Real Estate Terms & Word
UsageListed below are
words commonly used during real estate
transactions.
A B C D E F G H I J
K L M N O P Q R S T U V W X Y Z
Abstract of judgment, law
The summary of a court judgment that creates a
lien against a property when filed with the
county recorder.
Accelerated cost recovery system
A tax calculation that provides greater
depreciation in the early years of ownership of
real estate or personal property.
Accelerated depreciation
A bookkeeping method that depreciates property
faster in the early years of ownership.
Acceleration clause
A provision that gives a lender the right to
collect the balance of a loan if a borrower
misses a payment.
Acceptance
The seller's written approval of a buyer's
offer.
Access
Any means by which a person can enter property.
Accessibility
The degree to which a building or site allows
access to people with disabilities.
Accretion
The gradual addition to the shore or bank of a
waterway by deposits of sand or silt.
Acknowledgment
A written declaration affirming that a person
acted voluntarily.
Acre
A measurement of land equal to 43,560 square
feet.
Addendum
An addition or change to a contract.
Administrator
A person given authority to manage and
distribute the estate of someone who died
without leaving a will.
Adverse possession
The acquisition of title to property through
possession without the owner's consent for a
certain period of time.
Adverse use
The access and use of property without the
owner's consent.
Aeolian soil
Soil that is composed of materials deposited by
the wind.
Affiant
A person who makes a sworn statement.
Agency
The relationship of trust that exists between
sellers and buyers and their agents. The agency
is formed through a written
Agency closing
The process by which a lender uses a title
company or other firm as an agent to complete a
loan.
Agent
A person licensed by the state to conduct real
estate transactions.
Agreed boundary
A compromise boundary to which property owners
agree in order to resolve a dispute.
Agreement of sale
A document the buyer initiates and the seller
approves that details the price and terms of the
transaction.
Allowances
Budgets offered by builders of new homes for the
purchase of carpeting and fixtures.
Amenities
Parks, swimming pools, health-club facilities,
party rooms, bike paths, community centers and
other enticements offered by builders of planned
developments.
Americans with Disabilities
Act
A law passed in 1990 that outlaws discrimination
against a person with a disability in housing,
public accommodations, employment, government
services, transportation and telecommunications.
Anticipatory breach
A communication that informs a party that the
obligations of the original contract will not be
fulfilled.
Appraisal
An opinion of the value of a property at a given
point in time.
Appraised value
An opinion of the current market value of a
property.
Arbitration
A method of resolving a dispute in which a third
party renders a decision.
As-is condition
The purchase or sale of a property in its
existing condition.
Asking price
A seller's initial price for a property.
Assessed value
A tax assessor's determination of the value of a
home in order to calculate a tax base.
Assessment
The estimated value of a piece of real estate or
a levy placed on property in addition to taxes.
Assets
Items of value which include cash, real estate,
securities and investments.
Assignor
A person who transfers rights and interests of a
property.
Average price
The price of a home determined by totaling the
sales prices of all houses sold in an area and
dividing that number by the
number of homes.
Back title letter
A letter that a title insurance company gives to
an attorney who then examines the title for
insurance purposes.
Backup offer
A secondary bid for a property that the seller
will accept if the first offer fails.
Boundary
The dividing line between two adjacent
properties.
Breach of contract
The failure to perform provisions of a contract
without a legal excuse.
Breach of covenant
The failure to obey a legal agreement.
Breach of warranty
A seller's inability to pass clear title to a
buyer.
Broker
A person licensed by the state to deal in real
estate.
Brokerage
The act of bringing together two or more parties
in exchange for a fee or commission.
Broom clean
The ideal condition of a building when it is
turned over to an owner or tenant.
Builder upgrades
Extra house features or better finishing
materials that a builder offers.
Building line or setback
Guidelines that limit how close an owner can
build to the street or an adjacent property.
Built-ins
Appliances or other items that are framed into a
home or permanently attached.
Buyer broker
A real estate broker who exclusively represents
the buyer's interests in a transaction and whose
commission is paid by the buyer rather than the
seller.
Buyer's market
A slow real estate market in which buyers have
the advantage.
