Real Estate Glossary: Common Terms to Know
- Craig Kaiser
- 16 hours ago
- 9 min read
Navigating the world of real estate can feel like learning a new language. With so many unique terms and acronyms, it's easy to get overwhelmed, especially if you're buying or selling a home for the first time. Understanding this vocabulary is the first step toward a confident and smooth transaction.
This guide breaks down the essential real estate terms into simple, easy-to-understand definitions, so you can feel empowered on your journey. However, knowing these terms is just the beginning of mastering the real estate market. With LandApp, you can put that knowledge into action- buy, sell, or lease properties right from our nationwide marketplace. Whether you’re hunting for your next investment or want to sell or lease your land, LandApp makes the process easy, fast, and hassle-free.
Real Estate Glossary: Common Terms to Know
When venturing into the real estate market, it is crucial to understand some basic terms. This understanding will empower you to make informed decisions while searching for your dream home. Here are some key real estate terms every buyer should familiarize themselves with.
General Real Estate Terms to Know
Whether you’re buying, selling, or investing in property, understanding the basics of real estate is essential. From professionals who guide transactions to common property agreements and listing platforms, knowing these foundational terms can help you navigate the market with confidence. Here are some general real estate terms that you should be familiar with.
Exclusive Listing
An exclusive listing is an agreement where a property owner grants a single real estate agent or brokerage the exclusive right to sell their property for a specified period. During this time, only that agent can market the property and earn a commission if it sells. Exclusive listings give agents more incentive to invest in marketing the property, while providing sellers with a dedicated point of contact and professional support throughout the selling process.
Home Inspection
A home inspection is a professional evaluation of a property’s condition conducted before a sale. A licensed inspector examines the home’s structure, systems, and major components, including the roof, plumbing, electrical, HVAC, and foundation, to identify any defects or potential issues.
Homeowners Association (HOA)
A Homeowners Association (HOA) is an organization that manages and enforces rules for a residential community or subdivision. Homeowners in the community pay monthly or annual fees to the HOA, which uses the funds for maintenance, amenities, landscaping, and community services.
iBuyer
An iBuyer is a company or platform that uses technology and algorithms to make instant cash offers on homes, often aiming for a quick, hassle-free sale. While iBuyers offer speed and convenience, their offers may be slightly lower than market value, and fees for the service can apply.
Land Lease
In real estate, a land lease is an agreement where a tenant rents land from a property owner for a specific period, rather than buying the land outright. The tenant may build or use structures on the land, but ownership of the land itself remains with the landlord.
Multiple Listing Service (MLS)
The Multiple Listing Service is a database of properties for sale, used by real estate agents to share listings with one another. It provides valuable information about properties, including price, features, and status.
Realtor vs. Real Estate Agent
While the terms “Realtor” and “real estate agent” are often used interchangeably, they are not synonymous. A Realtor is a licensed real estate agent who is a member of the National Association of Realtors and abides by its strict code of ethics.
Survey
In real estate, a survey is a professional assessment that maps out property lines, dimensions, and physical features. It shows exactly where the property lines are and identifies any easements, encroachments, or structures that may affect the land.
Title
A title is a legal document that proves ownership of a property. It is vital for buyers to conduct a title search to ensure there are no liens or claims against the property before finalizing the purchase.
Zoning
Zoning laws refers to the regulations and laws that govern how a property can be used in a specific area. Local governments divide land into zones, such as residential, commercial, industrial, or agricultural, and set rules about what types of buildings and activities are allowed in each zone.
Real Estate Terms Buyers & Sellers Should Know
When you’re buying land or a home, understanding the language of real estate can make the process smoother and less stressful. From financing to inspections, knowing key terms helps you make informed decisions, avoid surprises, and confidently navigate every step of the purchase. Here are some essential real estate terms buyers should know.
Appraisal
An appraisal is an assessment of a property's value, typically conducted by a professional appraiser. The appraisal is important because it informs both the buyer and the lender about the market value of the property. If the appraisal value is lower than the agreed-upon purchase price, it can affect the buyer's ability to secure financing.
Assessed Value
Assessed value is the valuation a local government assigns to a property for tax purposes. It is used to calculate property taxes and may differ from the property’s current market value.
Buyers Agent
A buyers agent, also referred to as the listing agent, represents the seller of a property and is responsible for marketing and showing the home. They play a critical role in setting the price and negotiating offers. Buyers often work with their own agents for representation. Although it is recommended to work with a real estate professionals when buying or selling property, it is possible to buy and sell real estate without a realtor (for sale by owner).
Contingency
A contingency in real estate is a condition that must be met for the sale to proceed. Common contingencies include home inspections, financing approvals, and appraisal requirements. If a contingency is not satisfied, the buyer or seller may have the right to back out of the transaction without penalties.
Due Diligence
In real estate, due diligence is the research and investigation process a buyer undertakes before finalizing a property purchase. It’s the period when buyers thoroughly evaluate the property’s condition, legal status, and value to ensure there are no surprises after closing. This can include reviewing property inspections, title reports, zoning laws, environmental assessments, and financial documents.
Escrow
In real estate, escrow refers to a neutral third-party arrangement where money, documents, or other assets are held safely until all conditions of a transaction are met.
Fair Market Value (FTM)
Fair market value (FMV) is the estimated price a property would sell for on the open market between a willing buyer and a willing seller, both having reasonable knowledge of the property and neither being under undue pressure to buy or sell. It is important for pricing properties, obtaining financing, assessing taxes, and making informed investment decisions.
Lein
In real estate, a lien is a legal claim or hold on a property that serves as security for a debt or obligation. It gives the lienholder (such as a lender, contractor, or government entity) the right to take possession of or sell the property if the debt isn’t repaid.
