In the world of real estate, understanding key terms is essential for buyers, sellers, and investors alike. Whether you’re a first-time homebuyer or an experienced investor, having a grasp of important real estate terminology empowers you to make informed decisions. What is earnest money? Or a contingency? And what about all those acronyms, like APR, HELOC and PMI?
To help you navigate the complex landscape of property transactions with confidence, we’re providing clear and concise definitions for the most crucial real estate terms you’ll encounter. From A to Z (or adjustable-rate mortgages to zoning regulations!), we’re covering a range of essential, fundamental terms in our real estate glossary.
Adjustable-Rate Mortgage: A home loan with an interest rate that can change periodically based on market conditions, usually every 3, 5, 7, or 10 years.
Agent: A licensed professional working under a broker and represents buyers and/or sellers in a real estate transaction.
Annual Percentage Rate (APR): The total interest percentage charged on a loan per year, taking into account both the interest rate and any additional fees.
Appraisal: The process of estimating the value of a property based on factors such as location, condition, and comparable sales, in order to ensure the lender is offering the correct loan amount.
Appreciation: The increase in value of a property over time.
Assessed Value: The value placed on a property by a tax assessor for the purpose of calculating property taxes.
Broker: A real estate agent, who has passed the state’s broker’s exam and completed additional training or licensing requirements, with the ability to work independently or hire agents.
Buyer’s Agent: The real estate agent who represents the buyer in a home buying process.
Closing: The final stage of a real estate transaction where the buyer, seller, and any necessary parties meet to complete the transfer of ownership.
Closing Costs: The expenses and fees associated with a real estate transaction paid by both the buyer and seller on closing day, which may include loan processing costs, attorney fees, title insurance, the appraisal, taxes, and more.
Commission: The percentage of the property’s purchase price paid to a broker for their services in facilitating a real estate transaction.
Comparative Market Analysis: A report that provides information on recently sold properties in the area to help sellers determine a suitable listing price and assist buyers in making competitive offers.
Contingency: A condition that must be met for the real estate transaction to proceed. Common contingencies include financing, appraisal, inspection, and sale of the buyer’s current home. (More info here!)
Deed: A legal document signifying the transfer of ownership of a property from one party to another.
Down Payment: The initial payment made by the buyer during a real estate transaction, usually between 5-20% of the purchase price, which is subtracted from the total amount financed.
Due Diligence: A period of time, typically 10-30 days, in which the buyer has the opportunity to inspect the property and review relevant documents before finalizing the purchase.
Earnest Money: A deposit made by the buyer to demonstrate their serious intent to purchase the home, which is applied towards the down payment or closing costs.
Equity: The difference between the market value of a property and the amount owed on any mortgages or loans secured by the property.
Escrow: When a neutral third party holds funds, documents, or other assets during a real estate transaction until specific conditions are met.
Fair Market Value: The estimated price at which a property would sell in the open market, assuming a willing buyer and seller, without any undue influence or pressure.
Fixed-Rate Mortgage: A home loan with an interest rate that remains constant throughout the entire loan term, resulting in predictable monthly payments for the borrower.
For Sale By Owner (FSBO): When a property is sold directly by the homeowner without the involvement of a real estate agent. If you are selling on your own, it may be difficult to know the exact steps or pricing and compliance. We suggest consulting a Realtor®.
Foreclosure: The legal process by which a lender takes possession of a property due to the borrower’s failure to make mortgage payments.
Home Equity Line of Credit (HELOC): A line of credit that allows homeowners to borrow against the equity they have built up in their property, typically used for major expenses or investments.
Homeowners Association (HOA): An organization that manages and enforces rules for a community or condominium complex, typically funded by fees paid by homeowners.
Homeowner’s Insurance: Insurance coverage that protects homeowners from financial losses and damages to their property and belongings, as well as liability for accidents or injuries that occur on the property.
Home Warranty: A contract that covers the repair or replacement of specific systems or appliances in a home for a specified period of time, typically one year.
Inspection: A thorough examination of a property’s condition and structure, usually performed by a professional inspector, to identify any issues or defects.
Interest Rate: The percentage of principal charged by a lender for borrowing money, typically expressed as an annual percentage rate (APR).
Jumbo Loan: A mortgage loan that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA) for Fannie Mae and Freddie Mac.
Lender: An individual or institution that provides funds to borrowers for the purpose of financing real estate purchases or other investments.
Lien: A financial claim on a property, often used by lenders as security for a debt if the borrower is behind on payments.
Listing: A property that is available for sale or rent, typically represented by a real estate agent.
Listing Agent: The real estate agent who represents the seller in the home buying process, responsible for marketing the property and negotiating on behalf of the seller.
Market Value: The estimated price at which a property would sell based on current market conditions, supply and demand, and comparable sales in the area.
Mortgage: A loan used to finance the purchase of a property, with the property itself serving as collateral for the loan.
Mortgage Broker: A professional who assists borrowers in obtaining mortgage loans, acting as an intermediary between borrowers and lenders.
Multiple Listing Service (MLS): A private database used by real estate professionals to share information about properties available for sale, allowing agents to cooperate and facilitate transactions.
Offer: A proposal to buy a property at a specified price and under certain conditions, typically made by a potential buyer to the seller.
Pre-Approval: A lender’s evaluation of a borrower’s financial situation to determine the maximum amount they can borrow for a mortgage.
Pre-Qualification: A preliminary assessment of a borrower’s financial situation based on self-reported information, providing an estimate of the amount they may be eligible to borrow.
Principal: The original amount of money borrowed in a loan, excluding interest and other costs.
Private Mortgage Insurance (PMI): Insurance coverage that protects the lender in case the borrower defaults on the mortgage, typically required for loans with a down payment less than 20% of the property’s value.
Real Estate Owned (REO): Properties that have been acquired by a lender through foreclosure and are now owned by the bank or financial institution.
REALTOR®: A real estate professional who is a member of the National Association of REALTORS® and adheres to a strict code of ethics. (Fun Fact: All of NP Dodge’s agents are REALTORS®!)
Refinancing: The process of replacing an existing mortgage with a new loan, often to obtain better terms, lower interest rates, or access to equity.
Title: The legal document proving ownership of a property.
Title Insurance: Insurance coverage that protects against losses or claims arising from defects in the title or ownership of a property.
Under Contract: A status indicating that a property has an accepted offer and is in the process of moving towards closing, with certain conditions and contingencies yet to be fulfilled.
Zoning: Local government regulations that control the use and development of land within a specific area, typically dividing it into different zones (e.g., residential, commercial, industrial).
Any Questions?
We can help! As the most experienced real estate company in the country, NP Dodge has a roster of agents with decades of experience buying and selling homes in the Omaha, Council Bluffs and Lincoln areas. They are knowledgeable about the area’s neighborhoods, school districts and attractions — but are also deeply familiar with these terms and other aspects of the real estate process. Contact us to be connected to one of the many trusted agents at NP Dodge!
Search 
