Whether you’re an investor, an agent, a home buyer or seller, or simply a property owner who wanted to get into the real estate industry, there is a need to a minimum understanding of the most important terms in this business – the real estate terminologies. Though every industry has its own jargon, real estate business is no different. These terminologies are some of the many things we have to learn from the time we decided to enter into real estate transactions to the present moment. And eventually, this will become part of our daily living inside the industry.
Below are some of the most commonly used real estate terminologies Though it doesn’t include all used terms, only the heavily used ones in the industry were picked and defined.
Agent or Realtor.
A person authorized by the state to conduct real estate transactions.
The lender, or the person to whom money is owed. Could be a person, financing company, bank, government or any other institution.
An individual or institution that agrees to fulfill a contract if the main loan receiver defaults.
Any person or other entity who commits capital with the expectation of receiving financial returns. Investors utilize investments in order to grow their money and/or provide an income during property sales from invested purchases of properties.
A legal document that acknowledges the ownership of a property to a certain owner.
According to wiki, it is a debt provided by one entity (organization or individual) to another entity at an interest rate, and evidenced by a note which specifies, among other things, the principal amount, interest rate, and date of repayment. A loan entails the reallocation of the subject asset(s) for a period of time, between the lender and the borrower.
Simple, equity in real estate arena refers to the difference between the market value of a property and the total value of unpaid debts on this property.
This is the cost of borrowing money for a home. Interest is combined with principal to determine monthly mortgage payments. The longer a mortgage is, the more you will pay in interest when you have finally paid off the loan.
It could be defined as the proof or security that the buyer is serious about the negotiation to purchase the property. It may also form a part of the price of the property..
It is a contractual agreement/ financial instrument where it is held by a third party not interested with the property on behalf of the buyer and purchaser until the condition or terms regarding the sale is accomplished.
The decrease in the value of any property. When said a property depreciated over time, it means it lost some of its value. Depreciation could be due to economic reasons like a downturn in the market, or due to other external factors like political turmoils for example.
The increase in the value of any property. When a said property appreciated over time, this means it gained more value during a certain period of time.
A legal process where lender has the right to seize and evict the homeowner and eventually sell the property as stipulated in the mortgage contract. This is for the reason that the borrower failed to pay due principal and interests.
An agreement where one party allows the other to use his or her property for a definite period of the time for a definite price. The two parties are called the Lessor and the Lessee. The Lessor is the owner of the property and the Lessee is the borrower.
A debt instrument that is secured by a collateral or a specified property. The lender is called the mortgagor and the borrower is called the mortgagee. It is also known as lien against the property or claims against the property.
Home inspections are suggested for a potential buyer makes an offer. Typically, they cost a few hundred dollars. The purpose is to check that the house’s plumbing, foundation, appliances, and other features are up to code. Issues that may turn up during an inspection may factor into the negotiation on a final price. Failing to do an inspection may result in surprise costly repairs down the road for the home buyer.
The act of purchasing a home at a low price, fixing any problems and updating the cosmetic features and then selling it for a profit.