Within the real estate world, there are many unique terms specific to the industry. Some real estate terms are used enough in general conversation (or on HGTV) to be recognized by the average person. However, more often than not there are other real estate terms used solely in this particular field that anyone looking to be successful in the industry should know and understand. That’s why we’ve created a simple, 26-word dictionary of the most popular real estate terms used in the industry today by home buyers, sellers, lenders, and agents. Whether you are a first time home buyer (or seller) or have been through this process more than once, take a minute to refresh your knowledge by perusing the Keri Shull Team’s ABCs of real estate.
Here are some of the top real estate terms used in the industry along with their meanings and definitions in alphabetical order:
A | Appraisal — an estimation of a property’s value based on comparable sales nearby; appraisals are performed by a certified appraiser.
B | Bill of Sale — a written document authorizing the transfer of a home’s title into another person’s ownership as a form of personal property.
C | Closing Costs —fees associated with a home purchase and home loan at the end of a real estate transaction; can be incurred by either the buyer or seller. Example: appraisal fees
D | Down Payment —the percentage of the purchase price of the home that the buyer must pay upfront, anywhere between 5 to 20 percent.
E | Escrow — a neutral third party that holds the buyer’s funds until all conditions have been met. Example: insurance or property tax
F | Federal Housing Administration (FHA) — a United States government agency designed to provide loans for low to moderate income home buyers; overseen by the U.S. Department of Housing and Urban Development.
G | Government Home Loan — a home loan insured by the FHA or promised by the Department of Veterans Affairs; the opposite of conventional home loans.
H | Homeowner’s Association (HOA) — a committee or organization designed to have jurisdiction over a specific neighborhood, subdivision, or community; able to enforce rules, plan new projects, and oversee HOA funds/fees.
I | Inspection — a thorough examination of a home by a licensed inspector to assess the quality and function of a home’s systems; usually performed prior to the sale of a home.
J | Jumbo Loan — a home loan for an amount of money exceeding loan limit regulations; also known as a jumbo mortgage. Example: a luxury home purchase
K | Key Interest Rate — the interest rate set by the federal government determining the cost of borrowing money for home mortgages.
L | Listing Contract — written document stating the real estate agent’s authority to negotiate the purchase of a home on the home buyer’s behalf; also known as a listing agreement.
M | Multiple Listing Service (MLS) — an internet based real estate database designed for agents to list and market homes for sale.
N | Net Proceeds — the amount of money a seller will receive (profit) after their home sale, only after all closing costs and other fees have been subtracted.
O | Open House — a marketing event organized by real estate agents to show a home to multiple prospective buyers all at once.
P | Pre-qualification — an initial evaluation of a potential home buyer’s credit worthiness used to come up with an estimated amount of money the home buyer could afford to borrow; conducted before the buyer applies for a home loan.
Q | Quitclaim Deed — a legal way of transferring interest of a property over to a specific recipient in the form of a written, notarized document; does not validate any form of ownership.
R | Real Estate Agent — experienced, licensed professionals representing home buyers or sellers who are able to navigate every step in the process on behalf of either party; most agents work solely on commission. Example: the Keri Shull Team!
S | Seller Disclosure Documents — official and legal document stating a property’s history, renovations, repairs, and/or defects; gathered by the seller and delivered to the buyer prior to the completion of the home sale. Note: The laws regarding seller disclosure vary state by state.
T | Title — the lawful document stating the right to ownership of personal property
U | Under Contract —a home in which a buyer’s offer has been accepted by the seller, yet not final by law or considered a closed transaction.
V | VA Mortgage — a home loan exclusive to military veterans and spouses funded by private lenders and guaranteed by the United States government.
W | Wrap-Around Mortgage — a type of home loan in which the lender takes over responsibility for an existing mortgage on a property; homes with wrap-around mortgages are usually sold by the lenders.
X | Xerocopy — a method of making copies of all important documents during the home buying or selling process like the seller disclosure documents or bill of sale.
Y | Yield-Spread Premium (YSP) — a fee paid by the mortgage lender to the broker in exchange for a higher interest rate or above market mortgage rate on a home loan.
Z | Zoning — local or municipal government laws dictating legal uses of a piece of real estate. Example: laws dictating whether a piece of property can be residential or commercial.