Location, Location, Vocabulary: 10 Key Real Estate Terms

Whether you're involved in corporate real estate, investing in property, or simply navigating the housing market, the world of real estate has its own specialized language. Understanding these key terms is essential for making sound financial decisions and communicating effectively with agents, lenders, and lawyers.

This guide explains 10 fundamental real estate concepts. For more related vocabulary, check out the Finance and Business Law decks in the BizVoc app.

Key Real Estate Vocabulary

• Appraisal

  An unbiased professional opinion of a home's value. Appraisals are typically used in purchase and sale transactions.

  The property appraisal came in at $520,000, which is slightly above the asking price.
• Escrow

  A legal arrangement in which a third party temporarily holds large sums of money or property until a particular condition has been met (e.g., the fulfillment of a purchase agreement).

  The buyer's deposit is being held in escrow until the closing date.
• Mortgage

  A loan used to purchase or maintain a home, land, or other types of real estate. The borrower agrees to pay the lender over time, typically in a series of regular payments.

  They were approved for a 30-year fixed-rate mortgage to buy their first home.
• Amortization

  The process of spreading out a loan into a series of fixed payments over time. You'll pay off the interest first, and the remainder goes toward your principal balance.

  The amortization schedule shows that the majority of our early payments will go toward interest.
• Equity

  In real estate, it is the difference between the property’s fair market value and the outstanding balance of all liens on the property.

  After ten years of mortgage payments, they have built up significant equity in their home.
• Closing Costs

  Fees paid at the closing of a real estate transaction. These costs are incurred by either the buyer or the seller.

  Be sure to budget for closing costs, which can be 2-5% of the home's purchase price.
• Title

  A legal document that establishes the ownership of a property. A "clear title" means there are no liens or claims on the property.

  The title search confirmed that the seller has a clear title to the property.
• Contingency

  A condition or action that must be met for a real estate contract to become binding.

  Our offer is contingent on a satisfactory home inspection report.
• Zoning

  Municipal or local government laws that dictate how real property can and cannot be used in certain areas.

  The property is in an area with commercial zoning, which allows for business use.
• Commission

  A fee paid to a real estate agent for negotiating a real estate transaction.

  The seller is typically responsible for paying the commission for both their agent and the buyer's agent.

Navigate Property with Precision

A clear understanding of these real estate terms will empower you to navigate property transactions with greater confidence, whether for personal or professional purposes.

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