Real Estate Jargon Dictionary
Are you looking for a real estate jargon dictionary? Then click here as we explain important real estate lingo and acronyms in plain English.
1031 Tax Deferred Exchange
An important IRS rule in the U.S. allowing property owners to avoid paying capital gains taxes if they sell their investment property to buy another like-kind property. This rule only applies only if certain requirements are met - such as using the property for investment purposes and closing the sale within certain time limits.
Agent
Real estate jargon definition: This refers to the third party person who represents a seller, a buyer (or both) in the sale or purchase of real estate.
Appraisal
An appraisal is an estimated value of a property by a professional third party such as a certified real estate appraiser. A written property appraisal my help the buyer borrow the required funds to buy the property.
Every non-owner financed mortgage will require an appraisal and it is paid for by the buyer in general.
Assessment
Real estate lingo explained: This refers to the value of a property as calculated by the local tax laws. This assessment is then used to determine the amount of property taxes owed by the owner.
Comparable Market Analysis CMA
A comparable market analysis is a comparison of the prices of similar houses in the same geographic area. A buyer or seller can perform a CMA to help determine the value of a property.
Closing
This refers to the process where the deed of the property is formally transferred from the seller to the buyer. Closing also finalizes the mortgage of the property.
Closing Costs
These are the additional costs incurred at the time of closing. Closing costs can include loan origination fees, discount points, recording fees, pre-payments and lawyer fees. Do note that down payment is not considered as a closing cost. Closing costs typical add to 3 to 5% of the final selling price of the property
Contingencies
Contingencies are conditions worded into real estate offers to prevent a buyer from being forced to buy a property that is unsatisfactory - either structurally or financially.
Translating real estate jargon: A common example of contingencies is "This offer is subject to the buyer's obtaining adequate financing." This means that the buyer does not have to buy the property if he or she is not able to obtain a property mortgage or loan within a fixed period of time.
Deed
This real estate jargon refers to the legal document that determines who has ownership of a property. A deed is transferred from seller to buyer during closing.
Earnest Money
Earnest money is a sum of money that is submitted together with an offer to purchase. It is proof that the buyer is sincere in purchasing the property. "Good Faith Sum" is another name for this term.
The earnest money will be held by a neutral third party until the time of closing when it becomes part of the down payment.
Escrow
Money such as deposits and earnest money that is held for safekeeping before closing by a third party. After closing, part of the escrow money will be used for paying taxes and insurance.
Escrow Agent
A neutral third party whose job is to ensure that all the conditions of a real estate transaction are being met by the buyer and seller. He or she is also responsible for the safekeeping of the escrow money.
For Sale By Owner FSBO
This real estate lingo and acronym refers to property that is sold directly by the owner of the property without enlisting the help of any real estate agents.
Foreclosure
Foreclosure is a legal process where the lender of a loan (usually banks) takes over the property of a borrower who has repeatedly defaulted on mortgage payments.
The bank will proceed to put the property up for auction in order to recover the debt owed by the borrower.
Homeowner's Association
An owners' group (within a condominium, apartment, town house or single family subdivision) that enforces the general guidelines and standards for the operation of the community.
Inspection
A thorough check of a property that is being considered for purchase. Inspection can be conducted by the buyer or by professionals such as a home inspector or licensed contractor. The main purpose of an inspection is to assess the condition of the property and estimate any repair costs.
Legal Description
This real estate jargon refers to a specific way of identifying and locating a piece of real estate that is acceptable to a court of law.
Lien
If someone owes you money or you are awarded damages from a court case, you can apply to have a lien placed on the person's property. This lien gives you the right to claim payment from the sale of the person's real estate.
Listing
This real estate jargon refers to a property that is for sale by a real estate brokerage and agent.
Multiple Listing Service MLS
A multiple listing service combines the listings for all available properties in an area into one database. Since this database is pooled by a group of brokers, properties that are for sale by owners FSBO are excluded from it.
In general, access to a multiple listing service database is restricted to licensed real estate agents. They may have to pay a fee to view the database.
Prepayment Penalty
A fee that borrowers have to pay if they choose to repay their entire loan before it is due. This typically happens when the property owner switches bank or lender to refinance mortgage loans at lower interest rates. This penalty does not apply to FHA or VA loans.
Principal
The amount borrowed for a mortgage loan. Monthly mortgage payments include both the repayment of the principal and interest owed.
Property Tax
An annual or semi-annual tax paid to one or more government agencies based on the property value assessment.
Real Estate Attorney
A lawyer who specializes in real estate transactions. They are typically responsible for drafting real estate sales contracts and providing legal advice.
Real Estate Broker
A real estate agent who is licensed by the state to represent a buyer or seller in a real estate transaction. A real estate broker gets paid a commission. Most real estate brokers also have agents working for them.
Real Estate Owned REO
If a foreclosed property is not sold off during the foreclosure auction, the bank will take ownership of the real estate. This bank owned property is known as a real estate owned property.
Real Estate Purchase Agreement
A written document in which the buyer agrees to buy the property and the seller agrees to sell it according to the terms and conditions stated within. It is also known as a sales contract, earnest money contract or agreement for sale.
Recording
The real estate jargon refers to act of entering deed and mortgage information into public record with the local government.
Recording Fee
The fee charged by real estate agents for conveying the sale of a piece of property into the public record.
Title
Real estate jargon definition: The legal document granting ownership of the real estate.
Title Insurance
Insurance paid at closing to protect the owner's title from any claims against it.
Waiver
The voluntary giving up of certain rights or claims. Certain waivers may be prohibited by the law.
Zoning
Laws that govern how a real estate can be used. Properties can be zoned for residential, commercial or industrial usage or a combination of two or more uses.