Buyer's remorse
An emotion felt by first-time homebuyers after
signing a sales contract or closing the purchase
of a house.
Bylaws
The rules and regulations that a homeowners
association or corporation adopts to govern
activities.
Cancellation clause
A clause that details the conditions under which
each party may terminate the agreement.
Cape Cod style
A wood-frame or shingled house with a steep roof
and several windows projecting from the second
floor.
Capital gains
Profits an investor makes from the sale of real
estate or investments.
Capital gains tax
A tax placed on the profits from the sale of
real estate or investments.
Capital improvement
Any improvement that extends the life or
increases the value of a piece of property.
Capitalization rate
The percentage rate of return estimated from the
net income of a piece of property.
Caravan
A group of real estate agents who tour a house
that has been recently listed for sale.
Cashier's check
A check the bank draws on itself rather than on
a depositor's account.
Certificate of eligibility
A document issued by the Veterans Administration
that verifies the eligibility of a veteran for a
loan program.
Certificate of occupancy
A document which states that a home or other
building has met all building codes and is
suitable for habitation.
Certificate of sale
A document issued at a judicial sale, which
entitles the buyer to receive a deed after court
confirmation of the purchase of the
Certificate of title
A written opinion on the status of a piece of
property based on an examination of the public
record.
Change order
A modification of the construction contract to
authorize a change in the work, an adjustment in
the amount of the contract or a change in the
contract time. The owner, architect and
contractor must sign the change.
Clear title
A property that does not have liens, defects or
other legal encumbrances.
Closing
The final procedure in which documents are
signed and recorded, and the property is
transferred.
Closing costs
Expenses incidental to the sale of real estate,
including loan, title and appraisal fees.
Closing statement
A document which details the final financial
settlement between a buyer and seller and the
costs paid by each party.
Cloud on title
An invalid encumbrance on real property.
Commercial property
An area that is zoned for businesses.
Commingling
The mixing of money held in trust with other
funds.
Commission
The negotiable percentage of the sales price of
a home that is paid to the agents of the buyer
and seller.
Commitment
A promise by a lender to make a loan with
specific terms for a specified period.
Commitment fee
The fee a lender charges for promising to make a
loan.
Common area
An area inside a housing development that is
owned by all residents.
Common law
A body of laws based on custom, usage and
rulings by courts in various jurisdictions.
Common-area assessments
Fees paid by the owners of a condominium project
or planned-unit development to maintain, repair,
improve or operate common
Comparables
Properties used as comparisons to determine the
value of a certain property.
Comparative market analysis
An estimate of the value of a property based on
an analysis of sales of properties with similar
characteristics.
Conditional commitment
A promise by a lender to make a loan if the
borrower meets certain conditions.
Consideration
Anything that is legal, has value and induces a
person to enter into a contract.
Contingency
A condition specified in a purchase contract,
such as a satisfactory home inspection.
Contract
An agreement between two or more parties that
creates or modifies an existing relationship.
Contract to purchase
A contract the buyer initiates which details the
purchase price and conditions of the transaction
and is accepted by the seller. Also known as an
agreement of sale.
Conveyance
The transfer of title of property.
Cooperating broker
A real estate broker who finds a buyer for a
property that another broker has listed.
Co-signer
A second party who signs a promissory note and
takes responsibility for the debt.
Counteroffer
A response to an offer.
Covenant
A legal assurance or promise in a deed or other
document, or implied by the law.
Covenants, conditions and
restrictions (CC&Rs)
Rules and regulations for a development, such as
acceptable landscaping or improvements that can
be made to individual
Days on the market
The period of time a property is listed for sale
until it is sold or taken off the market
Deed
The legal document that transfers ownership of a
piece of property.
Deed of trust
A document that gives a lender the right to
foreclose on a piece of property if the borrower
defaults on the loan.
Default
The failure to fulfill a duty or promise or
discharge an obligation, such as making monthly
mortgage payments.
Deposit
Money given by the buyer with an offer to
purchase property. Also called earnest money.
Disclosure
A statement to a potential buyer listing
information relevant to a piece of property,
such as the presence of radon or lead paint.
