Being well-versed in real estate terms is key to becoming a successful real estate agent. To ensure optimal professionalism and to present yourself as an expert, you must have a thorough understanding of common real estate terms and definitions. It can mean the difference between growing your real estate business and plateauing with no future leads.
Abatement: A common legal term meaning to reduce or lessen, such as a reduction of fees.
Agent: A person, partnership, corporation or association authorized to act for and on behalf of the client.
Amortization: The payment of principal and interest of a financial obligation, made in installments.
Appraisal: An evaluation of property conducted by a licensed professional to estimate listing price based on the sale of similar properties.
Asset: Something owned that has value.
Buyer’s Market: When the real estate market has more homes for sale than prospective homebuyers.
Capital Expenditure: Money spent on the improvement of a property that will increase the value.
Closing: The period in which ownership of a property is transferred to the buyer, based on the sales contract.
Commitment Fee: The fee paid to a lender for processing the mortgage.
Comparable: The process of assessing the market value of recently sold properties based on size, condition, amenities and location.
Contingency: A condition in a contract absolving a party from liability in the case a specified event occurs.
Conveyance: The transfer of title of a real property from one party to another
Down Payment: The amount of money owed by the buyer upfront to the sellers in order to purchase a property. The balance of the payment is made with the mortgage.
Equity: The difference between the worth of something versus the loan secured for the asset.
Escrow: The process in which a sum of money, legal rights, benefits or documents are held by one person in trust for another person until fulfillment of sale conditions.
Foreclosure: The process in which the lender takes title of a property for which the owners have failed to make mortgage payments.
Inspection: The examination of a property conducted by a qualified inspector to determine the condition, to check for structural damage, required repairs, termites, etc.
Mortgage: A legal document describing and defining the pledge of real estate collateral to secure a debt.
National Association of REALTORS® (NAR): The largest and most reputable trade organization for real estate agents and brokers.
Pre-Approval: The process of obtaining a conditional commitment before a loan is underwritten.
Pre-Qualification: The process of calculating the housing-to-income ratio and the total debt-to-income ratio to determine maximum mortgage loan amount for which a buyer may apply.
Refinancing: The process of using the proceeds of a new loan to pay off an existing mortgage loan on the same property.
Sale Price: The amount of money paid by the buyer to the seller.
Seller Contribution: A payment made by the seller for some or all of the buyer’s closing costs.
Seller’s Market: When the real estate market has more buyers than homes for sale.
Tax Abatement: A financial incentive offered by the government to stimulate development in a specific area.
Tax Deductible: An expense that helps to reduce taxable income.
Title: Documentation that an owner legally possesses a property.
Being fluent in real estate terms is vital to gaining new leads, closing deals, and furthering your success. Study these common real estate terms and definitions to present yourself with optimal professionalism to your competitors and clients.