Real Estate Terms Glossary: Your Complete Guide for Buyers, Sellers, and Investors
Understanding real estate terminology is essential for making informed decisions when buying, selling, or investing in property. This comprehensive glossary defines the most important real estate terms used by agents, brokers, lenders, and attorneys. Whether you are a first-time buyer or a seasoned investor, this guide will help you navigate the process with confidence.
A
Abstract of Title – A summary of the history of ownership and claims against a property, including deeds, mortgages, liens, and judgments.
Acceleration Clause – A clause in a mortgage or loan agreement that allows the lender to demand full repayment if the borrower defaults.
Adjustable-Rate Mortgage (ARM) – A mortgage with an interest rate that changes periodically based on a market index.
Amortization – The process of paying off a loan through regular payments of principal and interest over time.
Appraisal – An expert’s opinion of a property’s market value, usually conducted for mortgage approval or tax assessment.
Appreciation – The increase in a property’s value over time due to market demand, improvements, or inflation.
Assessed Value – The value placed on a property by a public tax assessor for purposes of calculating property taxes.
Assumption of Mortgage – When a buyer takes over the seller’s existing mortgage, becoming responsible for the remaining payments.
B
Balloon Mortgage – A mortgage that requires a large final payment at the end of the loan term after smaller regular payments.
Bill of Sale – A document transferring ownership of personal property from the seller to the buyer, often used in real estate for fixtures or equipment.
Breach of Contract – Failure to fulfill the terms of a contract, such as missing a payment or not completing a sale.
Bridge Loan – A short-term loan used to cover expenses when transitioning from one property to another.
Broker – A licensed professional who represents buyers or sellers in real estate transactions.
Building Code – Regulations established by local governments that set construction standards to ensure safety and quality.
Buyer’s Agent – A real estate agent who represents the buyer’s interests during a transaction.
C
Capitalization Rate (Cap Rate) – A measure used by investors to determine a property’s return on investment, calculated by dividing net operating income by the property’s price.
Cash Flow – The amount of money left over after expenses are deducted from rental income.
Closing – The final step in a real estate transaction when ownership transfers from the seller to the buyer.
Closing Costs – Fees paid at closing, including title insurance, lender charges, and attorney fees.
Comparable Sales (Comps) – Recently sold properties similar in size, location, and features used to estimate a property’s value.
Commission – The fee paid to real estate agents or brokers for facilitating a sale, typically a percentage of the purchase price.
Contingency – A condition that must be met for a real estate contract to become binding, such as financing or inspection approval.
Conventional Loan – A mortgage not insured by a government agency like FHA or VA, usually requiring higher credit scores.
Condominium (Condo) – A private residence in a multi-unit building where owners share common areas but hold title to their individual units.
Contract for Deed – A financing agreement where the seller retains title until the buyer completes all payments.
Cooperative (Co-Op) – A type of housing where residents own shares in a corporation that owns the entire property.
Covenant – A written promise or restriction in a deed, often outlining property usage or design standards.
Credit Report – A document showing a borrower’s credit history, used by lenders to determine loan eligibility.
D
Debt-to-Income Ratio (DTI) – A financial metric comparing total monthly debt payments to gross monthly income, used to assess loan qualification.
Deed – The legal document transferring ownership of real property from seller to buyer.
Deed of Trust – A document used in some states instead of a mortgage, involving a borrower, lender, and trustee.
Default – Failure to meet legal obligations, such as making mortgage payments.
Depreciation – The decrease in property value over time due to wear and tear or economic changes.
Disclosure – The act of informing buyers about known property defects or legal issues.
Down Payment – The portion of the purchase price paid upfront by the buyer, typically between 3% and 20%.
Dual Agency – When a single agent represents both the buyer and seller in a transaction, with both parties’ consent.
E
Earnest Money Deposit – A good faith payment made by a buyer to show serious intent to purchase, applied toward the closing costs.
Easement – The right of another person or entity to use part of a property for a specific purpose, such as utility access.
Eminent Domain – The government’s power to take private property for public use, with compensation to the owner.
Encroachment – When a structure extends onto another person’s property without permission.
Encumbrance – Any claim, lien, or restriction on a property’s title that may affect its transferability.
Equity – The difference between the market value of a property and the remaining mortgage balance.
Escrow – A neutral third party that holds funds or documents until the conditions of a sale are met.
Estate – The total of an individual’s assets, including real estate, personal property, and financial holdings.
F
Fair Market Value (FMV) – The price a property would likely sell for in an open and competitive market.
Fannie Mae (FNMA) – A government-sponsored enterprise that buys and guarantees mortgages from lenders.
Federal Housing Administration (FHA) – A government agency that insures mortgages to help buyers with lower credit scores.
Fee Simple – The most complete form of property ownership, giving full rights to use, sell, or bequeath the property.
Foreclosure – The legal process in which a lender takes possession of a property due to borrower default.
Fixture – An item permanently attached to a property, such as lighting or cabinetry, which is included in the sale.
Flip – The act of buying, renovating, and reselling a property for profit.
G
Grace Period – The time allowed after a payment due date before penalties apply.
Gross Income – The total income generated from a property before expenses are deducted.
Ground Lease – A long-term lease allowing the tenant to use land owned by another party, often for commercial development.
Guarantee – A promise by a third party to fulfill loan obligations if the borrower defaults.
