Navigating the real estate world can feel like learning a new language. This glossary defines common real estate terms to help you understand the process, whether you’re buying, selling, or investing.

A

• Appraisal: An estimate of a property’s fair market value, typically conducted by a licensed appraiser.
• Amortization: The process of gradually paying down a mortgage loan over time through regular payments.
• Assessed Value: The value a local government assigns to a property for tax purposes.
• Agent (Real Estate): A licensed professional who assists buyers and sellers in real estate transactions.

B

• Broker (Real Estate): A licensed real estate professional who has passed a more advanced licensing exam than an agent and can manage other agents.
• Buyer’s Market: A market condition where there are more sellers than buyers, giving buyers more negotiating power.

C

• Closing: The final stage of a real estate transaction where ownership of the property is transferred from the seller to the buyer.  
   
• Closing Costs: Fees and expenses associated with closing a real estate transaction, including loan origination fees, appraisal fees, and title insurance.
• Commission: The fee paid to a real estate agent or broker for their services, typically a percentage of the sale price.
• Contingency: A condition that must be met before a real estate contract becomes binding. Common contingencies include financing, appraisal, and inspection.
• Contract (Real Estate): A legally binding agreement between a buyer and seller outlining the terms of a real estate transaction.

D

• Deed: A legal document that transfers ownership of real property from the seller (grantor) to the buyer (grantee).
• Down Payment: The portion of the purchase price that the buyer pays upfront, typically a percentage of the total price.

E

• Equity: The difference between the current market value of a property and the amount owed on the mortgage.
• Escrow: A neutral third party that holds funds and documents related to a real estate transaction until all conditions are met.

F

• Foreclosure: The legal process by which a lender repossesses a property due to the borrower’s failure to make mortgage payments.  
   

H

• Home Inspection: A thorough examination of a property’s condition by a qualified inspector.

L

• Listing: A property that is offered for sale by a real estate agent or broker.
• Loan (Mortgage): A loan secured by real estate, used to finance the purchase of a property.

M

• Market Value: The estimated price a property would sell for on the open market.
• Mortgage: A loan secured by real estate.
• Mortgage Loan Originator (MLO): A professional who helps borrowers find and secure mortgage loans.

O

• Offer: A proposal made by a buyer to a seller to purchase a property.

P

• Principal: The original amount of a loan, not including interest.
• Property: Real estate, including land and any buildings or improvements on it.

R

• Real Estate: Land and any buildings or improvements on it.
• Realtor: A real estate agent or broker who is a member of the National Association of Realtors (NAR).

S

• Seller’s Market: A market condition where there are more buyers than sellers, giving sellers more negotiating power.

T

• Title Insurance: A type of insurance that protects the buyer against defects in the title of a property.

U

• Underwriting: The process by which a lender evaluates a borrower’s creditworthiness and ability to repay a loan.