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Glossary of Real Estate Terms
Clear definitions to help buyers and sellers move forward with confidence.
How to Use This Glossary
Real estate transactions often involve unfamiliar terminology. This glossary is designed to provide straightforward explanations of commonly used real estate terms, helping buyers and sellers better understand contracts, financing, and the overall process.
Terms are listed alphabetically for easy reference.
Real Estate Terms Explained
Addendum
An additional page or pages added to a contract to clarify, explain, or modify specific terms.
Amortize
The process of spreading loan payments evenly over time, covering both principal and interest.
Annuity
An interest-earning account that provides scheduled payments over a fixed period, often used in investment planning.
Appreciation
An increase in a property’s value over time, typically influenced by market demand, location, and economic conditions.
Assigns
Individuals or entities who may legally take over a contract if the agreement allows it.
Clause
A specific section of a contract that outlines a condition, obligation, or requirement.
Closing
The final step in a real estate transaction where ownership is officially transferred and funds are distributed.
Collateral
Property or assets pledged to secure a loan.
Consideration
Anything of value exchanged in a contract, such as money, services, or property.
Contingency
A condition that must be met for a contract to move forward, such as financing approval or a satisfactory inspection.
Deflation
A decrease in overall economic value, often reflected by falling prices.
Depreciation
A decrease in value due to age, wear and tear, or outdated features.
Distressed Property
A property that is undervalued due to condition issues, foreclosure status, or surrounding factors.
Due-on-Sale Clause
A mortgage provision allowing the lender to require full repayment if the property is sold or transferred.
Earnest Money
A deposit made by a buyer to demonstrate good faith and commitment to a purchase agreement.
Easement
A legal right allowing limited use of another person’s property, such as access or utilities.
Equity
The portion of a property’s value owned outright, calculated as market value minus outstanding debt.
Escrow
Funds or documents held by a neutral third party until all contract conditions are met.
Face Value
The remaining principal balance on a loan, excluding interest.
Fiduciary
A professional legally obligated to act in another party’s best interest.
Inflation
An increase in prices and value over time due to economic conditions and demand.
Junior Mortgage
A mortgage that holds a lower priority than a first mortgage.
Lien
A legal claim against a property to secure payment of a debt.
Life Estate
The legal right to use and occupy a property for the duration of one’s life.
Market Value
The estimated price a property would sell for based on current market conditions.
Mortgagee
The lender who provides the loan and holds the mortgage.
Mortgagor
The borrower who receives the loan and pledges the property as security.
Note
A legal document outlining the terms of a loan or debt.
Open-End
A loan or agreement without a fixed end date.
Option
The right—but not the obligation—to purchase a property at a set price within a specified timeframe.
PITI
An acronym for Principal, Interest, Taxes, and Insurance—the components of a monthly mortgage payment.
Possession
The point at which a buyer legally takes ownership and control of a property.
Proration
The division of expenses proportionately between buyer and seller at closing.
REO (Real Estate Owned)
Property owned by a lender after foreclosure.
Seasoned Mortgage
A loan with a well-established payment history, typically 30 months or more.
Subdivision
The division of a larger parcel of land into smaller lots.
Title Insurance
Insurance protecting buyers and lenders against ownership disputes or title defects.