This comprehensive list of 50 real estate terms and definitions will help you understand the basics of real estate. From common terms like mortgage and appraisal to more complex concepts such as escrow and title insurance, this list covers all the topics you need to know when buying or selling your home. Whether you are a beginner or a seasoned real estate professional, this glossary of terms is the perfect reference for all your real estate questions. With easy-to-understand definitions, you’ll be prepared for any real estate jargon you come across.
50 Real Estate Terms and Definitions to Help You Navigate the Real Estate Market
1. Absorption Rate – The rate at which real estate properties are sold in a certain area over a certain period of time.
2. Amortization – The process of paying off a loan in regular installments of principal and interest over a period of time.
3. Appraisal – A professional opinion of the value of a property. Read more: Checklist to Prepare for Home Appraisal
4. Assessed Value – The value placed on a property for tax purposes.
5. Balloon Payment – A large, lump-sum payment due at the end of a loan.
6. Buyer’s Agent – A real estate agent representing a buyer in a real estate transaction.
7. Closing – The final step in a real estate transaction; the buyer pays for the property, and the seller transfers the title.
8. Closing Costs – The fees and expenses associated with purchasing or selling a property.
9. Commission – The fee paid to a real estate agent or broker for services rendered in a real estate transaction.
10. Contingency – A condition attached to a real estate contract that must be met before the contract is binding.
11. Contract – A legally binding agreement between two or more parties.
12. Conventional Mortgage – A mortgage that the government does not insure.
13. Deed – A legal document that conveys ownership of a property from one person to another.
14. Default – When a borrower fails to make a payment on a loan.
15. Depreciation – A loss in value of property over time due to wear and tear.
16. Due Diligence – The process of researching a property before making an offer. Read more: Due Diligence vs Earnest Money
17. Earnest Money – Money given to a seller as a sign of good faith when a property is placed under contract.
18. Escrow – Money held by a third party in a real estate transaction.
19. Foreclosure – The process of a lender repossessing a property when the borrower defaults on their loan. Read more: Foreclosures in Colorado
20. Home Inspection – A professional assessment of a property to determine its condition. Read more: What Fixes are Mandatory After a Home Inspection?
21. HOA Fee – A monthly fee paid to a Homeowners Association to cover the cost of common area maintenance.
22. Interest Rate – The percentage rate charged by a lender for the use of its money.
23. Lease – A legal agreement between a landlord and tenant that outlines the terms of their rental relationship.
24. Listing Agreement – A contract between a real estate agent and a seller that outlines the services to be provided.
25. MLS – A multiple listing service, a database used by real estate agents to list and market properties for sale.
26. Mortgage – A loan used to purchase a property.
27. Offer – An amount a buyer is willing to pay for a property.
28. Open House – An event where a property is open to the public for viewing.
29. Pre-Approval – A lender’s written commitment to provide financing for a buyer after reviewing their financial history.
30. Principal – The amount of money borrowed on a loan.
31. Private Mortgage Insurance (PMI) – Insurance required by lenders to protect them in case a borrower defaults on their loan.
32. Property Tax – A tax levied on real property by the government.
33. Real Estate Agent – A professional who helps buyers and sellers with their real estate transactions.
34. Realtor – A real estate agent who is a member of the National Association of Realtors.
35. Refinancing – The process of replacing an existing loan with a new one.
36. Rent to Own – An agreement in which a tenant makes monthly payments towards the purchase of a property.
37. Seller’s Agent – A real estate agent that represents a seller in a real estate transaction.
38. Survey – A measurement of a property that determines its boundaries. Read more: Who Arranges a Survey When Buying a House?
39. Title – A legal document that proves a person’s ownership of a property.
40. Title Insurance – Insurance that protects the owner of a property from any claims against the title. Read more: Do I Need Title Insurance in Colorado?
41. Transfer Tax – A tax imposed on the sale of a property.
42. Trustee – A person or institution that holds legal title to a property for the benefit of another.
43. Underwriting – The process of evaluating a borrower’s financial information to determine if they are eligible for a loan.
44. VA Loan – A loan guaranteed by the Department of Veterans Affairs. Read more: Can You Have a Cosigner on a VA Loan?
45. Walk-Through – A final inspection of a property done before closing.
46. Zoning – Restrictions placed on a property by a local government.
47. Cap Rate – The ratio of a property’s net operating income to its current market value.
48. Flipping – The process of purchasing, renovating, and selling a property for a profit.
49. Short Sale – When a lender agrees to accept a sale price that is less than the amount owed on a property. Read more: Why Short Sales are Better than Being Foreclosed On
50. Subdivision – When a large parcel of land is divided into smaller lots.