Important Real Estate Glossary You Should Know

Time and time again, you have exposed yourself to the basic knowledge on real estate investment.

However, whether as an investor or prospect, you need a breakdown of real estate jargons to help you brush up your investment further.

As you grow in your investment, these 30 real estate terms should help you better understand the process and plan your move.

Agent

A real estate professional that is legally licensed to buy and sell property on behalf of their clients.

If you are planning to buy or sell your home, there is a good chance you will be working with a real estate agent that you pay a commission.

Appraisal

When you apply for a mortgage, your lender will require an appraisal of the home you want to buy. A licensed appraiser will estimate the home’s value based on comparable homes that have sold in the area and an investigation of the property.

Basically, real estate appraisal, is the process of developing an opinion of value for real property.

Buyer’s agent/listing agent

A buyer’s agent, also known as a selling agent, is a licensed real estate professional whose job is to locate a buyer’s next property, represent their interests by negotiating on behalf of that buyer to obtain the best price and purchase scenario for that buyer. While the listing agent represents the interests of the seller.

However, dual agency occurs when one agent represents both the seller and the buyer in a single real estate transaction.

Bill of sale

A written instrument given to pass title to personal property. It is a formal document detailing in writing a sale or transfer of property from one party to another.

Closing

As the final execution in real estate transaction, the closing includes all parties’ signatures on all required documents, all monies conveyed, and when a lender is involved, with full lender’s approval.

Co-tenants

Two or more persons who have entered into a tenancy agreement together for the same rental unit. Each co-tenant is 100% responsible for carrying out the rental agreement, which includes paying the entire rent if the other tenant skips town and paying for damage caused by the other tenant.

Contingency

When a house is listed as contingent, it means that an offer has been made and accepted, but before the deal is complete, some additional criteria must be met.

Down payment

The amount of money that a buyer must pay upfront as part of a real estate transaction. The amount paid is usually a percentage of the purchase price and can range from as little as 3% to as much as 20% for a property being used as a primary residence.

Equity

A measure calculated by taking the market value of a property and deducting the amount that is still owed on the mortgage, if any.

Fixed-rate mortgage

A home loan with an interest rate that stays the same throughout the loan’s lifetime. It refers to a home loan that has a fixed interest rate for the entire term of the loan.

Ground Lease

A ground lease is an agreement that permits a tenant to develop a piece of property during the period of the lease.

Home inspection

An examination of the overall condition and safety of a property. It is an opportunity to discover problems with the house before purchasing.

Interest

The profit a mortgage lender makes in exchange for the loan. It is quantified as a percentage.

Listing

A property that is up for sale. A listing on a website shows information about the home, such as the price and number of bedrooms.

Mortgage

A long-term loan given by a lender to finance a real estate property. The property is used as collateral in exchange for the money that is borrowed.

Open listing

A situation in which a property owner chooses to sell their home on their own. There is no exclusive agreement, which means they can have listings with multiple agents.

Principal

The total amount borrowed in a mortgage loan. The principal balance of a mortgage loan is the amount of money owed to the lender, not including interest.

Pre-approval

Before submitting an offer on a home (or even engaging with a real estate agent), you’ll likely be required to get pre-approved. This means a lender has checked your credit, verified your information, and approved you for up to a specific loan amount for a period of up to 90 days.

Preliminary report

A preliminary report reveals any issues with a title that need to be dealt with by the seller in order to deliver a clear title.

Probate sale

A probate sale happens when a homeowner dies without writing a will or leaving a property to someone.

Purchase agreement

A purchase agreement demonstrates a buyer’s intent to purchase a piece of property and a seller’s intent to sell that property. The document outlines the terms and conditions of a sale and holds each party legally accountable to meeting their agreement.

Realtor

An individual who is a member of the National Association of Realtors (NAR), a trade association for real estate professionals. By becoming a member, realtors agree to abide by a strict Code of Ethics laid out by the NAR.

Rent-back

Rent-back, or leaseback, refers to an arrangement whereby the buyer, who is now the new homeowner, agrees to allow the seller, the now-tenant, to stay in the house beyond the close of escrow.

Short sale

A property that is sold for less than the amount that is owed on the mortgage.

Tenant

Anyone, including a corporation, who rents real property, with or without a house or structure, from the owner (called the landlord). The tenant may also be called the lessee.

Tenancy in common (TIC)

Tenancy in common describes a type of joint ownership of a property, whether a single family property or a commercial building. The tenants in common all own the property, but in different ratios.

Title

A home’s title represents the rights to the property. Those rights are transferred from the seller to the buyer during a real estate transaction and give the buyer legal rights to the property upon closing.

Title insurance

Title Insurance is a form of indemnity insurance that protects lenders and homebuyers from financial loss sustained from defects in a title to a property.

Title search

A title search examines public records for the history of the home, including sales, purchases, and tax and other types of liens.

Transfer of ownership

In real estate, transfer of ownership refers to transfer of a property’s deed and title from the seller to the buyer at closing.

Under contract

This is when a seller has accepted an offer from a buyer but the transaction has not yet closed.

 

Tags:

Leave a Reply