Real Estate Term Glossary
For a comprehensive live of real estate and mortgage terms see our REAL ESTATE TERM GLOSSARY.
The real estate term glossary list below will provide you with the most commonly used terms in the Home Sale Process.
Appraised Value: An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property. An appraisal is based primarily on comparable sales in the neighborhood. The mortgage is based on the appraised value of the property. All mortgage applications required an appraisal be done on the property.
Assessment: The placing of a value on property for the purpose of taxation. This is done by the property appraiser's office. The assess value and the appraised value can be different.
Clear Title: A title that is free of liens or legal questions as to ownership of the property.
Closing: This has different meanings in different states. In some states a real estate transaction is not consider "closed" until the documents record at the local recorders office. In Florida the "closing" is a meeting where all of the documents are signed and money changes hands.
Closing costs are separated into what are called "non-recurring closing costs" and "pre-paid items." Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan. "Pre-paids" are items which recur over time, such as property taxes and homeowners insurance. A lender makes an attempt to estimate the amount of non-recurring closing costs and prepaid items on the Good Faith Estimate which they must issue to the borrower within three days of receiving a home loan application.
Cloud on Title: Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by deed, release, or court action.
Comparable Sales: Recent sales of similar properties in nearby areas and used to help determine the market value of a property. Also referred to as "comps." We suggest reviewing the "comps" before making an offer.
Deed-in-lieu : Short for "deed in lieu of foreclosure," this conveys title to the lender when the borrower is in default and wants to avoid foreclosure. The borrower signs the house back over to the mortgage company. The principle advantage to the borrower is that it immediately releases him from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he would in a formal foreclosure.
Deed Restrictions: These are restrictions placed within a deed that control the use of the property. Restrictions travel with the deed. Many homes in Florida reside in a "deed restricted" community. Sellers are obligated to disclosed whether their property is subject to deed restrictions. This is indicated on the property disclosure statement. Buyers need to make sure you review the deed restrictions before buying the home.
Deposit: A sum of money given in advance of a larger amount being expected in the future. Often called in real estate as an "earnest money deposit." Although there are no hard or fast rules, in Florida typical deposit might be 5-10% of the amount you offer in the purchase contract. The final amount is negotiable and will depend on such things as how long it will take you to close and the number and types of contingencies included in the contract.
Escrow: An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the earnest money deposit is put into escrow until delivered to the seller when the transaction is closed.
Examination of title: The report on the title of a property from the public records or an abstract of the title. This is done by either the title company or your lawyer prior to closing.
Home Inspection: A thorough inspection by a professional that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser.
Homeowners' Association: A nonprofit association that manages the common areas of a neighborhood, subdivision or condominium project and enforces any applicable "deed restrictions". Many Florida Subdivisions require that you join the neighbor Homeowner's Association. This must be disclosed in the seller's property disclosure statement.
Homeowner's Insurance: An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.
Homeowner's Warranty: A type of insurance often purchased by home buyers that will cover repairs to certain items, such as heating or air conditioning, should they break down within the coverage period. The buyer often requests the seller to pay for this coverage as a condition of the sale, but either party can pay.
Lien: A legal claim against a property that must be paid off when the property is sold. A mortgage or first trust deed is considered a lien.
Pre-Approval: A loosely used term but it generally it means that the borrower has completed a loan application and provided debt, income, and savings documentation to a underwriter. It is usually done at a certain loan amount and making assumptions about what the interest rate will actually be at the time the loan is actually made, as well as estimates for the amount that will be paid for property taxes, insurance and others.
Pre-Qualification: This usually means a written statement from a loan officer indicating his or her opinion that the borrower will be able to qualified for a mortgage up to a certain amount. It involves supplying a lender with basic information regarding your debt, income and assets. From this information, lenders can get an idea of the mortgage amount for which you qualify, and it can usually be done at no cost.
Purchase Agreement: A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
Realtor : A real estate agent, broker or an associate who holds active membership in a local real estate board that is affiliated with the National Association of Realtors.
Subdivision: A housing development that is created by dividing a tract of land into individual lots for sale or lease. This is usually set up by the developer of the land and must be approved by the local or county government.
Title: A legal document evidencing a person's right to or ownership of a property.
Title Company: A company that specializes in examining and insuring titles to real estate. In Florida, many closings are handled by the Title Company.
Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property. Title insurance can be paid for by the seller or the buyer. In Florida, each municipality has its own common practices as to who pays. That said, it can be negotiated when making an offer.
Title Search: A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding. This is done prior to closing on a house. The seller must give the buyer a "clean title."
Truth-in-Lending: A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges.
Additional Real Estate Terms are listed in the REAL ESTATE TERM GLOSSARY .