Dual agency
A relationship in which a real estate agent or
broker represents both parties in a transaction.
Dutch colonial style
A design that features barn-like gambrel roof, a
ground-level front porch, and dormers.
Early occupancy
The condition in which buyers can occupy the
property before the sale is completed.
Earnest money
Money a buyer gives with an offer to purchase a
property. Also called a deposit.
Easement
A right given to a third party to use a portion
of the property for certain purposes, such as
power lines or water mains.
Effective age
The age of a structure estimated by its
condition rather than its actual age.
Eminent domain
The government's right to condemn private land
for public use, such as the routing of a public
highway.
Encroachment
Fences or other structures that extend into the
property of another owner.
Encumbrance
A claim or lien on a property which complicates
the title process.
English Tudor style
An architectural design that features stone or
brick exterior walls and exposed beams.
Equity
A determination of the value of a property after
existing liens are deducted.
Errors and omissions
insurance
A policy that pays for any mistakes a builder
or architect makes in a project.
Escrow
A neutral third party holds the documents and
money involved in a real estate transaction and
ensures that all conditions of a sale are met..
Escrow also refers to a special account that a
lender establishes to hold monthly installments
from the borrower to cover property taxes and
insurance.
Escrow account
An account that a lender or mortgage servicer
establishes to hold funds for the payment of
expenses such as homeowners insurance and
property taxes. Also known as an impound
account.
Escrow agent
A neutral third party who ensures that all
conditions of a real estate transaction are met.
Escrow closing
Escrow closes when all conditions of a real
estate transaction are met and the title of the
property is transferred to the buyer.
Escrow company
Firms that act as neutral third parties to
ensure that all conditions that the buyer,
seller and lender establish in a real estate
transaction are met.
Estate
The total assets of a person, including real
property, at the time of death.
Examination of title
An inspection by a title company of public
records and other documents to determine the
chain of ownership of a property.
Exclusive listing
A contract that gives an agent the exclusive
right to market a property for a specific period
of time.
Executor
A person appointed to carry out the instructions
in a will. If there is no will, a probate court
will appoint an executor.
Fair Housing Act
Landmark federal law passed in 1965 and amended
in 1988 that makes it illegal to deny rent or
refuse to sell to anyone based on race, color,
religion, sex or national origin. The 1988
amendment expanded the protections to include
family status and
Fee simple
This type of ownership is the maximum interest a
person can have in a piece of real estate. It
entitles the owner to use the property in any
manner they see fit, in accordance with state
and local laws.
Fiduciary duty
The relationship of trust that buyers and
sellers expect from a real estate agent. The
term also applies to legal and business
relationships.
Fixture
Personal property permanently attached to a
house, such as drapery rods, toilets, built-in
bookcases or a furnace.
Flat fee
A set fee charged by a broker instead of a
commission.
Flood insurance
Hazard coverage that is required in designated
flood areas.
Flood plain
Flat, flood-prone areas located along waterways.
Grantee
A person conveyed an
interest in a piece
of property.
Grantor
The person who
conveys an interest
in a piece of
property to another
person.
Greenbelt
Any stretch of park,
open space or other
natural setting in a
community.
Hazard insurance
This provision of
homeowners insurance
covers damage by
fire, wind or other
disaster. It is
required by all
lenders before a
loan is approved.
Home inspection
An examination of a
home's construction,
condition and
internal systems by
an inspector or
contractor prior to
purchase.
Home
warranty
A type of insurance
that covers repairs
to certain parts of
a house and some
fixtures.
Homeowners'
association
A group that governs
a modern subdivision
or planned
community. An
association collects
monthly fees from
all owners to pay
for maintenance of
common areas, handle
legal and safety
issues, and enforce
the covenants,
conditions and
restrictions set by
the developer.
Homeowners'
insurance
This insurance
includes hazard
coverage for any
damages that may
affect the value of
a house, in addition
to personal
liability and theft
coverage.
Homeowners' warranty
Special insurance
policies that cover
certain home repairs
for a specified
amount of time.
