Real Estate Terminologies You Should Know

real estate terminologies you should know

Real estate terminologies are a necessary part of your real estate investment journey. Why?

Because it helps you to understand what is available in the industry and also aids solid decision-making.

It also gives you an edge when negotiating either to purchase a property or to rent and sell.

Another thing to note with these real estate terminologies is that their meaning or interpretation might be different when used in another context, but in real estate, the definition is correct and accurate.

You’re here because you are interested in knowing what you need to know to have an edge in the market, so let’s get into it.

  1. Appraisal: This is the process of estimating the fair market value of a property by a licensed professional.
  2. Appreciation: Appreciation is how much the value of a piece of property increases over time
  3. Brokers: They are real estate professionals who have taken advanced courses and licensing to understand real estate and property management law.
  4. Certificate of Occupancy (C of O): This is a legal document that gives a person the right to occupy a property.
  5. Closing: The final meeting where ownership of the property is transferred from seller to buyer, and all legal and financial documents are signed.
  6. Closing Costs: Fees associated with buying or selling a property, paid by both buyer and seller (e.g., title search, loan origination fees, taxes).
  7. Comps (Comparables): This has to do with the recent sales of similar properties in the same area, and is used to determine market value.
  8. Commercial Real Estate: Real estate is used for commercial purposes such as offices, retail, and industrial spaces.
  9. Contingency: A condition that must be met before a sale is finalized (e.g., obtaining financing, home inspection).
  10. Days on the market(DOM): this measures the number of days between a property being actively listed for sale and the contract being signed by the seller and buyer.
  11. Deed: This is the legal written document transferring ownership of a property from the seller to the new buyer.
  12. Due Diligence: Reasonable steps you would expect a person to take when considering buying or selling a property
  13. Earnest Money Deposit: A good faith payment from the buyer to the seller, demonstrating their intent to purchase the property.
  14. Equity: The difference between the market value of a property and the amount owed on the mortgage.
  15. Escrow: A neutral third party holding money or documents until certain conditions are met.
  16. Exclusive Listing: An exclusive listing is an agreement between a seller and a specific real estate agent wherein the agent earns a commission by finding a buyer in the agreed-upon period of time.
  17. Fair market value: Generally speaking, fair market value is how much a piece of property is worth on the open market. It assumes that both the buyer and the seller are at least somewhat knowledgeable about the property and that this number is an accurate valuation of its worth
  18. Fixed-Rate Mortgage: A loan with a constant interest rate throughout the loan term or duration.
  19. Home Inspection: A thorough examination of a property by a qualified inspector (third party) to determine the state of the property and identify any major repairs or safety hazards.
  20. Listing Agent: The real estate agent representing the seller in marketing and selling the property.
  21. Multiple Listing Service (MLS): A database listing properties for sale by cooperating real estate agents.
  22. Pre-Approval: A conditional commitment from a lender indicating the maximum loan amount you qualify for.
  23. Probate Sale: A probate sale happens when the owner of a property passes away without a will. The local courts then take charge of the property and sell it to pay off existing loans and/or provide remaining funds to the deceased owner’s beneficiaries. 
  24. PITI: An acronym for Principal, Interest, Taxes, and Insurance – the major components of a monthly mortgage payment.
  25. Real Estate Agent:real estate agent is a state-licensed professional that is certified to represent individuals in the buying and selling of real estate.
  26. Real Estate Developer – A person or company that develops and sells real estate.
  27. Real Estate Investment Trust (REIT): A company that owns, operates, or finances income-producing real estate.
  28. Seller’s Disclosure: A document provided by the seller of a property before closing that details their knowledge of the property’s condition, including any issues or repairs that need to be completed.
  29. Short Sale: This happens when you sell a property for less than the amount owed on the mortgage.
  30. Title Search: A process to verify the legal ownership of a property and identify any outstanding liens or claims.

Conclusion

Now that you’ve explored these key real estate terminologies, you’re equipped to navigate conversations with confidence.

Whether you’re a seasoned investor or a curious newcomer, understanding these terms empowers you to make informed decisions and ask the right questions.

To get started with your real estate investment journey, visit our website or call 09069884912

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