Real Estate Glossary
Below are some terms and their meaning, you may often hear in the real estate industry.
An authorized person who manages or transacts business for another.
Laws governing real estate--especially relating to agents--vary
considerably from state to state. While some standardization has
been achieved, it is best to check the particulars in each state.
An agent who represents the buyer in a real estate transaction.
A buyer agent may be paid by the buyer, seller, or listing agent
at closing, provided all parties consent.
An agent representing both parties in a transaction. In almost every
state, dual agency is illegal and unethical without the written
consent of both the buyer and the seller.
The agent who represents the seller.
The agent who obtains a buyer. A selling agent may represent the
buyer, or may be a subagent of the seller.
A salesperson who works for an agent.
Features that enhance the value or desirability of a property.
To pay a debt in periodic amounts until the total amount, including
any interest, is paid.
A qualified party's opinion of the value of a property.
This may include examples of sales of similar properties.
An increase in value
A process where disputes are mortgage to cover processing costs. settled by referring them to a fair and neutral third party (arbitrator). The disputing parties agree in advance to agree with the decision of the arbitrator. There is a hearing where both parties have an opportunity to be heard, after which the arbitrator makes a decision.
ARM (Adjustable Rate Mortgage)
A financing technique in which the lender can raise or lower the mortgage
interest rate according to a set index, such as six-month Treasury
Assessment / Assesed Value
An official valuation of property for tax purposes. Payments made
by condominium or cooperative owners for their share of building
A mortgage with monthly payments often based on a 30-year amortization schedule, with the unpaid balance due in a lump sum payment at the end of a specific period of time (usually 5 or 7 years). The mort-gage may contain an option to “reset” the interest rate to the current market rate and to extend the due date if certain conditions are met.
Legally declared unable to pay your debts. Bankruptcy can severely impact your credit and your ability to borrow money.
An independent business person who sets real estate office policies,
hires employees, determines their compensation, and supervises their
CLO (Computerized Loan Origination)
A computer network of major lenders that allows agents to initiate
mortgage applications in their office. HUD has approved the procedure
as long as 1) full disclosure is made of the fee; 2) multiple lenders
are displayed on the computer screen to give borrowers a basis for
comparison; 3) the fee charged is a dollar amount rather than a
percentage of the loan.
The point at which real estate formally changes ownership. Closing
costs are fees paid for services associated with a home's closing
such as title insurance, surveying fees, recording fees, deeds,
CMA (Competitive Market Analysis)
A method of determining the value of a property by comparing the
prices paid for similar properties.Code of Ethics A written
standard of ethical conduct embraced by the NATIONAL ASSOCIATION
OF REALTORS®, a trade organization of more than 700,000 members
representing all branches of the real estate industry.
Compensation paid to a real estate agent (usually by the seller)
for services rendered in connection with the sale, exchange, or
lease of property.
Individual ownership of a portion of a building, with common areas
shared by all owners. Maintenance fees called "assessments" are
paid to the condominium association to maintain, repair, or improve
A fixed-rate, fixed term loan that is not insured by the government.
An arrangement in which a corporation made up of residents owns
a building. The buyer owns a proprietary lease, rather than real
property, and a corresponding number of shares in the corporation.
A new offer as to price, terms, and conditions, made in response
to a prior, unacceptable offer. A counter offer terminates an original
CRS (Certified Residential Specialist)
A professional designation awarded to experienced agents who complete
an advanced course of study in residential real estate and demonstrate
proficiency in sales and production. CRS Designees are members of
the Residential Sales Council, a not-for-profit affiliate of the
NATIONAL ASSOCIATION OF REALTORS®.
A legal document transferring ownership of a property from one
party to another.
Deed in Lieu of Foreclosure
The voluntary surrender of property by an owner or borrower to a lien holder (such as a bank) that eliminates the need to continue foreclosure action by the lien holder. The lien holder can refuse to accept the Deed in Lieu and file a Notice of Non Acceptance with the County Recorder.
Revealing what previously was private knowledge. Any statement of
fact that is required by law.
A percentage of the purchase price the buyer pays in cash.
A buyer's partial payment to the seller as a show of good faith
in completing the transaction.
The difference between the current market value of a property and
the claims--such as the unpaid portion of a mortgage--that exist
The closing of a real estate transaction through a neutral third
party who holds funds and/or documents for delivery after specific
conditions have been met.
A written agreement in which the seller appoints only one agent
to market the property for a specific period of time. If the owner
sells the property himself, he is not required to pay a commission.
Exclusive Right of Sale Listing
A written agreement between an agent and a property owner stating
that the owner will pay a commission to the agent if the property
is sold during a specific time period--whether or not the agent
is responsible for the sale.
Fannie Mae (Federal National Mortgage Association)
Fannie Mae purchases home mortgages, thus serving as a source of
funds for mortgage lenders. It is a privately owned corporation
whose shares are traded on the New York Stock Exchange, but it is
subject to the strict supervision of the secretary of the U.S. Department
of Housing and Urban Development (HUD).Federal Fair Housing Law
Refers to Title VIII of the Civil Rights Act, and stipulates that
discrimination based on race, color, sex, familial status, handicap,
religion, or national origin is illegal in connection with the sale
or rental of most dwellings.
