Dictionary for Real Estate Terms

Home owners, home buyers, and renters alike can all benefit from a dictionary for real estate terms that gives them basic definitions for often-used terms. Whether you’re looking to buy, sell, or just educate yourself on the housing market, knowing these basic terms can help you immensely as you start your research and venture into the field.

Buyers can benefit most from knowing terms that are related to the financial process of purchasing a home. They may also be interested in terms used to define the value of the property and to describe the purchasing process itself. Just a few examples of these terms are:

• Mortgage: The loan, typically given by a bank or other private lender, to cover the cost of the home. The buyer makes mortgage payments on the loan each month for the full term of the mortgage.
• Earnest money: A down payment made by an interested buyer during the opening negotiations of a home purchase; this is partially a payment and partially a sign of good faith/ intention to purchase.
• Adjustable rate: A mortgage term that refers to interest rates that are adjusted from time to time to match current going rates.

Terms for Sellers

Like buyers, sellers should go into the process of selling their homes knowing some of the terms that refer to the financial transaction that will take place. They should also look up definitions for terms that will help them ascertain their home’s value on the market and what they can do to make the most of it. A dictionary for real estate terms for sellers should include terms such as:

• Appraisal: The estimated value of a property based on factors like condition, size, location, and more; appraisals are typically done by experts who analyze the property versus the market and produce a number based on that.
• Original cost: The price paid by the home seller (current owner at time of current sale) during their original purchase. Many people incorrectly assume “original cost” refers to the original cost of the property, but only insofar as the current seller is concerned; the current seller may or may not be the original owner.

Terms for Renters

Renters are, in their own way, just as much a part of the housing market as buyers and sellers, and making the decision to rent rather than buy is loaded with consequences both good and bad; so, any renter should be aware of the basics before deciding on a course of action. Renters should be familiar with terms that will apply to them during the course of their lease, as well as in unusual circumstances such as the sale of the rented property, or the option to purchase that is sometimes offered by the landlord.

A renter’s dictionary for real estate terms would include:

• Lease: A contract between a property owner and another individual, which gives the individual the right to live at the property for a specific amount of time, paying a specific amount per month in return.
• Abatement: Lowered-cost or free rent for a specific amount of time, based typically on financial hardship
• As-is: A term meaning the tenant is willing to accept the rental property in its exact condition and will not demand repairs from the landlord before being willing to enter a lease
• Building code: Set forth by local ordinances, these are the standards for health and safety to which a building must be maintained; landlords are responsible for maintaining rental properties to meet local building codes, and failure to do so can result in the tenant’s right to terminate a lease.

The world of real estate, and the housing market itself, are both complicated and fascinating. Many people are intimidated by the technical terminology they hear, and by the legal language of contracts and deeds – and certainly there’s a lot to learn. But your main concern should be, at the very least, knowing the terms that relate to you and your situation so that you’re an educated participant in any transaction you undertake.

Research relevant terminology and do your homework, and you’ll feel much more confident the next time you’re faced with a housing decision - whether you're a buyer, seller, renter, or anywhere in between.