Real Estate Glossary

1031 Exchange

A provision in the IRS tax code that allows investors to def...

1031 Exchange

A tax strategy allowing real estate investors to defer capit...

3D Virtual Tour

An immersive digital representation of a property that allow...

Absorption Rate

A metric showing how quickly available homes are being sold ...

Abstract of Title

A condensed history of all transactions and legal actions af...

Accredited Investor

An individual or entity meeting specific SEC income or net w...

Active Listing

A property currently available for sale on the market that h...

Actual Cash Value

An insurance valuation method that pays the replacement cost...

Addendum

A document added to an existing contract that modifies or ad...

Adjustable-Rate Mortgage (ARM)

A mortgage with an interest rate that changes periodically b...

After Repair Value (ARV)

The estimated market value of a property after all planned r...

Agency Disclosure

A legally required document that informs all parties in a re...

Amendment

A change or modification to an existing contract that alters...

Amortization

The process of gradually paying off a mortgage through sched...

Amortization Schedule

A detailed table showing each monthly mortgage payment broke...

Annual Percentage Rate (APR)

The total yearly cost of borrowing expressed as a percentage...

Appraisal

A professional assessment of a property's market value condu...

Appraisal Contingency

A clause that allows the buyer to renegotiate or withdraw if...

Appraisal Gap

The difference between the appraised value of a property and...

Appraisal Gap Coverage

A clause in a purchase offer where the buyer agrees to pay a...

Appraised Value

The professional opinion of a property's worth as determined...

Appreciation

An increase in a property's value over time due to market co...

As-Is

A sale condition indicating the seller will not make any rep...

As-Is Sale

A property sold in its current condition, with the seller ma...

Asking Price

The price at which a seller lists their property for sale. A...

Assessed Value

The value assigned to a property by the local tax assessor f...

Assumable Mortgage

A mortgage that allows a buyer to take over the seller's exi...

Automated Valuation Model (AVM)

A technology-based tool that uses mathematical modeling and ...

Back on Market

A listing status indicating a property that was previously u...

Best and Final Offer

A request by the seller for all interested buyers to submit ...

Bidding War

A competitive situation where multiple buyers submit increas...

Breach of Contract

A violation of the terms of a real estate contract by either...

Bridge Loan

A short-term financing option that helps homeowners purchase...

Broker Price Opinion (BPO)

An estimate of a property's value prepared by a real estate ...

BRRRR Strategy

A real estate investment method standing for Buy, Rehab, Ren...

Buyer Love Letter

A personal letter from a buyer to a seller expressing why th...

Buyer's Agent

A real estate agent who represents the buyer in a transactio...

Buyer's Market

A market condition where the supply of homes exceeds demand,...

Cap Rate (Capitalization Rate)

A measure of investment return calculated by dividing the pr...

Capital Gains Tax

A tax on the profit made from selling a property. Homeowners...

Cash Flow

The net amount of money remaining after all property expense...

Cash Offer

A purchase offer where the buyer proposes to pay the full pr...

Cash-on-Cash Return

The annual cash flow divided by the total cash invested, exp...

Cash-Out Refinance

A refinancing transaction where the new mortgage is larger t...

CC&Rs (Covenants, Conditions & Restrictions)

Rules governing properties in a planned community or HOA, co...

Chain of Title

The complete history of ownership transfers for a property f...

Clear Title

A title that is free of liens, disputes, or legal questions ...

Closing

The final step in a real estate transaction where ownership ...

Closing Costs

Fees and expenses paid at the closing of a real estate trans...

Closing Date

The date specified in the purchase agreement when the real e...

Closing Disclosure

A five-page form provided to the borrower at least three bus...

Cloud on Title

Any document, claim, lien, or encumbrance that challenges or...

Co-op (Cooperative)

A type of housing where residents own shares in a corporatio...

Coming Soon

A listing status indicating a property will be available for...

Commercial Real Estate

Property used for business purposes including office buildin...