HUD-1
Uniform Settlement
Statement
A closing statement
or settlement sheet
that outlines all
closing costs on a
real estate
transaction or
refinancing.
Impact fees
Fees collected from
developers of new
homes to pay for
schools, parks and
other facilities.
Incurable defect
A defect in a
property that cannot
be fixed, such as an
adjacent hazardous
waste site, or that
would cost too much
to repair relative
to the value of the
property.
Inspection report
An examination of a
home's exterior,
foundation, framing,
plumbing, electrical
system, heating, air
conditioning,
fireplace, kitchen,
bathroom, roofing
and interior.
Insurance
Owners and buyers
can purchase various
types of insurance:
hazard, private
mortgage and
earthquake. The
policies guarantee
compensation for
specific losses.
Judgment
The decision of a
court or law. If a
court decides that a
person must repay a
debt, a lien may be
placed against that
person's
Lead
A metallic chemical
element present in
older dwellings,
primarily in the
form of lead-based
paint and lead
plumbing. Exposure
to lead has been
found to be a health
risk.
Legal blemish
Blemishes on a piece
of property, such as
a zoning violation
or fraudulent title
claim.
Legal
description
A specific way of
identifying and
locating a piece of
real estate that is
acceptable to a
court.
Lender
A bank, savings
institution or
mortgage company
that offers home
loans.
Letter of intent
A formal statement
that the buyer
intends to purchase
the property for a
certain price on a
certain date.
Liability insurance
A policy that
protects owners
against any claims
of negligence,
personal injury or
property damage.
Listing
A piece of property
placed on the market
by a listing agent.
Listing inventories
The known number of
houses for sale
within a given
market.
Low-ball offer
An offer made to a
seller that is
substantially below
market value. The
longer a property
stays on the market,
the more likely
there are to be such
offers.
Manufactured
housing
Prefabricated homes
that can range from
simple trailers to
larger dwellings.
Market conditions
Factors affecting
the sale and
purchase of homes at
a particular point
in time.
Market value
The price that a
piece of property
sells for at a
particular point in
time.
Master-planned
community
A suburban plan that
includes homes and
commercial, work,
educational and
community
facilities.
Mediation
A dispute-resolution
process in which a
neutral party works
to resolve contract
differences.
Metes
and bounds
A time-honored land
surveying method of
describing land in
terms of shape and
boundary dimensions.
Mortgage
A legal document
specifying a certain
amount of money to
purchase a home at a
certain interest
rate, and using the
property as
collateral.
Motivated buyer
Any buyer with a
strong incentive to
make a purchase.
Motivated seller
Any seller with a
strong incentive to
make a deal.
Move-in condition
A house that is
ready for a new
occupant.
Multiple listing
service (MLS)
The service combines
the listings for all
available homes in
an area, except
For-Sale-By-Owner (FSBO)
properties, in one
directory or
database.
Multiple offers
Multiple purchase
offers occur in hot
markets or hot
neighborhoods.
Online real
estate listings
Properties listed
for sale on the
Internet.
Open house
A marketing tool in
which a listing
agent opens a house
for view.
Open
listing
A property given to
a number of brokers
to market at the
same time.
Parcel
An officially
described piece of
land.
Personal property
Any moveable
property in a house
such as furniture or
appliances.
Pest-control
inspection
A common
pest-control
inspection is a
termite inspection,
which is required in
some states, such as
California.
Planned-unit
development
Residents own the
home and the land,
and share the use
and financial
responsibility for
common areas.
Possession
When a buyer signs
the papers and
receives the keys to
the house, the buyer
officially takes
possession.
Power
of attorney
A document that
authorizes an
individual to act on
behalf of someone
else.
Price
range
The range of how
much a buyer is
willing to pay for a
home.
Property line
The official
dividing line
between properties.
Property tax
Property taxes are
calculated at about
1.5 percent of the
current market
value.
Property value
The value of a piece
of property is based
on the price a buyer
will pay at a
certain time.
Proration
Agreed-upon
percentages of
certain expenses
associated with a
piece of property
that must be paid by
the buyer or the
seller at the time
of closing.
Purchase agreement
A document which
details the purchase
price and conditions
of the transaction.
