Costs: Fees paid at the closing of a real estate transaction.
- Commercial Property: Real estate property that is used for business activities.
- Comparative Market Analysis (CMA): An examination of the prices at which similar properties in the same area recently sold.
- Contingency: A condition that must be met for a real estate contract to become binding.
- Conventional Mortgage: A type of mortgage loan that is not insured or guaranteed by the government.
- Deed: A legal document that proves ownership of a property.
- Down Payment: The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.
- Earnest Money: A deposit made to a seller indicating the buyer’s good faith in an arrangement.
- Equity: The difference between the market value of a property and the amount the owner still owes on the mortgage.
- Escrow: An account held by a third party on behalf of two parties in a transaction.
- Fixed-Rate Mortgage: A mortgage that has a fixed interest rate for the entire term of the loan.
- Foreclosure: The process by which a bank takes back a property from a borrower who has failed to make mortgage payments.
- Home Inspection: A thorough inspection by a professional that evaluates the structural and mechanical condition of a property.
- Homeowner’s Association (HOA): An organization in a subdivision, planned community, or condominium that makes and enforces rules for the properties in its jurisdiction.
- Lease: A legal document outlining the terms under which one party agrees to rent property from another party.
- Lien: A claim or charge on property for payment of some debt, obligation or duty.
- Listing: A formal agreement between a property owner and a real estate broker authorizing the broker to represent the seller and find a buyer.
- Loan-to-Value Ratio (LTV): The ratio of a loan to the value of an asset as determined by the formula loan amount divided by the appraised value of the property.
- Market Value: The highest estimated price that a buyer would pay and a seller would accept for an item in an open and competitive market.
- Mortgage: A loan to finance the purchase of real estate, usually with specified payment periods and interest rates.
- Multiple Listing Service (MLS): A service used by a group of real estate brokers. They band together to create an MLS that allows each of them to see one another’s listings of properties for sale.
- Pre-Approval Letter: A letter from a lender indicating that a potential buyer has the ability to pay back a loan up to a certain amount.
- Principal: The amount of money originally borrowed in a loan.
- Private Mortgage Insurance (PMI): Insurance that a mortgage lender requires a borrower to purchase if the loan is more than 80% of the home’s value.
- Property Tax: A tax assessed on real estate by the local government, usually based on the value of the property.
- Real Estate Agent: A professional licensed to negotiate and conduct real estate transactions.
- Real Estate Investment Trust (REIT): A company that owns, operates, or finances income-generating real estate.
- Realtor: A real estate agent who is a member of the National Association of Realtors.
- Refinance: Obtaining a new mortgage to replace an existing one.
- Title: A legal document evidencing a person’s right to ownership of a property.
- Title Insurance: Insurance that protects the holder from loss sustained by defects in the title.
- Underwriting: The process of evaluating a loan application to determine the risk involved for the lender.
- Zoning: Government regulations that control how land can be used.
- Adjustable-Rate Mortgage (ARM): A mortgage loan with the interest rate on the note periodically adjusted based on an index.
- Appreciation: The increase in the value of a property over time.
- Bankruptcy: A legal proceeding involving a person or business that is unable to repay outstanding debts.
- Cash Flow: The net income generated by a property after mortgage payments and operating expenses.
- Chain of Title: The history of all of the documents that transfer title to a parcel of real property, starting with the earliest existing document and ending with the most recent.
- Condominium: A building or complex of buildings containing a number of individually owned apartments or houses.
- Depreciation: A decrease in the value of a property due to wear and tear or obsolescence.
- Easement: A right to cross or otherwise use someone else’s land for a specified purpose.
- Fair Market Value: The price that a willing buyer and a willing seller would agree upon, given reasonable exposure of the property to the marketplace, full information as to the potential uses of the property, and no undue compulsion to act.
- Gross Rent Multiplier (GRM): A simple method used to assess the approximate value of a rental property.
- Home Equity Line of Credit (HELOC): A line of credit extended to a homeowner that uses the borrower’s home as collateral.
- Interest Rate: The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.
- Joint Tenancy: A legal arrangement in which two or more people own a property together, each with equal rights and obligations.
- Landlord: The owner of property that is rented or leased to an individual or business, who is called a tenant.
