Real Estate Terms
October 12, 2021

70 Real Estate Terms to Know | Boost Your Real Estate Vocabulary

by The CE Shop Team

Real Estate Terms - Agent Glossary 

Whether you’re a new agent or a seasoned real estate pro, there is an entire lexicon of real estate terms and concepts that you should know. Having a comprehensive grasp on the language of real estate sets great real estate agents apart from their peers. This guide will define the terms and concepts you need to know while helping you establish yourself as the go-to real estate authority in your market.

Adjustable-Rate Mortgage

Adjustable-rate mortgages (ARMs) are just what they sound like: Mortgages where the interest rates fluctuate. Typically, ARMs offer a lower interest rate than traditional fixed-rate mortgages to begin, but usually the interest rate increases over time. 


As it relates to real estate, amortization is the schedule and distribution of monthly mortgage loan payments. An amortization schedule can show your client how much of their monthly mortgage payment is going to principal and how much is going toward interest.

Amount of Money

The amount of money is exactly what it sounds like — it’s the complete sum of funds involved in any given aspect of a real estate transaction. Generally speaking, this language is often found in contracts or other forms of legally binding documents. 

Annual Percentage Rate

Annual percentage rate (APR) refers to the interest rate on a loan for the year. Interest is the cost of borrowing the funds and is expressed as a percentage of the overall amount borrowed. 

Appraised Value

In real estate, the appraised value references the particular value of a property at a particular time. The value is determined by an appraiser, often selected by the lender, during the mortgage loan origination process. 


An appraiser is someone who analyzes the value of an individual property based on factors like its location, condition, and local market data to produce an objective assessment of what the property is worth. 


Like an appraiser, an assessor is somebody who determines the value of a property on behalf of the local government. Assessors typically produce approximations based on many properties and standardized benchmarks to ensure the tax burdens are distributed equally.  

Balloon Payment

A balloon payment is the payment at the end of a balloon mortgage. Unlike traditional mortgages, balloon mortgages allow borrowers to pay a smaller monthly payment toward the beginning of the term, but then they must pay a larger-than-usual amount (or the balloon payment) in the end. 


In a real estate transaction, the borrower is the party that’s taking out a loan or mortgage with the intent to pay it back. 

Bridge Loan

A bridge loan is usually a quick, high-interest loan that clients might use to make a down payment on a new property while their current property is on the market awaiting sale. 


Sometimes the terms “real estate agent” and “real estate Broker” are used interchangeably, but the truth is real estate agents sell real estate on behalf of a brokerage firm. A brokerage is a firm consisting of agents who conduct business under a licensed Broker. 

Chain of Title

Put simply, the chain of title is the backstory of a property. It’s a record of who built the home, how much it cost, how long they lived there, and how many previous owners have either owned or occupied the property. 

Clear Title

A clear title is a title to a property that doesn’t have a lien or levy from creditors or other parties that could challenge transfer of ownership. 

Closing Costs

Closing costs are the fees associated with purchasing a home — they are typically paid at time of closing, thus the name. These costs can include fees charged by a lender, the title company, attorneys (when necessary), insurance companies, taxes, homeowner’s associations, agent fees, and any other closing settlement related to the transaction. 

Construction Loan

Construction loans, as the name suggests, is a loan typically sought by those who plan to build their own house. They’re often short-term, high-interest loans that cover the cost of construction. More often than not, these loans are paid to the contractor — or the company responsible for building the structure — then they’re generally converted into a more traditional mortgage. 

Conventional Mortgage

Conventional mortgages are among the industry’s most common loan offerings. In fact, many homebuyers choose a traditional 30-year conventional mortgage when financing their property purchase. However, conventional mortgages are not backed or insured by a government entity, so they can require higher down payments or mortgage insurance. 

Counter Offer

A counter offer is an offer made in response to an original proposition. For example, an initial offer is made by an interested buyer, and a seller responds with an offer of their own. 

Credit Score

Credit scores are ratings tied to a particular individual that tell lenders how likely they are to repay their debts. These scores are based on a variety of factors including their credit history, payment history, lines of credit that are open, and amount of debt currently outstanding. Higher credit scores deem potential buyers as being less risky as compared to lower credit scores. In fact, higher scores allow potential homebuyers to receive lower interest rates and qualify for things like Federal Housing Administration (FHA) loans. 


Depreciation is the decrease in the fair value of an asset. 

Down Payment

The down payment is a payment given to the lender at the beginning of the mortgage term. It is equal to a percentage of the total cost. Higher down payments (usually 20% or more) generally help homebuyers avoid paying mortgage insurance. 

Earnest Money

Earnest money is cash, usually held in an escrow, that shows the seller that the buyer is serious about going through with the transaction. With earnest money, the seller can remove the listing from the market with confidence. Earnest money is often 1% - 3% of the sale price. 


