Real Estate Glossary

Appraisal – An estimation of a property’s market value by a licensed appraiser. Typically used by lenders to ensure the property is worth at least as much as the loan amount.

Assessment – An assignment of value to a property conducted by county officials for the purpose of determining property tax payments.

Cleared for Closing – All conditions of a home loan have been met and the loan underwriter has given permission to begin the closing process.

Closing – The final step in executing a real estate transaction.

Closing Costs – Fees incurred in addition to the purchase price of a property that cover costs for title and settlement services, title insurance, appraisal fees, lender fees, and other services carried out during the closing process.

Comparables – Properties of similar size, condition, age, and style that recently sold in a particular area. Comparables are used to determine the fair market value of a property.

Contingencies – Conditions included with an offer on a home that must be fulfilled before the deal can close. If contingencies are not met the offer to purchase may become void.

Covenants, Conditions & Restrictions (CC&Rs) – Limits and rules placed on a group of properties by the builder, developer, neighborhood association or homeowners association.

Counteroffer – An offer made in response to another.

Down Payment – The cash payment made by the buyer at closing. The payment typically represents only a percentage of the full purchase price, with the remainder to be covered by a loan.

Disclosures – Documents containing information about a property. Some of which, under state law, must be provided to the buyer of real estate before the transaction closes.

Earnest Money – An initial deposit made by the buyer when they submit an offer to purchase property, used to show the seller they are serious. The deposit is placed in escrow and is applied to the purchase price when the sale closes. The earnest money deposit is customarily 3% of the offer price and is also known as a Good Faith Deposit. 

Escrow – In a real estate transaction, a contractual arrangement in which a neutral third party handles the exchange of money and documents in accordance with instructions agreed upon by the transacting parties.

Escrow Officer – The neutral third party that handles the transfer of money and documents in escrow.

Fiduciary – A person who has the power and obligation to act for another while upholding the highest standard of care, diligence, loyalty, confidentiality, disclosure, obedience, and accountability. Real estate brokers and agents are fiduciaries and as such owe their clients the highest level of duty known to law.

Homeowners Insurance – An insurance policy that protects against damage to your home. Many policy options also cover damage to personal property kept in the home and provide accident liability coverage.

Homeowners’ Association (HOA) – A group that manages a subdivision, planned community, or other housing complex. An HOA will usually have a board that enforces rules, collects dues, and manages the upkeep of common areas.

Inspection – An examination of a property’s condition performed by a licensed inspector to identify any necessary or recommended repairs, maintenance concerns, or other issues.

Listing Agreement – A written contract between a property owner and a real estate broker authorizing the broker to act as the owner’s agent in the sale of their property.

Mortgage Insurance – Protects the lender against loss if the borrower defaults. Usually required with a down payment less than 20%.

Multiple Listing Service – A service used by a group of real estate brokers allowing them to see one another’s listings.

Offer to Purchase – A written expression of interest to purchase real property which states the purchase price and any conditions. If accepted in writing, the offer becomes a binding contract, known as a purchase agreement.

Pre-Approval – Confirmation from a lender that they’ve verified a buyer’s finances and are willing to lend them a specific amount of money to purchase a home. The amount is subject to review once a property is selected.

Pre-Qualification – An informal estimation of how much a lender might be able to loan a home-buyer. Pre-qualification does not guarantee loan approval.

Preliminary Title Report – A report prepared prior to issuing a policy of title insurance that shows the ownership of a specific parcel of land along with any liens and encumbrances, and a description of the terms under which the policy will be issued.

Purchase Agreement – A written contract outlining the agreed-upon price and terms for the purchase of property.

Real Estate Broker – A licensed real estate professional who represents buyers and sellers in real estate transactions. Brokers can work alone or can hire agents to work for them. When you work with our team, your broker is eXp Realty of California.

Real Estate Agent – A licensed real estate professional who, as an agent of their broker, represents buyers and sellers in real estate transactions. Agents must work under a licensed broker.

Real Estate Agent, Buyer’s – The real estate agent representing the buyer in a real estate transaction. The buyer’s agent is legally bound to uphold the buyer’s best interest.

Real Estate Agent, Seller’s – The real estate agent representing the seller in a real estate transaction. The seller’s agent is legally bound to uphold the seller’s best interest. Also known as the listing agent.

REALTOR® – A real estate agent who is a member of the NATIONAL ASSOCIATION OF REALTORS®.

Recording – The act of entering documents affecting interest in real estate into the public record.

Title – A legal document indicating recognition of ownership.

Title Company – A company involved in examining and insuring title to real property. In Northern California, title companies tend to also handle the escrow process.

Title Insurance – An insurance policy that protects from loss of ownership due to liens, encumbrances, or other defects in the title to real property.

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