FHA (Federal Housing Administration)
A federal agency established to improve housing standards and conditions.
The FHA provides mortgage insurance to approved lending institutions.
An agreement between a mortgage holder and a borrower that specified a loan payment plan and halts the foreclosure action if borrower meets requirements and terms of the agreement. The payment plan generally includes provisions for repayment to the mortgage holder of all delinquent interest and fees and could include extending the life of the mortgage beyond it's original term.
The legal process by which property that is mortgaged as security for a loan may
be sold to pay a defaulting borrower's loan.
Freddie Mac (Federal Home Loan Mortgage Corporation)
A federally chartered corporation established to purchase mortgages
in the secondary, or resale, market. Freddie Mac's policies are
designed to serve the needs of savings and loan associations. It
is subject to oversight by the U.S. Department of Housing and Urban
A pledge made by one person (the guarantor) to ensure that another
person (the obligor) will fulfill an obligation to a third party
HUD (U.S. Department of Housing and Urban Development
A federal department active in a variety of national housing programs
including urban renewal and public housing.
Additions intended to increase the value of a property.
An examination of a property by the buyer, agent, title insurance
company, or other interested party.
A charge or claim by one party on the property of another as security
for the payment of a debt.
A written agreement between a property owner and a real estate broker
authorizing the broker to find a buyer.
Banks and lenders look to limit losses on delinquent mortgages by working out solutions with borrowers through a Loss Mitigation Department, generally operated by the bank or lender to deal specifically with delinquent accounts.
The price a property will command on the open market.
MLS (Multiple Listing Service)
A means by which agents are informed of the properties offered for
sale by other agents.
A legal document pledging property as security for the payment of
An insurance plan that protects the lender if the borrower does
not repay a loan. Mortgage insurance is required when a home buyer
makes less than a 20% down payment at the time of purchase. Private
mortgage insurance (PMI) covers conventional (fixed-year, fixed-rate)
loans. The Federal Housing Administration charges a mortgage insurance
premium (MIP) on FHA loans.
NATIONAL ASSOCIATION OF REALTORS ®
A trade organization serving over 700,000 members from all branches
of the real estate industry. Members subscribe to a strict Code
of Ethics which governs their conduct.
Abbreviation for Notice Of Default.
Notice of Default
An official notice filed and recorded by a designated trustee at the request of a lender indicating lender has commenced foreclosure action.
A proposal to purchase property at a specified price and terms.
The common real estate practice of showing "For Sale" homes to the
public during established hours.
A lender's charge for establishing and processing a new mortgage
loan. It is generally computed as a percentage of the loan and may
be tax deductible.
Owner of Record
The person named in the public record as the owner of a property
A one-time charge paid to the lender for issuing a loan. Each point
equals one percent of the loan amount and is used to obtain revenue
in addition to the interest rate.
The amount of money upon which interest is paid.
A buyer who has demonstrated the financial ability to afford the
asking price of a home. Prequalifying with a lender can expedite
the home buying transaction.
A registered trade name that may only be used by members of the
NATIONAL ASSOCIATION OF REALTORS®, an organization with over
700,000 members who represent all branches of the real estate industry.
REALTORS® subscribe to a strict Code of Ethics which governs
Obtaining a new loan to pay off an existing loan. Refinancing is
a popular practice when interest rates drop.
Residential Sales Council
A not-for-profit affiliate of the NATIONAL ASSOCIATION OF REALTORS®.
The Council awards the Certified Residential Specialist (CRS) Designation,
to experienced members who have completed an advanced course of
study in residential real estate.
A single-family mortgage that is 90 days or more past due, or a multifamily
mortgage that is two months or more past due.
Short refinance is the replacement of a mortgage, usually with a reduced mortgage, when the borrower is already in default. This is done to transition the borrower to a more affordable payment structure. The lender has to write off the difference between the old mortgage and the new mortgage, but in some cases this may be preferable to foreclosure.
To sell a home through negotiation with the bank or lender, who agrees to accept less than the full amount owed to satisfy the debt allowing the debt to be ‘paid off’, short. Short sales are subject to bank approval and are often used as options in lieu of foreclosure.
Lawful ownership of property.
An insurance policy that protects against losses arising from title
defects such as forged or misfiled documents
An examination of the public records to determine whether the current
title is clear or defective.
Also known as a row house, generally refers to a type of dwelling
having two floors, with the living area and kitchen on the first
floor, and the bedrooms on the second. Town houses share a common
wall between units.
VA (Veterans Administration)
A federal agency designed to
help veterans enter the housing market.
A loan guaranteed by the U.S. Department of Veterans Affairs (VA).
VA loans are made to honorably discharged veterans or their unremarried
widows or widowers. Such loans require a minimal or no down payment
and offer lower interest rates.
A final inspection of a property before it changes ownership.