An encumbrance is anything that limits a property owner’s ability to do whatever they wish with their property. This can include zoning regulations, tax liens, or even homeowner association restrictions. Homeowners are legally obligated to disclose any encumbrances to potential homebuyers. 


An escrow is a contractual agreement with a third party in which they agree to hold a sum of money on behalf of the two other parties. Once terms are met between the two negotiating parties, the money is then released by the escrow to the appropriate party. Escrows are one way to prove that funds exist and are readily available upon completion of contractual agreements.  

Fair Market Value

The fair market value of a property is the price a property would fetch if it was put up for sale under current conditions. Determining fair market value usually requires a comparative analysis of the current market and housing prices. However, in cases where a property is exceptionally unique — such as if it were owned by somebody famous — fair market value can be difficult to determine. 

Fannie Mae

The Federal National Mortgage Association, better known as “Fannie Mae”, is a government-sponsored enterprise and publicly traded company that gives the United States’ mortgage finance system the liquidity it needs to operate smoothly. 

Federal Housing Administration

The Federal Housing Administration (FHA) is a government agency that insures mortgages made by private lenders. As a result, these lenders can offer more funds with lower down payments, subsequently lowering the barrier to homeownership. 

FHA Loan

An FHA loan is a mortgage or loan that’s been insured by the Federal Housing Administration. Since these loans are covered by the FHA, they allow buyers to qualify for lending with little money down — in some cases, only 3.5% of the sale price is required. With that said, there are some credit requirements to qualify for an FHA loan. 

Fixed-Rate Mortgage

A fixed-rate mortgage is a mortgage where the interest rate is fixed (or remains the same) for the term of the loan.  


Foreclosure is the legal process by which a bank seizes a property from a borrower who has failed to make their payments. Federal law mandates the lender to wait until the loan is over 120 days delinquent before initiating a foreclosure.

For Sale By Owner (FSBO)

A FSBO or “For Sale By Owner” property is exactly what it sounds like. FSBO listings entail the property owner listing, marketing, and preparing their property to be sold without the help of a real estate professional. Since selling real estate isn’t as easy as it appears, FSBO listings regularly fetch fewer offers and lower sale prices.  

Home Equity

Home equity is the difference between what a borrower owes and the fair market value of the real property. Another way to look at it is how much a borrower has paid on their loan plus any appreciation or depreciation of the home. 

Home Inspection

A home inspection occurs when the buyer hires an inspector to evaluate the condition of a home based on what can be observed from the outside. Aspects such as structural integrity, air conditioning units, visible walls, windows, siding, etc. are all evaluated in a home inspection. Oftentimes, sales are contingent upon passing an inspection but not always. 

Home Loan

A home loan or mortgage is an arrangement between a lender and a borrower wherein the lender has agreed to loan a certain sum of money to the borrower for the purpose of purchasing real estate. 

Homeowners Association

Homeowners associations (HOAs) are private entities made up by a neighborhood or condominium complex’s homeowners that moderate and regulate the appearance and maintenance of communal spaces. In most cases, homeowners are required to pay a fee to their HOA. Fees vary from neighborhood to neighborhood depending on the community’s amenities.

Homeowners Insurance

Homeowners insurance is an insurance policy that protects a home from destruction, damage, liability claims, or theft. Though some lenders will require it, homeowners insurance isn’t legally required but highly recommended. It’s also important to talk to an insurance professional about what’s not covered in this policy (e.g., flooding). 


The United States Department of Housing and Urban Development (HUD) is an entity within the executive branch of the United States government. Its mission is to support and uplift communities by making housing more accessible, and it works toward this goal by funding affordable housing developments, rent assistance programs, and managing its programs. 

Insurance Premium

Insurance premiums are the payments the borrower makes to maintain their insurance coverage. 

Interest Rate

The interest rate, which is usually expressed as a percentage of the sum of money borrowed, is the amount of money a borrower must pay over a period of time in exchange for borrowing the funds. 


A lender is usually a financial institution or bank that issues funds to borrowers with the expectation that the borrower will pay them back with interest. 

Loan Amount

The loan amount is the total amount of funds a borrower is authorized to receive from a lender. 

Loan Term

The loan term is the period of time a borrower has to repay their loan. 


Loan-to-value is a ratio commonly used in mortgage lending to determine the size of down payment a borrower must make before the lender will extend credit to them.

Mortgage Broker

The Mortgage Broker is a person who acts as an intermediary between individuals or businesses and the financial institutions that issue mortgages. Since the mortgage industry is so competitive, a Mortgage Broker shops for financial products on behalf of their client and connects them with the best loan for their unique situation.

Mortgage Lender

A mortgage lender is the financial institution or bank that determines if borrowers are qualified and offers home loans. They set the terms, interest rate, amortization schedule, and how much down payment is needed to qualify. 