Common Areas

Shared spaces in a condominium, planned community, or apartm...

Comparable Sales (Comps)

Recently sold properties similar in size, location, conditio...

Comparative Market Analysis (CMA)

An evaluation prepared by a real estate agent that compares ...

Comparative Market Analysis (CMA)

A detailed report prepared by a real estate agent that estim...

Condominium (Condo)

A unit within a larger building or complex that is individua...

Conforming Loan

A mortgage that meets the guidelines and loan limits set by ...

Construction Loan

A short-term financing product used to fund the building of ...

Contingency

A condition written into a purchase agreement that must be m...

Contingency Removal

The formal process of waiving or satisfying conditions in a ...

Contingent

A listing status indicating the seller has accepted an offer...

Contingent Offer

A purchase offer that includes conditions that must be fulfi...

Continuing Education (CE)

Mandatory ongoing training that licensed real estate agents ...

Conventional Loan

A mortgage not insured or guaranteed by a government agency....

Cooperating Broker

The buyer's brokerage that participates in a property sale l...

Cost Basis

The original value of a property for tax purposes, including...

Counteroffer

A response to an initial offer that changes one or more term...

Covenant

A legally binding agreement or promise in a deed or other do...

Creative Financing

Non-traditional methods of funding real estate purchases, in...

Credit Score

A numerical rating based on a person's credit history that l...

Curb Appeal

The visual attractiveness of a property as seen from the str...

Days on Market

The number of days a property has been listed for sale, coun...

Debt Service Coverage Ratio (DSCR)

A measure of a property's ability to cover its debt payments...

Debt-to-Income Ratio (DTI)

A financial measure comparing a borrower's total monthly deb...

Decluttering

The process of removing excess personal items, furniture, an...

Deductible (Insurance)

The amount a policyholder must pay out of pocket before the ...

Deed

A legal document that transfers ownership of real property f...

Deed of Trust

A document used in some states instead of a mortgage, involv...

Deed Restriction

A limitation written into a property deed that controls how ...

Deficiency Judgment

A court order requiring a borrower to pay the remaining mort...

Depersonalizing

Removing personal photographs, memorabilia, and unique decor...

Depreciation

For tax purposes, the gradual deduction of an investment pro...

Depreciation Recapture

A tax provision that requires investors to pay taxes on the ...

Discount Points

Upfront fees paid to the lender at closing to reduce the mor...

Down Payment

The portion of the home's purchase price paid upfront by the...

Drone Photography

Aerial photographs and videos of a property and its surround...

Dry Closing

A closing where all documents are signed but funds are not d...

Dual Agency

A situation where one agent or brokerage represents both the...

Due Diligence

The period during which a buyer investigates a property befo...

Due Diligence Period

A specified timeframe in the purchase agreement during which...

Duplex

A residential building divided into two separate living unit...

Dwelling Coverage

The portion of homeowners insurance that pays to repair or r...

Earnest Money

A deposit made by the buyer to demonstrate serious intent to...

Earnest Money Dispute

A disagreement between buyer and seller over who is entitled...

Easement

A legal right granted to a non-owner to use a portion of som...

Eminent Domain

The government's power to take private property for public u...

Encroachment

A situation where a structure or improvement extends beyond ...

Encumbrance

Any claim, lien, charge, or restriction on a property that m...

Equity

The difference between a property's current market value and...

Errors and Omissions Insurance

Professional liability insurance that protects real estate a...

Escalation Clause

A provision in a purchase offer that automatically increases...

Escrow

A neutral third party that holds funds, documents, or assets...

Escrow Account

An account managed by the mortgage servicer to hold funds co...

Escrow Holdback

An arrangement where a portion of the seller's proceeds is h...

Exclusive Right to Sell

The most common listing agreement where the listing agent ea...

Expired Listing

A property listing whose listing agreement period has ended ...

Fair Housing Act

Federal legislation prohibiting discrimination in housing ba...

