Real Estate Terms

Just like any other business, real estate has its own lingo and for many consumers this can be overwhelming. To help you better understand the home buying process, here is a glossary full of real estate terms.

A
Adjustable Rate Mortgage (ARM) – A loan for which the interest rate is subject to change on a periodic basis (i.e. every 1, 3, or 5 years).
Appraisal – An evaluation to determine the price for which a property would sell in the current marketplace.
Assessment – A tax levied on a property or a value placed on the worth of a property by a taxing authority.

B
Broker – A real estate professional who has a higher level of training than an agent. A broker is the legal representative and/or manager of the office. The term may also refer to the brokerage under which an agent is licensed.
Buyer-agency – A relationship between an agency and a buyer in which the agent represents the interests of the buyer, not the seller. The primary duty of a buyer’s agent is to obtain the best deal for his/her client.
Buyer Representation – Historically, an agent represented only the seller in a real estate transaction. Buyers today have the opportunity to be fully represented by an agent and brokerage firm.

C
Closing Costs – Charges paid at closing for obtaining a mortgage loan and transferring a real estate title.
Commission – The fee paid to a real estate agent/broker for services rendered during the sale or purchase of a home. Usually a percentage of the property’s sale price, averaging 6 to 7 percent on home sales.
Comparative Market Analysis (CMA) – A survey of attributes and selling prices of comparable houses listed for sale, recently sold or expired from the market; used to help determine correct pricing strategy for a seller's property.
Cooperate – A standard of practice in real estate in which brokers/agents agree to work together with other brokers/agents, but only in their client's best interest. Under a cooperative arrangement, there is no obligation to share commissions or fees.
Counteroffer – An offer made in response to an offer received. Essentially it rejects the original offer.

D
Debt-To-Income Ratio – A comparison of gross income to expenses (both housing and non-housing).
Deed – Legal document that formally conveys ownership of property from seller to buyer.
Deed Restrictions – Legally binding rules for the building and maintenance of homes and properties.
Discount Points – A fee paid to a mortgage lender by a borrower to get a lower interest rate on the mortgage loan. One point equals one percent of the loan amount.
Due–On–Sale – A clause in a mortgage contract requiring the borrower to pay the entire outstanding balance upon sale or transfer of the property.

E
Easement – The right-of-way granted to a person or company authorizing access to the owner's land; for example, a utility company may be granted an easement to install pipes or wires. An owner may voluntarily grant an easement, or can be ordered to grant one by a local jurisdiction.
Equity – The difference between the value of a home and what is owed on it.
Escrow – The handling of funds or documents by a third party on behalf of the buyer and/or seller.
Exclusive Agency Agreement – A contract that gives a real estate agency the right to market and sell a home.

F
FHA – The Federal Housing Administration. It insures loans made by an approved lender, as long as the loan is in accordance with FHA regulations.

G
Grace Period – A specified amount of time during which a loan payment may be made after its due date without incurring a late penalty. Each mortgage lender sets its own grace period policies.

H
Home Equity Loan – A loan secured by the equity built up in a home. Such a loan is often used to pay for repairs and home improvements. This can be a fixed or variable loan rate.

L
List Price – Also called the asking price. The price of the home as determined by the seller and his/her agent. The list price is often negotiable.
Listing Contract – Agreement whereby an owner engages a real estate company for a specified period to market a property for which (upon sale) the broker receives a commission.

M
Mortgage Broker – A broker who represents numerous lenders and helps consumers find affordable mortgages, the broker charges a fee only if the consumer finds a loan
Mortgage Loan – A contract in which the borrower's property is pledged as collateral. It is repaid in installments. The mortgagor (buyer) promises to repay principal and interest, keep the home insured, pay all taxes and keep the property in good condition.
Multiple Listing Service (MLS) – A system that provides its members with detailed information about properties for sale.

N
National Association of Realtors (NAR) – A national trade organization of more than one million real estate agents and brokers. Members may call themselves Realtors®.

O
Origination Fee – A charge for the work involved in preparing and servicing a mortgage application (usually one percent of the loan amount).

P
P.I.T.I – Principal, interest, taxes, and insurance—the four major components of monthly housing payments.
Pre-Approval – A mortgage approval obtained before negotiating a contract on a specific home.
Pre–Qualification – An informal estimate of how much financing a potential borrower might expect to obtain.
Purchase Agreement – Also called a sales agreement, a purchase agreement is a contract for the sale of a home between a buyer and a seller. It outlines the price, terms and conditions of the transaction.

R
Recording Fee – A charge for recording the transfer of a property, paid to a city, county, or other appropriate branch of government.

S
Second Mortgage – A loan that uses the equity in a home as collateral.

T
Title – Evidence (usually in the form of a certificate or deed) of a person's legal right to ownership of a property.
Title Insurance – Provides coverage against losses resulting from a defect in the title.

W
Walk–Through – A final inspection of a home before title transfer to search for problems that need to be corrected before ownership changes.

Z
Zoning – Regulations established by local governments regarding the location and use for any given piece of property within a specific area.

Hopefully these definitions help you feel more comfortable and at ease with the home buying experience. If you have any ever come across a real estate term you aren't familiar with or have any other real estate question. Please contact us! Dana 937-645-6545 dana.garrett@realliving.com or Nanie 937-645-6542 nanie.ingram@realliving.com