Welcome to the Prochnow Real Estate Group’s Real Estate Glossary! Here, you will find definitions of common real estate terms to help you better understand the buying and selling process. Whether you’re a first-time homebuyer, a seasoned investor, or simply curious about real estate terminology, our glossary is a valuable resource.
Glossary of Terms
A
Appraisal: An evaluation of a property’s value conducted by a licensed appraiser, based on comparable sales, location, and condition of the property.
Adjustable-Rate Mortgage (ARM): A type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan.
B
Broker: A licensed real estate professional who acts as an intermediary between sellers and buyers of real estate properties.
Buyer’s Agent: A real estate agent who represents the buyer’s interests in a real estate transaction.
C
Closing: The final step in a real estate transaction where ownership of the property is transferred from the seller to the buyer.
Commission: A fee paid to a real estate agent or broker for their services, typically a percentage of the property’s selling price.
D
Deed: A legal document that transfers ownership of real property from one party to another.
Down Payment: The amount of money a buyer pays upfront when purchasing a property, usually a percentage of the total purchase price.
E
Escrow: A neutral third party that holds funds and documents during a real estate transaction until all conditions of the sale are met.
Equity: The difference between the market value of a property and the amount owed on the mortgage.
F
Fixed-Rate Mortgage: A mortgage with an interest rate that remains the same for the entire term of the loan.
Foreclosure: The legal process by which a lender takes possession of a property due to the borrower’s failure to make mortgage payments.
G
Grant Deed: A legal document used to transfer ownership of real property, with the guarantee that the title is clear and the property has not been sold to another party.
Gross Income: The total income before taxes and other deductions.
H
Home Inspection: An examination of the condition of a home, often conducted by a professional inspector, to identify any potential issues before purchase.
Homeowners Association (HOA): An organization in a subdivision, planned community, or condominium that makes and enforces rules for the properties within its jurisdiction.
I
Interest Rate: The percentage charged by a lender for borrowing money, expressed as a percentage of the loan amount.
Inspection Contingency: A clause in a real estate contract that allows the buyer to have the property inspected and negotiate repairs or cancel the contract based on the inspection results.
J
Joint Tenancy: A form of property ownership where two or more people own a property together with equal rights and obligations.
Jumbo Loan: A mortgage loan that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA).
L
Lien: A legal claim on a property as security for a debt or obligation.
Listing Agent: A real estate agent who represents the seller’s interests in a real estate transaction.
M
MLS (Multiple Listing Service): A database used by real estate agents to list and access information about properties for sale.
Mortgage: A loan used to purchase a property, where the property itself serves as collateral.
N
Net Income: The income after taxes and other deductions.
Notary Public: An official authorized to witness and certify the signing of legal documents.
O
Offer: A formal proposal to buy a property at a specified price.
Open House: A scheduled period of time when a property for sale is open for public viewing.
P
Pre-Approval: A process in which a lender determines how much money a potential buyer can borrow before they make an offer on a property.
Principal: The original amount of money borrowed on a mortgage loan, excluding interest and fees.
Q
Quit Claim Deed: A legal document used to transfer ownership of a property without guaranteeing that the title is clear.
Qualifying Ratio: A ratio used by lenders to determine a borrower’s ability to repay a loan, typically comparing debt to income.
R
Real Estate Agent: A licensed professional who assists buyers and sellers in real estate transactions.
Refinance: The process of obtaining a new mortgage to replace an existing one, often to secure a lower interest rate or different terms.
S
Short Sale: A sale of a property where the proceeds are less than the balance owed on the mortgage, and the lender agrees to accept less than the amount owed.
Survey: A measurement of land to determine its boundaries and the location of improvements.
T
Title: The legal documentation proving a person’s right to ownership of a property.
Title Insurance: Insurance that protects the lender or buyer against losses due to disputes over the property’s title.
U
Underwriting: The process by which a lender evaluates the risk of a loan by assessing the borrower’s credit history, income, and other factors.
Utilities: Services provided to a property, such as water, electricity, gas, and sewer.
V
VA Loan: A mortgage loan guaranteed by the U.S. Department of Veterans Affairs, available to veterans and active-duty service members.
Variable Interest Rate: An interest rate that can change based on market conditions.
W
Walk-Through: A final inspection of a property by the buyer before closing to ensure that the property is in the agreed-upon condition.
Warranty Deed: A deed in which the seller guarantees that they hold clear title to the property and have the right to sell it.
Z
Zoning: Regulations established by local governments determining how property in specific areas can be used.