H
Home Equity Line of Credit (HELOC) – A revolving credit line secured by a homeowner’s equity.
Home Inspection – A professional evaluation of a property’s condition before purchase.
Homeowners Association (HOA) – An organization that manages shared spaces and enforces community rules in planned developments.
Homeowners Insurance – A policy covering property damage and liability in case of accidents or disasters.
HUD (Department of Housing and Urban Development) – The federal agency that oversees national housing programs and enforces fair housing laws.
I
Interest Rate – The percentage charged by a lender for borrowing money, usually expressed annually.
Investment Property – Real estate purchased for income generation rather than personal use.
Inspection Contingency – A clause allowing the buyer to renegotiate or cancel the contract based on inspection results.
Insurance Binder – A temporary proof of homeowners insurance required before closing.
J
Joint Tenancy – A type of ownership where two or more parties own equal shares and inherit each other’s shares automatically upon death.
Judgment Lien – A court order placed on property to secure payment of a legal debt.
L
Landlord – The property owner who rents real estate to a tenant.
Lease Agreement – A legal contract outlining the terms under which a property is rented.
Lien – A legal claim against property used as security for a debt.
Listing – A property offered for sale by a real estate agent or broker.
Loan-to-Value Ratio (LTV) – The percentage of a property’s value financed by a loan, used by lenders to assess risk.
Location – The most important factor influencing real estate value, including proximity to schools, transport, and amenities.
M
Market Value – The current price a buyer is willing to pay for a property.
Mortgage – A loan secured by real property. The borrower promises repayment plus interest.
Mortgage Broker – A licensed intermediary who connects borrowers with lenders.
Multiple Listing Service (MLS) – A database of properties for sale, used by agents to share listings.
N
Net Operating Income (NOI) – A property’s income after deducting operating expenses, used to evaluate investment performance.
Note – A legal document stating the borrower’s promise to repay a loan.
Notary Public – An authorized individual who verifies signatures and documents during closing.
O
Offer – A formal proposal from a buyer to purchase a property under specified terms.
Open House – A scheduled event where potential buyers tour a property for sale.
Option to Purchase – A contract giving a buyer the right, but not the obligation, to buy property at a set price within a certain time.
Owner Financing – When the seller finances the buyer’s purchase directly rather than through a traditional lender.
P
Pre-Approval – A lender’s written commitment indicating how much a buyer qualifies to borrow.
Principal – The original loan amount, excluding interest.
Private Mortgage Insurance (PMI) – Insurance required when a buyer’s down payment is less than 20% of the purchase price.
Property Tax – Taxes levied by local governments based on assessed property value.
Purchase Agreement – The legally binding contract between buyer and seller detailing terms of the sale.
Q
Quitclaim Deed – A deed transferring ownership interest without guaranteeing the title’s validity.
Qualifying Ratios – Financial metrics used by lenders to determine a borrower’s eligibility for a loan.
R
Real Estate Agent – A licensed professional who assists in buying, selling, or leasing property under a broker.
Real Property – Land and any structures attached to it.
Refinancing – Replacing an existing mortgage with a new one, usually for better terms.
Realtor® – A real estate agent who is a member of the National Association of Realtors, adhering to its code of ethics.
Recording – The act of filing a document with the county to make it part of the public record.
Rent Roll – A list of tenants, rental amounts, and payment history for an investment property.
Right of First Refusal – The opportunity to purchase property before it is offered to others.
S
Sales Contract – The binding agreement between buyer and seller detailing price and terms.
Second Mortgage – An additional loan taken against a property’s equity.
Short Sale – When a property is sold for less than the amount owed on its mortgage with lender approval.
Survey – A professional measurement of property boundaries.
Subdivision – The division of land into smaller lots for development.
T
Tax Lien – A government claim on property for unpaid taxes.
Tenancy in Common (TIC) – Ownership by two or more people where each holds a separate, transferable interest.
Title – The legal right to ownership of property.
Title Insurance – A policy protecting against losses due to title defects or ownership disputes.
Trust Deed – A document transferring property to a trustee as security for a loan.
U
Underwriting – The lender’s process of evaluating a borrower’s risk before approving a loan.
Upside Potential – The possibility of a property increasing in value or generating more income.
Utilities – Essential services such as electricity, water, and gas connected to a property.
V
VA Loan – A mortgage guaranteed by the Department of Veterans Affairs for eligible military service members.
Vacancy Rate – The percentage of unoccupied rental units in a property or market.
Variable Rate – An interest rate that fluctuates based on changes in a market index.
W
Warranty Deed – A deed guaranteeing that the seller owns the property free of liens and will defend the buyer against future claims.
Walk-Through – The final inspection before closing to ensure the property’s condition matches the purchase agreement.
Wholesale Real Estate – The practice of contracting a property below market value and assigning the contract to another buyer for profit.
Why Knowing Real Estate Terms Matters
Understanding real estate terminology empowers you to make confident, informed decisions in one of life’s biggest financial transactions. Whether you are securing financing, evaluating investments, or closing on your first home, knowing these terms helps you protect your rights and avoid costly mistakes. At Antonoplos & Associates, we guide clients through every stage of property transactions with transparency, expertise, and legal precision. Our team ensures that your real estate contracts, deeds, and negotiations are handled with care so your investment remains secure for years to come.