| Real Estate Terms
Simple Real Estate Terms and their Definitions
Adjustable rate mortgage (ARM)
A home loan with an interest rate that periodically adjusts to reflect changes in a specified financial index.
Agency
The relationship of trust that exists between a client and any person to which they have provided an authority to represent them. Having a fiduciary responsibility for client. To work in the best interest of.
Amortization loan
A loan in which the principal as well as interest is payable in periodic (monthly) installments over the term of the loan
Appraisal
A professional opinion of the value of a property by a licensed real estate appraiser.
Balloon payment
The final lump sum payment due at the end of a balloon mortgage.
Bridge loan
A short-term loan for borrowers who need more time to find permanent financing.
Buyer's agent
An agent representing a buyer in a home purchase, either as a single agent or as an exclusive buyer's broker.
Capital gain
Profit an investor makes from the sale of real estate or investments. Capital gains tax
A tax placed on profits from the sale of real estate or investments.
Closing
The final procedure in which loan and title documents are signed between the buyer and seller and their respective representation.
Closing costs
Expenses related to the sale of real estate including loan, title, and appraisal fees. These costs are above and beyond the price of the property and are paid at closing. Most closing costs are one-time expenses however a few are recurring.
Closing statement
A document which details the final financial details of a property sale between a buyer and seller and the costs paid by each party.
Commission
A negotiable percentage of a property's sales price paid to the agents of the buyer and seller.
Comparative market analysis (CMA)
An estimate of the value of a property based on an analysis of sales of properties with similar characteristics. Click here to obtain one.
Disclosure
A statement to a potential buyer listing information relevant to a piece of property, such as the presence of radon or lead paint.
Discount points
Fees charged by a lender to provide a lower interest rate. One discount point equals one percent (1%) of the loan amount.
Dual agent
An agent who represents both the buyer and the seller in a transaction.
Escrow
A neutral third party holds documents and money for a real estate transaction and ensures that all conditions of a sale are met before any disbursement of funds or articles.
Home inspector
A licensed professional who evaluates the structural soundness and operating systems of a residence.
Homeowners Warranty
A special insurance policy that covers certain home repairs for a specified amount of time.
HUD
Abbreviation of (the U.S. Department of) Housing and Urban Development. HUD is a federal agency that oversees the Federal Housing Administration (FHA) and a variety of housing and community development programs.
Listing agent
A broker or sales agent who has contracted with a seller to handle the marketing and sale of a piece of property.
Market value
The price a piece of property sells for at a particular point in time.
MLS
MLS is an acronym for the Multiple Listing Service. This service combines the listings for all available homes in an area (except For Sale By Owner properties) in one directory or database.
Owner financing
A transaction in which the seller of a property agrees to finance all or part of the purchase.
PITI (principal, interest, taxes, and insurance)
A payment amount calculated by a mortgage lender to include the total payment of all principal, interest, taxes and insurance due monthly.
Pre-approval letter
A letter from a lender that states the amount of money a potential buyer can obtain.
Principal
The amount of money originally borrowed in a mortgage, minus any payments made subsequently
Seller's market
A real estate market in which sellers have the advantage and multiple offers are common.
Selling agent
A real estate broker or salesperson who writes the purchase offer for a buyer in a real estate transaction but may not actually represent the buyer.
Title
The legal document conferring ownership of a piece of real estate.
Warranty
A legally binding promise to do something in the future.
Zero-lot line
The positioning of a house near or on top of the lot boundary, resulting in little or no space between houses.
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