Jargon is prevalent in real estate, which can further complicate an already complicated business. For individuals new to the industry, terms such as amortization, title insurance, and adjustable rate mortgages might appear like a bewildering word salad. We developed this tool to assist you in learning the vocabulary, whether you are purchasing or selling property.
But don’t fret; we have made a list of the most frequent real estate terms used in the US that you’re likely to run into. For budding real estate brokers, anxious property investors (or sellers), or anyone interested in the field, the following glossary of real estate terms is useful.
Let’s break down the terms into alphabetical order to make it easier for you to search for each one.
- Adjustable-rate mortgage (ARM)
Traditional loans come in two terms: fixed-rate and adjustable-rate mortgages. An adjustable-rate mortgage allows for changes in interest rates every five, seven, or ten years for the duration of the loan. This is a volatile loan for property owners who intend to live in their residences for an extended period because rates may abruptly increase based on market situations.
A US real estate expert authorized by law to purchase and sell US real estate on behalf of clients. The US Government demands that a licensed broker employ real estate agents. With that, they cannot act independently.
This means setting up regular monthly payments over time to pay off mortgage loan debt eventually. An amortized loan’s interest charge will drop over time, but the principal payment will rise.
An appraisal is necessary to determine the approximate worth of a specific property. The mortgage company sends a property appraiser during a sale to obtain a qualified assessment of the asset’s price. This aids the lender’s appraisal of the property’s value about the mortgage balance the prospective buyer is requesting.
A real estate expert with a state-issued license allows them to act as clients’ representative and oversee a brokerage. Brokers complete specialized training and obtain licensing to handle independent agents through some firm or work independently.
- Buying Agent
A buying agent is a US real estate agent who works for a client buyer to locate and acquire real estate.
- Capitalization Rate
CR is utilized in US real estate to assess the possible profit on an investment property.
- Cash Reserve
Funds set aside or saved by a person or a company for use in an emergency.
The process of concluding a real estate transaction. This entails completing mortgage contracts, paying processing fees, and signing documents to complete the transaction.
- Closing Costs
Charges related to completing a real estate deal. Expenses related to the closing will be incurred by both the buyer and the seller.
A prerequisite must be satisfied before a real estate deal can be signed.
A legally enforceable formal agreement states the specifics of a US real estate deal between a seller and a buyer.
- Conventional Sale
A typical sale occurs when a property is owned completely or has no outstanding debt on the mortgage, or the homeowner owes very little more than what the market suggests they may get for it. These conventional sales frequently go more smoothly than non-conventional sales, like foreclosed properties, sales connected with probate, and short sales.
- Covenants, conditions & restrictions (CC&Rs)
A homeowner, neighborhood association, or builder will typically impose these guidelines and restrictions on real estate to outline any requirements and obligations on what a homeowner is permitted to do with the real estate. Additionally, it might include yearly, monthly, or special evaluations.
- Curb appeal
The outward aspect and general allure of a building.
- Down payment
A buyer must put down the sum of money in advance as a condition of purchasing a home. It is commonly described as a negligible portion of the total cost of the property. The majority of mortgage lenders will want a down payment as a security.
The difference between the current market price of a US property and, if applicable, the outstanding mortgage balance.
A current account that the borrower opens and is funded with the buyer’s regular payments.
- Fixed-rate mortgage
A house loan has a fixed interest rate. This type of loan denotes no interest changes observed throughout the period.
A legal procedure ensues when an owner of the property fails to honor their loan arrangement and complete their obligations. The mortgage company will seize the estate and auction it to recuperate its losses.
- Home Appraisal
The procedure through which a qualified appraiser assesses several components of a property to ascertain its fair market value—the purchaser of the mortgage orders an appraisal.
- Home Inspection
An assessment of a property’s current condition. A real estate purchaser requests it.
a property that’s up for purchase.
- Listing Agent
The one that works on behalf of the seller while purchasing a home. The buyer’s agent stands in for the buyer and is on the opposing side.
- Listing Agreement
A contractual agreement that permits a real estate agent to sell an asset on the client’s behalf.
The asset is used as security in return for the borrowed funds.
- Net Operating Income (NOI)
A factor that establishes how much income a piece of commercial property produces.
- Open House
A real estate agent-organized event when potential buyers can tour a home without making an appointment. The purpose is to spark interest and present the estate in a relaxed environment.
- Pen listing
The process by which a homeowner decides to sell their house privately. Since there is no exclusivity clause, they can list their properties with several agents.
- Pocket Listing
A US property that is being offered for market sale but has not been made accessible to other brokers or potential purchasers.
The entire loan balance for a mortgage.
- Private Mortgage Insurance
The payment is made to shield the lender from a loan default. Once a buyer accumulates 20% equity in a property, these insurance costs usually will be discontinued.
A real estate professional who is a part of the National Association of Realtors. Members of NAR are required to abide by its code of ethics.
The exchange of an existing mortgage loan with one with new conditions and terms. The goal of refinancing is to have a better interest rate.
- Short Sale
A residence that is purchased for much less than the mortgage balance.
The method of setting up a home’s interior so that potential buyers will find it more appealing.
- Title insurance
An insurance policy that safeguards the purchaser and borrower if the seller does not possess complete legal ownership of the home.
- USDA loan
A mortgage loan supported by the federal government is accessible to Americans living in rural areas.
- VA Loan
A government mortgage loan is reserved for former members of the United States armed forces.
You are informed now. Although you might still need to become a technical expert, you are moving in that direction. You will be well-prepared the next time a topic involving US real estate terminology arises.
- Capterra. 2019. Real Estate Glossary: Top 29 Real Estate Terms Defined. Retrieved from: https://www.capterra.com/resources/the-ultimate-real-estate-glossary-real-estate-terms-defined/. Retrieved on 9 December 2022.
- Open Door. 2022. 52 Essential Real Estate Terms You Should Know. Retrieved from: https://www.opendoor.com/articles/real-estate-terms-you-should-know. Retrieved on 9 December 2022.
- Quicken Loans. 2022. 73 Real Estate Terms To Know In 2022. Retrieved from: https://www.quickenloans.com/learn/real-estate-terms. Retrieved on 9 December 2022.