Guide to the basic terminology used in real estate. It provides answers to 25 frequently asked questions about real estate concepts such as mortgages
- What is a mortgage? A mortgage is a loan used to finance the purchase of a property. The borrower agrees to pay back the loan with interest over a set period of time.
- What is equity? Equity is the value of a property minus any outstanding mortgages or loans. It represents the portion of the property’s value that the owner actually owns.
- What is a down payment? A down payment is the amount of money a buyer pays upfront towards the purchase of a property. It is usually a percentage of the total purchase price.
- What is a title? A title is a legal document that shows ownership of a property.
- What is a deed? A deed is a legal document that transfers ownership of a property from one party to another.
- What is a real estate agent? A real estate agent is a licensed professional who helps people buy, sell, and rent properties. They typically work on commission.
- What is a broker? A broker is a licensed professional who manages a real estate agency and oversees the work of real estate agents.
- What is a listing? A listing is a property that is currently for sale or rent and is advertised through a real estate agent.
- What is a buyer’s agent? A buyer’s agent is a real estate agent who represents the interests of the buyer in a real estate transaction.
- What is a seller’s agent? A seller’s agent is a real estate agent who represents the interests of the seller in a real estate transaction.
- What is a home inspection? A home inspection is a professional assessment of a property’s condition. It typically includes an inspection of the property’s structure, electrical and plumbing systems, and other important features.
- What is an appraisal? An appraisal is a professional estimate of a property’s value. It is typically performed by a licensed appraiser.
- What is a contingency? A contingency is a condition that must be met before a real estate transaction can be completed. For example, a buyer may make their offer contingent on a satisfactory home inspection.
- What is a closing? A closing is the final stage of a real estate transaction. It typically involves the transfer of ownership of the property and the payment of any remaining fees and taxes.
- What is a commission? A commission is the fee paid to a real estate agent for their services in a real estate transaction. It is typically a percentage of the sale price of the property.
- What is a foreclosure? A foreclosure is a legal process in which a lender takes possession of a property from a borrower who has defaulted on their mortgage.
- What is a short sale? A short sale is a real estate transaction in which the sale price of the property is less than the outstanding mortgage balance. The lender agrees to accept the lower sale price to avoid the costs of foreclosure.
- What is a home warranty? A home warranty is a service contract that covers the repair or replacement of certain systems or appliances in a property for a set period of time.
- What is a lease? A lease is a legal agreement between a landlord and a tenant that allows the tenant to use a property for a set period of time in exchange for rent.
- What is a leasehold? A leasehold is a type of property ownership in which a person owns the right to use a property for a set period of time, but does not own the property itself.
- What is a freehold? A freehold is a type of property ownership in which a person owns the property and the land on which it sits.
- What is a condominium? A condominium is a type of property ownership in which individual units of a building or complex are owned by separate individuals, while common areas are owned and maintained by a homeowners’ association.
- What is a cooperative? A cooperative, or co-op, is a type of property ownership in which a group of people collectively own and operate a building or complex. Each member of the co-op owns a share of the building or complex.
- What is a townhouse? A townhouse is a type of attached housing unit that shares one or more walls with neighboring units. Townhouses are typically two or three stories tall.
- What is a single-family home? A single-family home is a standalone residential property that is designed to house a single family. It is not attached to any other residential units.
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