RESIDENTIAL REAL ESTATE GLOSSARY

RESIDENTIAL REAL ESTATE GLOSSARY

Appurtenances and Improvements – Something that is attached to, or belongs to, a piece of property in such a way that it is part of the property. Examples include sheds, barns, swimming pools, and landscaping improvements.

Closing Costs – These costs cover frees, taxes, and administrative expenses required to process the purchase of your home.

Deed of Trust – A financial lending document, where a piece of property is pledged as security for the loan in a transaction. Deeds of Trust accompany a Promissory Note.

Down Payment – Usually consists of two parts. The first part of the down payment is “earnest money,” which is the cash you put in escrow when you first make an offer to buy a home. The second part is the remainder of the down payment which you give the lender when you make a purchase at closing.

Due Diligence Period – Typically, the time frame after making the offer on a home and before closing on the home. This is when the Buyer should investigate the property for potential costly problems by getting a home inspection, a title search, and other important surveys.

Easement – Gives the easement-holder a limited right to use or enjoy land possessed by another. Examples of typical easements include shared driveways and allowing utility companies to run power lines over the property.

Escrow – A third party hired to handle a real estate transaction. The escrow agent handles the exchange of money and any related documents.

Exclusive Listing – A brokerage agreement where the Seller will pay the Agent commission if the property is sold through the efforts of any real estate broker (even if not through the primary Agent). The Seller can also sell the property herself, and in doing so does not have to pay the Agent commission.

Exclusive Right to Sell – A brokerage agreement where the Agent earns commission on any sale during the listing period, even if the sale did not go through them. This is the most common form of brokerage agreement.

FHA Loans – Government sponsored property financing that requires lesser credit requirements and smaller down payments, but requires mortgage insurance and other limitations.

Fixtures – An item of personal property that is fixed, or attached, to the house that can be considered a part of the house for sale purposes. Examples include light fixtures, radiators, plumbing installations, and built in wardrobes or shelving units.

General Warranty Deed – This kind of deed warrants against all title defects, whether they were created by the Seller or by any past owner of the property. This kind of deed offers greater protection to the Buyer.

Home Warranty – An annual service protection plan that provides coverage for repairs or replacements of major systems and home appliances.

Insurable Title – The title does have a known defect or defects in the chain of title, but a title insurance company would still be willing insure at normal market rates.   

Marketable Title – Commonly phrased as “Good Title,” meaning that any title defects are very minor and the title is free from any reasonable risk.

Mortgage – A type of property financing where a loan is given to purchase real estate, and the collateral used to secure the loan is the real estate itself.

Open Listing – A brokerage agreement where the Seller of the real estate can sell the property herself, or use any Agent. The Agent earns commission only if he or she facilitates the sale.

PICRA – Short for Property Inspection Contingency Removal Addendum, which is a form that removes the home inspection contingency in the purchase agreement upon the Seller’s promise to repair certain deficiencies that the Buyer/Seller agree upon.

Promissory Note – A financial lending document that contains a written promise by the Borrower to repay the Lender a certain amount of money within a certain time frame. A Promissory Note is typically secured by a Deed of Trust.

Quitclaim Deed – A deed that gives to the Buyer whatever interest the Seller has in the property, without any guarantees about the quality of the title. These are risky for Buyers.

Real Estate Agent – A real estate agent is an individual who is licensed to sell property in their state, usually under a Broker.

Real Estate Broker – A broker is licensed to sell property and also to own their own real estate firm, they generally have more training and experience than Agents. Brokers serve different purposes, such as Listing Brokers and Selling Brokers (who serve the interests of the Seller) or Buyer’s Brokers (who serve the interests of the Buyer). Brokers can also occasionally serve the interests of both Buyer and Seller in a transaction.

Restrictive Covenants – Conditions on the ownership or use of the land. The conditions can be apparent in the deed, and are usually between two neighbors (such as a promise to not build a fence blocking a view of a lake) or part of a sub-division that has a Homeowners’ Association (which may prohibit you from painting your front door a bright color).

Seller’s Points/ Seller Contribution – These are payments made by the seller to the buyer’s lender to reduce the cost of the loan to the buyer. One “point” is equivalent to 1% of the loan amount.

Special Warranty Deed – A deed that only acknowledges defects in the title that occurred during the time that the Seller had possession of the property. This kind of deed doesn’t guarantee against any defects in the title that may have existed before the Seller took possession.

Title – A document that shows legal ownership to property. When buying a home, it is important to look into the history of the title to make sure it is free of any serious defects or encumbrances.

Title Defects – Any claim against, restriction on, or liability against the real estate which threaten the ownership and value of the property. Defects include flaws in the chain of ownership and encumbrances (examples include liens, deed restrictions, easements, covenants, encroachments on property lines). It is important to get a title search completed before purchasing a property to get a full understanding of the title’s history.

Title Insurance – An insurance policy that protects buyers and mortgage lenders against loss or damage that may arise from title defects when there is a transfer of property.