Fannie Mae

The Federal National Mortgage Association, a government-spon...

Farming (Geographic)

A real estate marketing strategy where an agent focuses thei...

FEMA Flood Zone

A geographic area identified by FEMA on Flood Insurance Rate...

FHA Appraisal

An appraisal required for FHA loans that evaluates both the ...

FHA Loan

A mortgage insured by the Federal Housing Administration tha...

FICO Score

The most widely used credit scoring model in mortgage lendin...

Fiduciary

A person or organization with a legal and ethical obligation...

Fiduciary Duty

The legal obligation of a real estate agent to act in their ...

Final Walkthrough

A last inspection of the property by the buyer, typically co...

Financing Contingency

A provision that allows the buyer to back out of the purchas...

Fixed-Rate Mortgage

A home loan with an interest rate that remains constant thro...

Fixer-Upper

A property in need of significant repairs or renovations, ty...

Flat Fee MLS

A service that allows homeowners to list their property on t...

Flood Insurance

A separate insurance policy covering property damage from fl...

Floor Plan

A scaled diagram of a property viewed from above showing the...

Foreclosure

The legal process by which a lender repossesses a property w...

Four-Point Inspection

An insurance inspection that evaluates four major home syste...

Fourplex

A residential building with four separate units. The largest...

Freddie Mac

The Federal Home Loan Mortgage Corporation, a government-spo...

FSBO (For Sale By Owner)

A method of selling property without hiring a listing agent....

Gross Rent Multiplier (GRM)

A quick metric to evaluate investment properties, calculated...

Hard Money Loan

A short-term loan from a private lender secured by real esta...

Hazard Insurance

The portion of homeowners insurance that covers physical dam...

HELOC (Home Equity Line of Credit)

A revolving line of credit secured by the equity in your hom...

HOA Fees

Monthly or annual dues paid by homeowners to the homeowners ...

Home Equity Loan

A fixed-rate loan that allows homeowners to borrow a lump su...

Home Improvement

Renovations, repairs, and upgrades made to a property to inc...

Home Inspection

A thorough examination of a property's physical condition by...

Home Sale Contingency

A condition in a purchase offer that makes the sale dependen...

Home Staging

The practice of preparing and decorating a property for sale...

Home Warranty

A service contract that covers the repair or replacement of ...

Homeowners Association (HOA)

An organization that manages a residential community by enfo...

Homeowners Insurance

An insurance policy that covers damage to the home and perso...

Homestead Exemption

A legal provision in many states that reduces the taxable va...

House Flip

An investment strategy of buying a property below market val...

House Flipping

An investment strategy of buying undervalued properties, ren...

House Hacking

An investment strategy where the owner lives in one unit of ...

Housing Bubble

A period when home prices rise rapidly beyond sustainable le...

Housing Inventory

The total number of homes available for sale in a given mark...

iBuyer

A technology-powered company that uses automated valuation m...

Independent Contractor (Real Estate)

The employment classification of most real estate agents, wh...

Independent Disclosure Package

A pre-listing disclosure package prepared by the seller befo...

Inspection Contingency

A clause in a purchase agreement that allows the buyer to ha...

Inspection Report

A detailed written document prepared by a home inspector des...

Interest Rate

The percentage charged by a lender for borrowing money, expr...

Investment Property

Real estate purchased with the intention of generating incom...

Jumbo Loan

A mortgage that exceeds the conforming loan limits set by th...

Just Listed

A marketing designation for a property that has recently bee...

Just Sold

A marketing announcement used by agents to promote recent sa...

Kick-Out Clause

A provision allowing the seller to continue marketing the pr...

Landlord

The owner of a rental property who leases it to tenants in e...

Landlord Insurance

A specialized policy for rental property owners that covers ...

Lead-Based Paint

Paint containing lead used in homes built before 1978. Feder...

Lease

A legally binding contract between a landlord and tenant tha...

Lease Option

A contractual arrangement that gives a tenant the right but ...