Mortgage Loan

A mortgage or home loan is an arrangement between a lender and a borrower wherein the lender has agreed to loan a certain sum of money to the borrower for the purpose of purchasing or refinancing a piece of real estate. 

Mortgage Payments

Mortgage payments are payments that a borrower makes toward their outstanding debt along with the owed interest, taxes, and insurance (if necessary). 


The mortgagor is simply the person or party who is taking out the mortgage. They may also be referred to as borrowers.

Multiple Listing Service

The multiple listing service or MLS is a database of property listings put together by multiple cooperating private firms and brokerages. 

National Association of REALTORS®

The National Association of REALTORS® is an organization of roughly 1.3 million agents, Brokers, and other real estate professionals. Membership benefits include special rates on industry-related services, special events, and the ability to network with professionals in every aspect of commercial and  residential real estate.

Origination Fee

The origination fee is a charge imposed on a borrower when their mortgage is issued. The origination fee covers services such as the loan’s processing, underwriting, and other administrative activities associated with the loan origination process.

Pre Approval

Pre approval occurs when a potential borrower has been deemed creditworthy up to a certain amount by their lender. In order to secure pre approval, the potential borrower’s credit profile is analyzed by the lender to determine if they can be given a pre-qualification offer.

Principal Balance

The principal balance of a mortgage is the amount of money owed by the borrower not including interest, taxes, fees, or other charges. 

Private Mortgage Insurance

Private mortgage insurance (PMI) is an insurance policy that protects the lender from borrowers who fall into delinquency. PMI premiums are paid by the borrower and are usually required for borrowers that put less than 20% down.


Probate occurs when a person dies and their assets, including their properties, are reviewed by a court and divided appropriately amongst the deceased person’s beneficiaries. 

Property Owner

A property owner is the company or individual listed on the title that has ownership rights to a property. Taxes and insurance are always the responsibility of the property owner. 

Property Taxes

Property tax is a tax imposed by local governments to fund certain community programs such as schools, recreation centers, infrastructure projects, etc. They’re paid by property owners and can change as they’re based on the property’s real value.

Purchase Price

The purchase price is the amount of money that the buyer pays for a piece of real estate. It should be noted that the loan amount is often less than the purchase price since buyers rarely take out a loan for 100% of the purchase price. 

Real Estate Agent

The terms “real estate agent” and “real estate Broker” are often used interchangeably, but they’re two very different roles. A real estate agent is the person who conducts real estate transactions on behalf of a Broker or brokerage firm (e.g., Keller Williams, RE/MAX, etc.). 

Real Estate Broker

As aforementioned, people often confuse “real estate agents” with “real estate Brokers” but becoming a real estate Broker requires more industry experience and education. Those who hold a Broker License can operate independently or hire real estate agents to conduct transactions on their behalf. 


Not all REALTORS® are real estate agents, and not all real estate agents are REALTORS®. A REALTOR® is simply a member of the National Association of REALTORS®


Refinancing occurs when a borrower considers their existing mortgage debt and takes out another loan (usually at a better interest rate) to pay it off. In many cases, borrowers refinance their loan to lower their monthly payment either by securing a lower interest rate or borrowing for longer term with a lower loan amount. 


Repayment is simply the act of paying back funds that a borrower owes to a lender. Repayments are usually scheduled to be made over time, but that’s not always the case. 

Sale Clause

A sale clause or due-on-sale clause enables lenders to require that a loan be paid in full if the property is sold or transferred. 

Sale Price

A sale price is the amount of money agreed upon by the seller and buyer during a sale. 

Secondary Mortgage Market

The secondary mortgage market is the platform upon which banks and financial institutions group together mortgages and sell their financial products or “mortgage-backed securities”. These securities are then purchased by investors, pension funds, etc. 

Short Term

A short-term mortgage or loan is any loan that matures in less than 10 years. Short-term loans offer exceptional interest rates but often come with higher principal payments. 


Tenancy in real estate, or tenancy in common, occurs when two or more parties share the ownership rights of a particular piece of real estate. 

Title Insurance

Title insurance is a form of indemnity insurance that protects homebuyers from potential issues or disputes that could occur with the transfer of a property’s title. Should legal issues arise after the sale of a property, title insurance can help the new homebuyer stay in the home. 

Transfer Tax

A transfer tax is a tax imposed by local or state governments whenever ownership of property is transferred on a title. Amounts can vary, but the transfer tax is usually one-tenth of the property’s real market value. 


A warranty deed, or general warranty deed, is a legal agreement between the buyer and seller effectively stating that there aren’t any liens, mortgages, or encumbrances that might cause issues with the transfer of property. If issues arise, it’s often the responsibility of the seller to mitigate the problem. 

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