Real Estate Glossary
Comprehensive definitions of real estate terminology. Use this reference to understand the language used in transactions, exams, and practice.
Abstract of Title
A condensed history of the title to a property, including all conveyances, liens, and encumbrances.
Acceleration Clause
A provision in a mortgage that allows the lender to demand full repayment if certain conditions are violated.
Adjustable-Rate Mortgage (ARM)
A mortgage with an interest rate that changes periodically based on market conditions.
Agency
A legal relationship where one person (agent) represents another (principal) in dealings with third parties.
Amortization
The gradual repayment of a debt through scheduled principal and interest payments.
Appraisal
A professional opinion of a property's market value.
Appreciation
An increase in a property's value over time.
Assessment
The value placed on property by a government entity for tax purposes.
Balloon Payment
A large final payment on a loan that is much larger than preceding payments.
Broker
A licensed individual who can operate a real estate business and supervise salespersons.
Buyer's Agent
A real estate agent who represents the buyer's interests in a transaction.
Bundle of Rights
The legal rights associated with property ownership: possession, control, enjoyment, exclusion, and disposition.
Cap Rate
The ratio of net operating income to property value, used to evaluate investment properties.
Chain of Title
The chronological sequence of ownership transfers for a property.
Clear Title
A title free of liens, encumbrances, or defects that could affect ownership.
Closing
The final step in a real estate transaction where ownership transfers from seller to buyer.
Closing Costs
Expenses beyond the purchase price paid at closing, including title insurance, taxes, and fees.
Commingling
Illegally mixing client funds with personal or business funds.
Commission
Compensation paid to real estate agents, typically a percentage of the sale price.
Comparable Sales (Comps)
Recently sold similar properties used to estimate a property's value.
Contingency
A condition in a contract that must be met for the contract to be binding.
Conventional Loan
A mortgage not insured or guaranteed by a government agency.
Conveyance
The transfer of property ownership from one party to another.
Days on Market (DOM)
The number of days a property has been listed for sale.
Deed
A legal document that transfers property ownership.
Default
Failure to fulfill the terms of a mortgage or contract.
Depreciation
A decrease in property value due to wear, age, or obsolescence.
Disclosure
The required revelation of known facts about a property.
Down Payment
The portion of the purchase price paid upfront by the buyer.
Dual Agency
When one agent represents both buyer and seller in the same transaction.
Due Diligence
The investigation and verification a buyer performs before purchasing property.
Earnest Money
A deposit made by a buyer to show serious intent to purchase.
Easement
The right to use another person's property for a specific purpose.
Eminent Domain
Government power to take private property for public use with compensation.
Encumbrance
A claim, lien, or liability attached to property that may affect its value.
Equity
The difference between a property's market value and the amount owed on it.
Escrow
A neutral third party holding funds and documents during a transaction.
Estoppel
A legal principle preventing someone from denying facts they previously established.
Fair Housing Act
Federal law prohibiting discrimination in housing based on protected classes.
Fee Simple
The highest form of property ownership with complete control and rights.
FHA Loan
A government-insured mortgage with lower down payment requirements.
Fiduciary Duty
The legal obligation to act in a client's best interest.
Fixed-Rate Mortgage
A mortgage with an interest rate that remains constant for the loan term.
Fixture
Personal property that has become attached to real property.
Foreclosure
Legal process where a lender takes possession of property due to default.
General Warranty Deed
A deed providing the most protection, guaranteeing title against all defects.
Gross Rent Multiplier (GRM)
Property value divided by annual gross rent, used for quick investment analysis.
Home Inspection
A professional examination of a property's condition before purchase.
HOA (Homeowners Association)
An organization that manages common areas and enforces community rules.
Interest
The cost of borrowing money, expressed as a percentage.
Joint Tenancy
Co-ownership with equal shares and right of survivorship.
Lease
A contract granting use of property for a specified time and rent amount.
Lien
A legal claim against property as security for a debt.
Listing Agreement
A contract between property owner and broker to sell property.
Loan-to-Value (LTV)
The ratio of loan amount to property value.
Market Value
The most probable price a property would bring in a competitive market.
Mortgage
A loan secured by real property, with the property as collateral.
Multiple Listing Service (MLS)
A database where brokers share property listings and commission information.
Net Operating Income (NOI)
Gross income minus operating expenses, used for investment analysis.
Offer
A proposal to purchase property at specified terms and price.
PITI
Principal, Interest, Taxes, and Insurance – the components of a mortgage payment.
PMI (Private Mortgage Insurance)
Insurance protecting lenders when borrowers put down less than 20%.
Points
Prepaid interest paid at closing to reduce the mortgage interest rate.
Pre-Approval
A lender's commitment to provide a mortgage based on verified information.
Pre-Qualification
A preliminary estimate of borrowing capacity based on self-reported information.
Principal
The original loan amount, or the party who authorizes an agent to act on their behalf.
Proration
Division of expenses between buyer and seller at closing.
Quitclaim Deed
A deed transferring whatever interest the grantor has, with no warranties.
Real Property
Land and everything permanently attached to it.
REALTOR®
A real estate professional who is a member of the National Association of REALTORS®.
Recording
Filing documents with the county to provide public notice of ownership.
Right of Survivorship
The right of surviving co-owners to automatically inherit a deceased owner's share.
Seller's Agent
A real estate agent who represents the seller's interests.
Settlement
Another term for closing – the final step in a real estate transaction.
Short Sale
A sale where proceeds are less than the mortgage balance, requiring lender approval.
Specific Performance
A court order requiring a party to fulfill their contract obligations.
Statute of Frauds
Law requiring certain contracts, including real estate, to be in writing.
Survey
A measurement and mapping of property boundaries.
Tenancy in Common
Co-ownership without right of survivorship; interests pass to heirs.
Title
Legal ownership of property, or the document proving ownership.
Title Insurance
Insurance protecting against losses from title defects.
Title Search
Examination of public records to verify property ownership and find liens.
Transfer Tax
A tax imposed on the transfer of property ownership.
Trust Account
An account where brokers hold client funds separately from business funds.
Underwriting
The process of evaluating loan risk and making approval decisions.
VA Loan
A government-guaranteed mortgage for eligible veterans and service members.
Variance
Permission to deviate from zoning regulations.
Warranty Deed
A deed guaranteeing clear title to the property.
Zoning
Government regulations controlling land use in specific areas.
Educational Content
This content is provided for educational purposes only and does not constitute professional advice. Rules and regulations vary by state. Consult with a licensed professional in your area for specific guidance.