From A to Z, You Better Know These Real Estate Definitions

07 February 2018
Joshua Chisvin

No surprise here, but having a working knowledge of several key housing market terms before you begin the homebuying process will not only grant you peace of mind now, but more importantly, probably save you lots of money later. To that end, here’s a list of principal real estate definitions that, frankly, any prospective buyer or seller should be familiar with.

(While I'm at it, let’s consider this the first instalment of an ongoing series, because obviously the list of definitions you should know is something of an extensive one!)

ASSIGNMENT

When ownership of your mortgage is transferred from one company or individual to another, it is called an assignment.

BILL OF SALE

A written document that transfers title to personal property. For example, when selling an automobile to acquire funds which will be used as a source of down payment or for closing costs, the lender will usually require the bill of sale — in addition to other items — to help document this source of funds.

CLOSING

Closing — also referred to as completion or settlement — is the final step in executing a real estate transaction. The closing date is set during the negotiation phase, and is usually several weeks after the offer is formally accepted. On the closing date, the ownership of the property is transferred to the buyer.

DOWN PAYMENT

The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.

EASEMENT

A right of way giving persons other than the owner access to — or over — a property.

FAIR MARKET VALUE

The highest price that a buyer — willing, but not compelled, to buy — would pay… and the lowest a seller — willing, but not compelled, to sell — would accept.

GRANTOR

The person conveying an interest in real property.

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.

JOINT TENANCY

A form of ownership or taking title to property, which means each party owns the whole property and that ownership is not separate. In the event of the death of one party, the survivor owns the property in its entirety.

MORTGAGE

A legal document that pledges a property to the lender as security for payment of a debt.

NO CASH-OUT REFINANCE

A refinance transaction which is not intended to put cash in the hand of the borrower. Instead, the new balance is calculated to cover the balance due on the current loan and any costs associated with obtaining the new mortgage. Often referred to as a rate and term refinance.

OWNER FINANCING

A property purchase transaction in which the property seller provides all or part of the financing.

PRE-APPROVAL

A loosely used term which is generally taken to mean that a borrower has completed a loan application and provided debt, income and savings documentation, which an underwriter has reviewed and approved. A pre-approval 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. A pre-approval applies only to the borrower. Once a property is chosen, it must also meet the underwriting guidelines of the lender.

QUITCLAIM DEED

A deed that transfers — without warranty — whatever interest or title a grantor may have at the time the conveyance is made.

RIGHT OF FIRST REFUSAL

A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase, or lease, the property before he or she offers it for sale, or lease, to others.

SALE-LEASEBACK

A technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.

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.

VESTED

Having the right to use a portion of a fund, such as an individual retirement fund. For example, individuals who are 100% vested can withdraw all of the funds that are set aside for them in a retirement fund. However, taxes may be due on any funds that are actually withdrawn.

  Real Estate