Must-Know Real Estate Terms And Definitions For Homeowners

We believe that every homeowner must be equipped with the basic knowledge of real estate terms and definitions that would help them whether they’re selling or buying a house. We made a list of some terms and definitions you may come across in your real estate journey as a homeowner.

Real Estate

The term Real Estate in its most basic definition is a property consisting of land or buildings. It consists of the land and any permanent structures, like a home, or improvements attached to the land, whether natural or man-made.

Mortgage

A mortgage is a legal agreement to borrow money from a bank or other financial institution which can be used to purchase or maintain a home, plot of land, or other types of real estate. The agreement gives the lender the right to take the property if the homeowner fails to repay the money loaned plus interest. Mortgage loans cans also be used to borrow money against the value of a home already owned by the borrower.

Upside Down Mortgage

The term upside down mortgage or negative equity on a home means the homeowner owes the lender more than the current value of the home. This can happen when the property value decreases or mortgage payments are missed. This is also known as underwater mortgage.

Home Equity

Home equity is the amount or value of a home that the homeowner actually owns or have already paid for. It is defined as the difference between what the home is worth and what is owed to the lender. Equity is built up as payments are made on the mortgage.

No Equity

The term no equity or 0 equity on a home mans that the value of the home is equal to the amount owed on the mortgage. It is important to note that the market value of a property may fluctuate which affects equity.

Subto or Subject to

This is a shortened version of an agreement for a real estate sale term which is “subject to the existing loan” that the homeowner owes. Buyers can purchase a house and pay the remaining loan balance on a monthly basis directly to the lender.

Cash offer

A cash offer is a buyers bid or proposal that’s all-cash. This means the buyer wants to purchase the property without a mortgage loan or other financing and the home seller will receive the full amount offered.

As-is

In real estate the term as-is means the current condition of the property which the buyer accepts and pays for. The buyer forgoes the opportunity to ask the seller to make any repairs or reduce the price based on problems the property may have.

Closing costs

Closing costs are fees typically paid at the time of closing when the property title is transferred from the seller to the buyer. The closing costs can vary by location and depend on the property value. It’s a collection of fees including those charged by a lender, the title company, attorneys, insurance companies, taxing authorities, homeowner’s associations, real estate agents, and/or other closing settlement related companies.

Downsizing

Downsizing in real estate means trading or selling a large house to get a smaller house; usually determined by the floor area or number of beds and floors. While the term is usually associated with the size of the house, it can also mean switching from an expensive house to a less expensive one.

Seller Finance

Seller Finance is also known as Owner Finance or Purchase-Money Mortgage. It is an agreement to purchase the property wherein the seller acts as the lender or the bank, earning interest on the deal. Instead of giving cash directly to the home buyer, the seller sells the house on credit.

EMV (Estimated Market Value)

EMV is a term often used in real estate. By common definition it is the price of a property in a competitive open market. It is determined by several factors such as location, condition, square footage, quality of construction, date of construction, the number of beds and baths, basement finish, garages, etc.

MLS (Multiple Listing Service)

MLS is a platform that compiles all the properties and listings available for sale in the real estate industry. It is a database and search engine established by cooperating real estate entities to provide data about properties in a specific region or area. Examples of public online MLS platforms are Zillow, Redfin and Realtor.com.

Check out these related articles and documents to gain more insight on the terms and definitions related to real estate.