Leverage

Using borrowed money (mortgage) to purchase property, allowi...

Liability Coverage

The portion of a homeowners insurance policy that covers leg...

Lien

A legal claim against a property that must be paid when the ...

Lis Pendens

A public notice filed in county records indicating a pending...

List Price

The price at which a property is marketed for sale, determin...

List-to-Sale Ratio

The percentage of the list price at which a property actuall...

Listing

A property that has been officially placed on the market for...

Listing Agent

A real estate agent who represents the seller, responsible f...

Listing Agreement

A contract between a property owner and a real estate broker...

Listing Description

The written marketing copy that accompanies a property listi...

Listing Photos

Professional photographs of a property used in MLS listings,...

Listing Presentation

A formal pitch by a real estate agent to a potential seller ...

Loan Estimate

A standardized three-page form provided by the lender within...

Loan-to-Value Ratio (LTV)

The ratio of the mortgage amount to the appraised value of t...

Lockbox

A secure device attached to a listed property that holds the...

Lot

A parcel of land defined by specific boundaries, identified ...

Manufactured Home

A factory-built home constructed on a permanent chassis and ...

Market Correction

A decline in real estate prices after a period of rapid appr...

Market Value

The estimated price a property would sell for on the open ma...

Material Defect

A significant flaw or issue with a property that could affec...

Matterport

A leading 3D capture technology platform used in real estate...

Mechanic's Lien

A legal claim filed by a contractor or supplier against a pr...

Mill Rate

The tax rate used to calculate property taxes, expressed as ...

Mixed-Use Property

A building or development that combines residential units wi...

Mobile Home

A factory-built housing unit constructed before June 1976 on...

Model Home

A fully furnished and decorated home in a new development th...

Modular Home

A home built in sections at a factory and assembled on-site ...

Months of Supply

A measure of how long it would take to sell all current list...

Mortgage

A loan used to purchase real estate where the property itsel...

Mortgage Broker

A licensed intermediary who connects borrowers with lenders,...

Mortgage Buydown

A financing arrangement where points are paid upfront to tem...

Mortgage Insurance

Insurance that protects the lender against loss if the borro...

Mortgage Insurance Premium (MIP)

The mortgage insurance required on FHA loans regardless of d...

Mortgage Interest Deduction

A federal tax deduction allowing homeowners to deduct intere...

Move-In Ready

A property that is in good condition and requires no major r...

Multi-Family Property

A residential building with multiple separate housing units,...

Multiple Listing Service (MLS)

A database used by real estate professionals to share proper...

Multiple Offers

A situation where a seller receives two or more purchase off...

NAR (National Association of Realtors)

The largest trade association in the United States represent...

National Flood Insurance Program (NFIP)

A federal program administered by FEMA that provides afforda...

Negotiation

The process of discussion and compromise between buyers and ...

Net Listing

A listing agreement where the agent receives any amount abov...

Net Operating Income (NOI)

A property's total income minus all operating expenses, befo...

Net Sheet

A document that estimates the seller's proceeds from a home ...

New Construction

A home that is newly built and has never been occupied. Can ...

Non-Recourse Loan

A type of mortgage where the lender can only seize the colla...

Notary Public

An officially authorized person who witnesses and certifies ...

Off-Market

A property that is available for sale but not publicly liste...

Offer

A formal proposal from a buyer to purchase a property at a s...

Open House

A scheduled period during which a listed property is open fo...

Open Listing

A non-exclusive listing agreement where the seller can work ...

Operating Expenses

The ongoing costs of running a rental property, including pr...

Option Period

A negotiated timeframe, common in Texas, during which the bu...

Origination Fee

A charge by the lender for processing a new mortgage applica...

Owner-Occupied

A property where the owner uses it as their primary residenc...

Passive Income

Earnings from rental properties or real estate investments t...

Pending

A listing status indicating that all contingencies have been...

Personal Property Coverage

Insurance coverage for belongings inside the home such as fu...