Quit-claim deed
A document that
releases a party
from any interest in
a piece of real
estate.
Radon
A ground-generated
radioactive gas that
seeps into some
homes through sump
pumps, cracks in the
foundation and other
inlets. A leading
cause of lung cancer
, radon is found in
mostly the northern
half of the country.
Real estate
Land and anything
permanently affixed
to it, including
buildings, fences
and other items
attached to the
structure.
Real
estate agent
A real estate agent
has a state license
to represent a buyer
or a seller in a
real estate
transaction in
exchange for a
commission. Most
agents work for real
estate brokers.
Real
estate attorney
A lawyers who
specializes in real
estate transactions.
Real
estate broker
A real estate agent
who is licensed by
the state to
represent a buyer or
seller in a real
estate transaction
in exchange for a
commission. Most
brokers also have
agents working for
them, and are
entitled to a
portion of their
commissions.
Real
Estate Settlement
Procedures Act (RESPA)
A federal law
designed to make
sellers and buyers
aware of settlement
fees and other
transaction-related
costs. RESPA also
outlaws kickbacks in
the real estate
business.
Real
property
Land and any
permanent fixtures
on it, including
buildings, trees and
minerals.
Realtor
A designation for an
agent or broker who
is a member of the
National Association
of Realtors.
Recording
The filing of a
specific document to
the appropriate
government entity.
Recording fee
A fee charged by
real estate agents
for conveying the
sale of a piece of
property into the
public record.
Redlining
The practice by a
bank or insurance
company to deny
credit or insurance
to people based on
ethnic background
Sales contract
A contract signed by
the buyer and seller
that details the
terms of a home
purchase.
Seller broker
A seller broker
represents the
interest of the
seller.
Seller's market
A hot real estate
market in which
sellers have the
advantage and
multiple offers are
common.
Septic system
A self-contained
sewage treatment
system that
distributes
wastewater to an
underground storage
area and relies on
bacterial action to
decompose solid
waste matter.
Setback
The minimum distance
a house or buildings
must be from the lot
line.
Settlement statement
A document that
details who has paid
what to whom.
Soils
test
A test of the
subsoil to ensure
that foundations can
be safely
constructed.
Special assessment
When a homeowners'
association needs or
wants extra funds,
it levies a special
assessment upon the
owners.
Square footage
The number of square
feet of livable
space in a home or
building.
Subagent
When an agent brings
a buyer to a
property, they in
effect act as a
subagent to the
listing agent.
Tenancy by the
entirety
When a married
couple owns a home,
it is usually
considered tenancy
by the entirety If
the property must be
sold to pay the
debts of one spouse,
both must agree.
Tenants in common
Two or more owners
who share interest
in a specific
property.
The
72-hour clause
When a buyer has a
house to sell before
they can purchase
another home, most
sellers insist on a
72-hour clause. In
the event of a
better offer coming
in before the
contingency is
settled, this clause
entitles the seller
to give the buyer 72
hours to remove the
contingency or lose
the house.
Title
The actual legal
document conferring
ownership of a piece
of real estate.
Title
company
Firms that ensure
that the title to a
piece of property is
clear and provide
title insurance.
Title
insurance
A policy issued to
lenders and buyers
to protect any
losses because of a
dispute over the
ownership of a piece
of property.
Title
risk
Possible impediments
to the transfer of a
title from one owner
to another.
Title
search
A check of public
title records to
ascertain that the
seller is the legal
owner and that there
are no claims or
liens against the
Transfer tax
An assessment by
state or local
authorities at the
time a piece of
property changes
hands.
U.S. Department. of
Housing and Urban
Development (HUD)
A federal agency
that oversees the
Federal Housing
Administration and a
variety of housing
and community
development
Walk-through
A buyer's final
inspection of the
home to determine if
conditions in the
purchase agreement
have been satisfied.
Warranty
A legally binding
promise to do
something in the
future.
Zero-lot lines
Houses built without
space between them
and with little or
no yard.
Zoning
Regulations that
control the use of
land within a
jurisdiction..
Zoning variance
A one-time
modification of
existing zoning law.
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