Do you know your ARM from your appraisal? Before diving into the real estate market, arm yourself with knowledge. Our comprehensive dictionary defines the 50 most important terms buyers and sellers should know. Click to become a real estate savvy consumer!

Real Estate Dictionary for Buyers and Sellers

A

1. Appraisal: A professional's estimate of a property's market value.

2. Amortization: The process of paying off a loan over time through regular payments.

3. Adjustable-Rate Mortgage (ARM): A mortgage with an interest rate that changes periodically.

4. Agent (Real Estate): A licensed professional who represents buyers or sellers in real estate transactions.

5. Assessed Value: The value placed on a property by a public tax assessor for taxation purposes.

B

1. Buyer's Agent: A real estate agent who represents the buyer in a transaction.

2. Broker: A licensed real estate professional who has passed additional training and licensing requirements beyond those of an agent.

3. Bridge Loan: A short-term loan used to bridge the gap between buying a new home and selling an existing one.

C

1. Closing: The final step in a real estate transaction where ownership is transferred.

2. Closing Costs: Fees and expenses paid by the buyer and seller to finalize a real estate transaction.

3. Contingency: A condition that must be met before a real estate contract is binding.

4. Conventional Loan: A mortgage loan not insured or guaranteed by a government agency.

5. Comparative Market Analysis (CMA): An estimate of a property's value based on recent sales of similar properties in the area.

6. Contract: A legally binding agreement between two or more parties.

D

1. Down Payment: The portion of the purchase price paid upfront by the buyer.

2. Deed: A legal document that transfers ownership of real property.

3. Due Diligence: The process of investigating and verifying information about a property before purchasing it.

E

1. Earnest Money: A deposit made by a buyer to show their serious intent to purchase a property.

2. Equity: The difference between a property's market value and the amount owed on the mortgage.

3. Escrow: A neutral third party that holds funds and documents related to a real estate transaction.

F

1. Fixed-Rate Mortgage: A mortgage with an interest rate that remains constant throughout the loan term.

2. Foreclosure: The legal process by which a lender repossesses a property due to the borrower's failure to make mortgage payments.1

3. FSBO (For Sale By Owner): A property being sold directly by the owner without the assistance of a real estate agent.

G

1. Gross Income: Total income before taxes and deductions.

H

1. Home Inspection: A professional examination of a property's condition.

2. Homeowners Association (HOA): An organization that governs a community and enforces rules and regulations.

I

1. Interest Rate: The percentage charged by a lender for borrowing money.

L

1. Lien: A legal claim against a property as security for a debt.

2. Listing: A property that is for sale, typically marketed by a real estate agent.

3. Loan-to-Value Ratio (LTV): The ratio of a loan amount to the appraised value of a property.

M

1. Mortgage: A loan used to finance the purchase of real estate.

2. Market Value: The estimated price a willing buyer would pay and a willing seller would accept for a property.

O

1. Offer: A proposal to purchase a property, including the proposed purchase price and terms.

2. Open House: A scheduled time when a property is available for potential buyers to view.

P

1. Principal: The original amount of a loan, separate from interest.

2. Pre-Approval: A lender's preliminary approval for a mortgage loan, based on the borrower's financial information.

3. Pre-Qualification: An estimate of how much a borrower might be able to borrow, based on self-reported financial information.

4. Property Tax: Taxes levied on real estate by local governments.

5. Purchase Agreement: A legally binding contract between a buyer and seller that outlines the terms of a real estate transaction.

R

1. Real Estate Owned (REO): Property owned by a lender due to foreclosure.

2. Realtor: A real estate agent who is a member of the National Association of Realtors.

S

1. Seller's Agent: A real estate agent who represents the seller in a transaction.

2. Settlement: Another term for closing.

3. Short Sale: The sale of a property for less than the outstanding mortgage balance, with the lender's approval.

T

1. Title: Legal ownership of a property.

2. Title Insurance: Insurance that protects against defects in a property's title.

U

1. Underwriting: The process by which a lender assesses the risk of lending money to a borrower.

V

1. VA Loan: A mortgage loan guaranteed by the U.S. Department of Veterans Affairs.

Z

1. Zoning: Local regulations that determine how land can be used.

2. Zero Lot Line: A type of property development in which the dwelling unit comes up to or very near the property line.