Pest Inspection

An examination of a property for evidence of wood-destroying...

Piggyback Loan

A second mortgage taken out simultaneously with the first mo...

PITI

An acronym for Principal, Interest, Taxes, and Insurance — t...

Planned Unit Development (PUD)

A community designed as a single entity with individual lot ...

Pocket Listing

A property for sale that is marketed privately without being...

Power of Attorney

A legal document authorizing someone to act on your behalf i...

Pre-Approval

A lender's written commitment to provide a mortgage loan up ...

Pre-Listing Inspection

A home inspection conducted before listing a property for sa...

Pre-Qualification

An informal estimate of how much a buyer may be able to borr...

Prepaid Items

Costs paid at closing that cover future expenses like proper...

Price Per Square Foot

A common metric for comparing property values, calculated by...

Price Reduction

A decrease in the asking price of a listed property, typical...

Primary Residence

The main home where a person lives for the majority of the y...

Principal

The original amount of money borrowed on a mortgage, or the ...

Private Mortgage Insurance (PMI)

Insurance required by lenders when a borrower puts down less...

Private Mortgage Insurance (PMI)

Insurance required by lenders when the borrower makes a down...

Promissory Note

A legal document in which the borrower promises to repay a m...

Property Flyer

A printed or digital marketing document featuring photos, de...

Property Management

The operation, oversight, and administration of rental real ...

Property Survey

A professional measurement and mapping of a property's bound...

Property Tax

An annual tax levied by local governments on real property b...

Property Tax Assessment

The official valuation of a property by a local tax assessor...

Property Tax Delinquency

The status of unpaid property taxes past their due date. Del...

Prorated Taxes

Property taxes divided proportionally between buyer and sell...

Proration

The method of dividing ongoing property expenses such as tax...

Purchase Agreement

A legally binding contract between buyer and seller that out...

Quiet Title Action

A lawsuit filed to establish clear ownership of a property a...

Quitclaim Deed

A deed that transfers whatever interest the grantor has in a...

Radon Test

A measurement of radon gas levels in a property. Radon is a ...

Rate Cap

A limit on how much the interest rate on an adjustable-rate ...

Rate Lock

An agreement with a lender to guarantee a specific interest ...

Real Estate Agent

A licensed professional who represents buyers or sellers in ...

Real Estate Attorney

A lawyer specializing in property law who reviews contracts,...

Real Estate Broker

A licensed real estate professional who has completed additi...

Real Estate Brokerage

A firm or company where real estate agents work, led by a de...

Real Estate Commission

The fee paid to real estate agents for their services in fac...

Real Estate Designation

A professional credential earned through additional educatio...

Real Estate Photography

Professional photography services specializing in capturing ...

Real Estate Syndication

A partnership between multiple investors to pool capital for...

Real Estate Team

A group of agents, assistants, and specialists who work toge...

Real Property

Land and everything permanently attached to it, including bu...

REALTOR

A trademarked term for a real estate professional who is an ...

Recording

The act of filing real estate documents with the county reco...

Recording Fee

A charge by the county or local government to officially rec...

Referral Fee

A payment made between real estate agents when one refers a ...

Refinance

The process of replacing an existing mortgage with a new one...

Rehab (Rehabilitation)

The process of renovating or restoring a property to improve...

REIT (Real Estate Investment Trust)

A company that owns, operates, or finances income-producing ...

Renovation ROI

The return on investment from home renovation projects, calc...

Rent-to-Own

An agreement combining a lease with an option to purchase, a...

Rental Income

Money received from tenants for the use of a property. Gross...

Rental Property

A property owned for the purpose of leasing it to tenants in...

REO (Real Estate Owned)

Property owned by a bank or lender after an unsuccessful for...

Repair Request

A formal written request from the buyer to the seller asking...

Replacement Cost

An insurance valuation method that pays the full cost to rep...

Return on Investment (ROI)

A measure of the profitability of a real estate investment, ...

