Real Estate Vocabulary

Real estate can be confusing, especially if you're buying or selling a house. If you're hearing words and phrases you don't get, don't worry – many people feel the same way. You might not deal with real estate often, so it's normal not to know all the terms. This list is here to help you understand the most commonly used words / phrases.

Amortization:

The gradual repayment of a mortgage loan through regular payments that include both principal and interest.

Appraisal:

An estimation of the value of a property, typically conducted by a licensed appraiser.

Closing:

The final step in a real estate transaction when the property is officially transferred to the buyer, and all necessary documents are signed.

Closing Costs:

Fees and expenses associated with the purchase or sale of a property that are paid at the closing, including but not limited to attorney fees, title insurance, and property taxes.

Counteroffer:

A response to an initial offer during negotiations, indicating a willingness to proceed with certain changes or conditions.

Down Payment:

The initial payment made by a buyer when purchasing a home, representing a percentage of the total purchase price.

Earnest Money:

A deposit made by a buyer to show their commitment to the transaction, often held in escrow until the closing.

Equity:

The value of ownership in a property, calculated as the property's current market value minus any outstanding mortgage balance.

Escrow:

A neutral third party that holds funds and documents during a real estate transaction until all conditions of the sale are met.

Foreclosure:

The legal process through which a lender takes possession of a property from a borrower who has failed to meet the terms of the mortgage.

Home Inspection:

An examination of a property's condition, typically conducted by a professional inspector, to identify any issues or concerns.

Homeowners Association (HOA):

An organization in a planned community or condominium complex that sets and enforces rules and regulations for the properties within its jurisdiction.

Interest Rate:

The percentage of a loan amount charged by a lender for borrowing money, usually expressed as an annual percentage rate (APR).

Listing:

A property that is available for sale or rent, often represented by a real estate agent.

Mortgage:

A loan used to finance the purchase of a home, with the property serving as collateral for the loan.

Multiple Listing Service (MLS):

A database used by real estate agents to share information about properties for sale, making it easier for buyers' agents to find suitable properties for their clients.

Pre-approval:

A lender's written commitment to provide a borrower with a specific loan amount based on a thorough analysis of their financial situation.

Real Estate Agent:

A licensed professional who facilitates the buying, selling, or renting of properties and represents clients in real estate transactions.

Title:

The legal ownership of a property, often documented in a deed.

Zoning:

Local government regulations that dictate how a property can be used, such as residential, commercial, or industrial.