Purchase and Sale Agreement
In real estate, a Purchase and Sale Agreement (PSA) is a legally binding contract between a buyer and a seller that outlines the terms and conditions of a property sale. It specifies details like the purchase price, closing date, contingencies, and responsibilities of each party.
Seller Concession
In real estate, a seller concession is an agreement where the seller agrees to pay certain costs on behalf of the buyer to help make the purchase more affordable. These costs often include closing costs, prepaid expenses, or repairs. Seller concessions can make a deal more attractive to buyers, but lenders typically limit the amount of concessions allowed based on the type of loan and purchase price.
Seller Disclosure
A seller disclosure is a document provided by the seller that outlines known issues or defects with a property. It informs potential buyers about things like structural problems, past repairs, environmental hazards, or legal issues that could affect the home’s value or safety.
Title Insurance
Title insurance is a policy that protects property buyers and lenders against financial loss from defects in a property’s title. These defects could include errors in public records, undisclosed liens, ownership disputes, or fraud that might affect legal ownership of the property. There are typically two types: owner’s title insurance, which protects the buyer’s interest, and lender’s title insurance, which protects the mortgage lender’s investment.
Under Contract
Being under contract indicates that the property is no longer actively available on the market, though the deal could still fall through if contingencies aren’t met.
Mortgage and Finance Real Estate Terms to Know
Understanding the financial side of real estate is key to making smart buying or selling decisions. From loans and interest rates to fees and repayment schedules, knowing these mortgage and finance terms helps you navigate the process with confidence, avoid surprises, and make informed choices about your investment.
Amortization
Amortization refers to the process of gradually paying off a mortgage through regular, scheduled payments over the life of the loan. Each payment typically covers both interest and principal, with the interest portion being higher at the beginning and the principal portion increasing over time.
Buydown
In real estate, a buydown is a financing arrangement where the borrower or seller pays upfront to reduce the mortgage interest rate for a certain period or the life of the loan. This lowers the buyer’s monthly payments, making the home more affordable initially.
Closing Costs
Closing costs encompass all the fees and expenses a buyer incurs when finalizing a real estate transaction. Closing costs can include attorney fees, title insurance, inspection costs, and other miscellaneous fees. It's essential for buyers to budget for these costs, which typically range from 2-5% of the purchase price.
Debt-to-Income Ratio (DTI)
In real estate, the debt-to-income ratio (DTI) measures a borrower’s ability to manage monthly payments and repay debts. It compares your total monthly debt payments to your gross monthly income (the amount you earn before taxes and deductions) using the formula: DTI = (Total Monthly Debt Payments ÷ Gross Monthly Income) × 100.
Down Payment
A down payment is the portion of the home's purchase price that you pay upfront in cash. It is not financed through your mortgage. The amount required for a down payment varies depending on the type of loan you get.
Earnest Money
Earnest money is a good-faith deposit. When you offer on a house, you typically include an earnest money check to show serious intent. This money is held in an escrow account and usually applied toward your down payment or closing costs. If you back out of the deal for a reason not covered by a contingency, you could lose this deposit.
Equity
In real estate, equity refers to the portion of a property that you truly own- it’s the difference between the property’s current market value and the amount you still owe on your mortgage or loans.
Fixed-Rate Mortgage
A fixed-rate mortgage has an interest rate that remains constant throughout the life of the loan. This stability makes it easier for buyers to budget their payments, as they will know exactly how much they need to pay each month. Fixed-rate mortgages usually come with terms of 15, 20, or 30 years.
Interest
Interest is the cost of borrowing money when taking out a mortgage or loan to buy a property. It’s usually expressed as a percentage of the loan amount and is paid to the lender over the life of the loan in addition to repaying the principal.
Origination Fee
An origination fee is a one-time charge by a lender for processing and approving a mortgage loan. It’s usually calculated as a percentage of the loan amount and covers the lender’s administrative costs, including underwriting and document preparation. Origination fees are part of the closing costs and are typically negotiable, so buyers may be able to reduce or shop around for lower fees.
Pre-Approval
In real estate, pre-approval is a lender’s conditional commitment stating how much money a buyer can borrow to purchase a property, based on an evaluation of their financial information- such as income, credit score, debt, and assets. Getting pre-approved for a mortgage gives buyers a clearer idea of their budget and strengthens their offer when bidding on a property.
Private Mortgage Insurance (PMI)
If your down payment is less than 20% of the home’s purchase price, your lender will likely require you to pay Private Mortgage Insurance (PMI). PMI is a type of insurance that protects the lender in case you default on your loan. It is typically rolled into your monthly mortgage payment. Once you have at least 20% equity in your home, you can usually request to have PMI removed.
Refinancing
In real estate, refinancing is the process of replacing an existing mortgage with a new one, usually to take advantage of better interest rates, change the loan term, or access home equity.
Underwriting
Underwriting is the process lenders use to evaluate a borrower’s financial risk before approving a mortgage. During underwriting, the lender reviews factors like credit score, income, employment history, debt-to-income ratio, and the property’s value to decide whether to approve the loan and under what terms.
Final Thoughts
Arming yourself with knowledge about important real estate terms can help you navigate the home buying process with confidence. Understanding these definitions will not only make it easier to communicate with your real estate agent but also empower you to make informed decisions. Whether you are a first-time home buyer or looking to invest in real estate, being familiar with the relevant terms can enhance your experience in the real estate market. To delve deeper into key real estate terms and definitions, you can visit this helpful glossary.
With LandApp, you can take action on what you’ve learned- buy, sell, or lease properties directly on our marketplace. Whether you’re looking for your next investment, ready to list your land, or exploring leasing opportunities, LandApp makes it simple and straightforward.