Right of First Refusal

A contractual right that gives a specific party the first op...

Right of Way

A type of easement that grants someone the legal right to pa...

Roof Certification

A document from a licensed roofing contractor stating the ro...

Sale Price

The final price at which a property actually sells, which ma...

Second Home

A property that the owner occupies part-time in addition to ...

Second Mortgage

An additional loan taken against a property that already has...

Security Deposit

A sum of money paid by a tenant to a landlord at the start o...

Seller Carry-Back

A financing arrangement where the seller provides a loan to ...

Seller Concession

A financial contribution from the seller to help cover the b...

Seller Disclosure

A legal document in which the seller reveals known defects, ...

Seller Financing

An arrangement where the property seller acts as the lender,...

Seller's Market

A market condition where demand for homes exceeds supply, gi...

Settlement Statement

A detailed document itemizing all costs, credits, and paymen...

Sewer Scope Inspection

A video inspection of a property's sewer line using a specia...

Short Sale

A sale where the property sells for less than the outstandin...

Showing

A private, scheduled tour of a listed property arranged betw...

Single Agency

A representation arrangement where an agent or brokerage rep...

Single-Family Home

A standalone residential property designed for one family, w...

Spec Home

A new construction home built by a developer without a speci...

Special Assessment

An additional charge levied by an HOA or local government fo...

Specific Performance

A court remedy that compels a party to fulfill their obligat...

Sphere of Influence

A real estate agent's personal and professional network of c...

Square Footage

The total livable area of a property measured in square feet...

Stale Listing

A property that has been on the market for an unusually long...

Stigmatized Property

A property that buyers may avoid for reasons unrelated to it...

Subject-To Financing

An investment strategy where the buyer takes ownership of a ...

Tax Appeal

A formal process of challenging your property's tax assessme...

Tax Assessment

The process by which a local government determines the value...

Tax Lien

A government claim against a property resulting from unpaid ...

Tax Proration

The process of dividing property taxes between buyer and sel...

Tax Sale

An auction conducted by a government entity to sell properti...

Tenant

A person who rents and occupies a property owned by a landlo...

Termite Inspection

A professional examination of a property for evidence of ter...

Title

Legal ownership of a property and the right to use it. Title...

Title Company

A company that searches public records to verify property ow...

Title Insurance

An insurance policy that protects the buyer and lender again...

Title Search

An examination of public records to verify the legal ownersh...

Title Transfer

The legal process of changing property ownership from one pa...

Townhouse

A multi-story home that shares one or two walls with adjacen...

Transaction Coordinator

A professional who manages the administrative tasks and pape...

Transfer Tax

A tax imposed by state or local government when real propert...

Triplex

A residential building containing three separate living unit...

Turnkey Property

A fully renovated and ready-to-rent investment property that...

Twilight Photography

Professional real estate photos taken during the golden hour...

Umbrella Insurance Policy

An extra liability insurance policy that provides coverage b...

Under Contract

The status of a property after the seller has accepted a buy...

Underwriting

The process by which a lender evaluates a borrower's creditw...

USDA Loan

A mortgage backed by the United States Department of Agricul...

VA Appraisal

An appraisal required for VA loans with specific requirement...

VA Loan

A mortgage guaranteed by the Department of Veterans Affairs ...

Vacancy Rate

The percentage of time a rental property is unoccupied over ...

Variance

An official exception to zoning regulations that allows a pr...

Virtual Staging

Using AI or digital technology to add furniture, decor, and ...

Virtual Tour

An interactive, 360-degree digital walkthrough of a property...

Warranty Deed

A deed that guarantees the seller holds clear title to the p...

Well and Septic Inspection

Testing and evaluation of private water well systems and sep...

Wet Closing

A closing where documents are signed and funds are disbursed...

Wholesaling

An investment strategy where a person contracts a property a...

Yield Spread Premium

Compensation paid by a lender to a mortgage broker for origi...

Zoning

Government regulations that dictate how land in specific are...