Are you thinking of buying or selling a home? If so, you may be feeling a little overwhelmed by all the real estate terminology. Don’t worry – you’re not alone! In this post, we’ll break down some of the most common terms used in the industry. With this Real Estate Glossary, you’ll be able to talk like a pro with your family and friends – or anyone in the industry. You’ll know what everyone is talking about, and feel more confident when making decisions about your future in real estate. Scroll to the bottom of this post for the informative video. 😉
Acre: A measure of land area equal to 43,560 square feet.
Assessment: The value placed on a property by a municipality for tax purposes.
Appraisal: An estimate of a property’s value, typically performed by a licensed appraiser.
Closing: The final step in the home-buying process, during which all necessary paperwork is signed and the ownership of the property is transferred from the seller to the buyer.
Deed: A legal document that conveys ownership of a piece of real estate.
Earnest Money Deposit (EMD): A deposit made by a prospective buyer to show their good faith in completing a purchase. The deposit is typically held in escrow until closing.
Escrow: A third-party account used to hold deposits or funds during a real estate transaction. This ensures that the money is not released until all conditions of the sale are met.
Homeowner’s Association (HOA): An organization that manages a community of homes, usually in a planned development or condo complex. HOAs collect monthly or annual dues from residents, which are used to cover common expenses such as landscaping, pool maintenance, and security.
Lien: A legal claim against a property that must be paid off before the property can be sold.
Listing Agreement: A contract between a homeowner and a real estate agent that gives the agent permission to list and market the property.
Mortgage: A loan used to purchase a piece of real estate. The property serves as collateral for the loan, and the borrower makes monthly payments until the loan is paid off.
Offer: A prospective buyer’s proposal to purchase a property at a certain price.
Planned Unit Development (PUD): A type of housing development that includes a mix of homes, recreational facilities, and green space. PUDs are often managed by a homeowner’s association.
Points: A one-time fee charged by a lender at closing, equal to 1% of the loan amount. Points are used to buy down the interest rate on a mortgage.
Pre-approval: A commitment from a lender that you qualify for a certain loan amount, based on an evaluation of your financial history.
Principal: The portion of a loan’s balance that is not interest.
Private Mortgage Insurance (PMI): Insurance required by lenders on certain loans with low down payments, in case the borrower defaults on the loan.
Property Tax: A tax levied by local governments on real property, based on the assessed value of the property.
Purchase Agreement: A contract between a buyer and seller that outlines the terms of the sale, including the purchase price, closing date, and other conditions.
Real Estate Agent: A professional who represents buyers or sellers in the purchase or sale of a property. Real estate agents are typically compensated with a commission, which is a percentage of the sale price.
Short Sale: A sale in which the proceeds from the sale are not enough to cover the balance of the mortgage. Short sales are typically used when a property is worth less than the amount owed on the mortgage.
Whether you’re a first-time homebuyer or seasoned real estate investor, it’s important to be familiar with the most common terms used in the industry. We’ve covered some of the most important ones in this Real Estate Glossary – blog post, but there are many more out there. If you’re curious about a specific term or would like more information on any of the topics we discussed, please don’t hesitate to give us a call. We’d be happy to help you find the home of your dreams!