- Lease Option: A lease with an option for the tenant to purchase the property.
- Mortgage Broker: An intermediary who brings mortgage borrowers and mortgage lenders together, but does not use its own funds to originate mortgages.
- Negative Amortization: An increase in the principal balance of a loan caused by making payments that fail to cover the interest due.
- Offer: A formal proposal to buy a property.
- Open House: A period of time during which a house or apartment for sale or rent is held open forpublic viewing.
- Pre-Qualification: An evaluation of a potential borrower’s ability to receive a loan, pre-qualification is an indication of approximate borrowing capacity.
- Real Estate Owned (REO): Property owned by a lender—usually a bank—after an unsuccessful sale at a foreclosure auction.
- Rent-to-Own: A type of agreement that allows a renter to become the owner of the property after a certain period of time.
- Seller’s Agent: A real estate agent who represents the seller in a real estate transaction.
- Short Sale: A sale of real estate in which the net proceeds from selling the property will fall short of the debts secured by liens against the property.
- Tenancy in Common: A type of joint tenancy of property without right of survivorship; each co-tenant’s portion is distributable under a will.
- Vacancy Rate: The percentage of all available units in a rental property, such as a hotel or apartment complex, that are vacant or unoccupied at a particular time.
- Walkthrough: A final inspection of a home before it changes ownership.
- Warranty Deed: A type of deed where the grantor (seller) guarantees that he or she holds clear title to a piece of real estate and has a right to sell it to the grantee (buyer).
- Abstract of Title: A summary of the public records relating to the title to a particular piece of land.
- Acquisition Cost: The cost to purchase a property, including the contract price and additional costs such as closing and renovation costs.
- Basis Point: One hundredth of one percent, used chiefly in expressing differences of interest rates.
- Building Code: A set of rules that specify the standards for constructed objects such as buildings and nonbuilding structures.
- Capitalization Rate: The rate of return on a real estate investment property based on the income that the property is expected to generate.
- Due Diligence: The process of examining all of the material facts of a deal or a contract before a legal contract is signed.
- Eminent Domain: The power of a government to take private property for public use.
- Fixture: An item of property so attached to a building or land that it becomes part of the real estate.
- Gentrification: The process of improving a house or district so that it conforms to middle-class taste.
- Housing Discrimination: The act of discriminating against an individual or group in the housing market, usually based on race, religion, national origin, sex, disability, and family status.
- Ingress and Egress: The right to enter and leave designated premises.
- Joint Venture: A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task.
- Leverage: The use of borrowed money to finance an investment.
- Nonconforming Use: A use of property that is permitted to continue after a zoning ordinance prohibiting it has been established.
- Owner Financing: A property purchase transaction in which the property seller provides all or part of the financing.
- Property Management: The operation, control, and oversight of real estate as used in its most broad terms.
- Quitclaim Deed: A deed that transfers a seller’s interest in a property but does not guarantee that the seller holds the property free and clear of all liens.
- Real Property: Land and anything permanently affixed to it, including buildings, fences, and other items attached to the structure.
- Survey: The processof measuring land to determine its size, location, and physical description and the resulting drawing or map.
- Tax Lien: A legal claim by a government entity against a noncompliant taxpayer’s assets.
- Triple Net Lease (NNN): A lease agreement on a property where the tenant or lessee agrees to pay all real estate taxes, building insurance, and maintenance on the property.
- Usury: The illegal action or practice of lending money at unreasonably high rates of interest.
- Variable Rate Mortgage: A type of home loan in which the interest rate is not fixed.
- Yield: The income return on an investment, such as the interest or dividends received.
- Zoning Ordinance: A rule that specifies how land in certain geographic zones can be used.
- 1031 Exchange: A swap of one investment property for another that allows capital gains taxes to be deferred.
- Absorption Rate: The rate at which available homes are sold in a specific real estate market during a given time period.
- Blanket Mortgage: A mortgage which covers more than one piece of real estate.
- Cost of Funds Index (COFI): An index that is used to determine interest rates or changes in interest rates for certain types of mortgages.
- Dual Agency: A situation in which a real estate agent represents both the buyer and the seller in the same transaction.
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