Do you ever need clarification about the meaning of sample lease agreements, mortgage terms, or other real estate terms? You’re not alone. Landlords and industry professionals find that real estate terminology includes hundreds of words, many of which they aren’t familiar with.
Do you know more than the most basic real estate terms? While you can get by with a limited real estate vocabulary, your lack of understanding could cost you big time. From taking out loans to analyzing property performance, learning real estate terms and definitions can help you make the right decisions confidently.
In today’s guide, we’ve compiled a range of real estate terms and definitions as a reference for landlords like you. Use this guide to deepen your understanding and stabilize your knowledge foundation.
A Table Of Contents On Real Estate Terms And Definitions
What’s going on with real estate terms and definitions? Read through this extensive glossary to expand your working vocabulary:
- The Lowdown On Real Estate Terminology
- General Real Estate Terms
- Rental Real Estate Terms And Definitions For Landlords
- Basic Real Estate Terms FAQs
- Real Estate Terminology And Your Future Success
Hundreds of words that specifically apply to real estate appear in legal documents, property management resources, state laws, and many other places. The terminology isn’t always precise, and it can be advantageous for landlords to have an accessible reference for the real estate terms essential to their business.
The primary reason for the complexity of real estate terminology is the complexity of the industry itself. Buying, selling, and managing property happens at the intersection of property law, civil law, finance, and various other industries. The real estate industry’s evolution naturally led to creation of specific terms.
In the glossary below, learn the basic terms you should be familiar with to succeed in real estate and all adjacent industries. Terms and definitions are listed alphabetically in two categories to facilitate easy browsing.
An addendum is a section added to a lease or another legal agreement that adds new information without changing the original document.
A broker is a real estate professional who is licensed to manage other real estate agents. They have taken classes to ensure they fully understand property and real estate laws.
A closing, also known as a settlement, is the final part of a real estate transaction. Real estate is officially transferred to the buyer on the closing date as long as the terms of the closing have been fully met.
Also known as comps, comparables are a way of evaluating real estate assets to estimate sale prices. Comps are created by comparing properties to similar recently sold properties.
A contingency is a limiting factor written into legal contracts. The contract can be canceled if the terms outlined in the contingency clause are not fulfilled. Contingencies are often used in real estate transactions to ensure both parties are satisfied with the progression of the sale.
Days On The Market:
Days on the market, abbreviated as DOM, represents how long a property was on the market before the sale contract was signed. DOM averages are often utilized in real estate market analyses.
A deed is a legal document representing and detailing a property’s ownership. A deed is transferred to the buyer when a real estate transaction is completed.
When a loan defaults, the homeowner or borrower hasn’t made the required payments. Lenders can request full repayment if a loan defaults for a certain amount of time. Typically, homeowners have three months to catch up on payments before defaulting.
A loan that hasn’t been paid on properly is known as a delinquent loan. In most cases, loans become delinquent when payments are over a month late. Repaying bills removes the delinquent status. If a loan remains delinquent for too long, it will be declared defaulted.
Due diligence refers to all reasonable steps buyers and sellers should take during a real estate transaction. Most real estate sales include due diligence clauses in their legal agreements. This ensures that both parties will take reasonable actions and cannot hold the other party responsible for their lack of foresight or investigation.
Home inspections are inspections done to determine the exact conditions of a property. Qualified inspectors pay close attention to structure, safety, heating and cooling systems, and other systems and potential issues during this inspection. Lenders often require home inspections before funding mortgages.
A homeowner’s association, also known as an HOA, is a privately managed organization that oversees the maintenance and governance of certain communities. Often, HOAs are often found in condos or gated communities, among others. Homes within these communities typically require membership in the local HOA.
Multiple Listing Service:
A multiple listening service, also known as MLS, is a database of properties for sale. This paid service is only accessible to licensed real estate agents.
Real Estate Agent:
A real estate agent is a licensed professional who can represent buyers and sellers during real estate transactions. Real estate licensing practices and requirements vary by state. Real estate agents work under a certified broker.
All real estate agents are not Realtors. Realtors are real estate agents who are members of the National Association of Realtors (NAR). NAR requires that Realtors pay membership dues and abide by their code of conduct.
Abandonment is when a tenant or individual relinquishes control of a piece of real estate.
Americans With Disability Act:
ADA, short for The Americans with Disability Act, is a federal law. This legislation prohibits discrimination against those with disabilities and applies to actions within the rental industry, such as tenant screening.
Affordable housing generally refers to government-managed housing with affordable rent control practices in place. Federal and state agencies manage these housing options to house those who cannot afford rent.
Features included in a property that increases its value, functionality, or appearance.
Rented living spaces inside a larger housing structure are known as apartments. These housing units are not standalone units or condominiums.
CAP rate, also known as the capitalization rate, is a calculation utilized by industry professionals to predict the profitability of an investment property.
A condominium is a building with multiple units. All condo owners in the larger structure own shared areas and amenities equally.
Depreciation is the loss of value of an asset or piece of property. Depreciation happens naturally over time and can be increased through loss of functionality and physical wear.
A duplex is a type of dwelling that is divided to house two separate parts or families.
Equal Housing Opportunity:
In America, everyone must be given the same opportunity for housing regardless of their membership in a protected class. Protected classes include age, disability, familial status, race, nationality, gender, and sexual orientation.
Eviction is the legal process a homeowner utilizes to remove someone from their property. Evictions happen for many reasons, including unpaid rent.
An eviction notice is a legal document sent from a landlord to a tenant to explain why eviction proceedings have begun. The tenant may be given a chance to remedy the situation, or they may need to leave within a set time period.
Fair Housing Act:
The Fair Housing Act requires that the housing market does not foster or allow discrimination based on age, color, race, nationality, gender, sexual orientation, religion, or disability status.
Fixed expenses are costs that are incurred regardless of a property’s tenancy status, such as property taxes.
An investment property isused to generate profit for the owner by renting it out to tenants.
The owner of a property rented out to tenants is a landlord. Landlords receive payments from tenants of their rental units.
Landlord insurance is a type of insurance policy created to cover risks specific to landlords. These risks include theft, fire, and legal issues.
Determined on a state-by-state basis, landlord-tenant law is the compilation of all laws defining tenants’ and landlords’ rights and responsibilities.
Lead-Based Paint Disclosure:
Landlords must disclose the lead-based paint risk to all tenants in affected homes with this document.
A lease agreement is a legal contract that outlines specific terms between a landlord and a tenant. The contract determines how the tenancy will be managed, paid for, and concluded.
A lease option is a legal agreement allowing tenants to buy the property they are currently leasing when the tenancy period ends. The property owner can only sell the property once the lease option expires.
Maintenance is a broad term for all activities taken to keep a property in good livable condition.
Assessing a particular pet for potential risks and overall status is known as pet screening. This is often done by landlords when accepting tenants with pets.
Property Management Agreement:
A property management agreement sets up the terms, conditions, costs, and services a property management company will perform. The landlord and the property management company both sign this agreement.
A property manager is responsible for managing a rental or real estate property in place of the owner. The owner pays them to perform specific tasks such as maintenance and rent collection.
Rent collection is collecting money from tenants according to each party’s lease agreement terms.
Renter insurance is a type of insurance policy a tenant holds to cover their personal belongings and some liabilities.
A rental property is a house, duplex, apartment, or condo occupied by tenants and managed by a landlord.
The rental rate is the amount of money paid by a tenant to their landlord to rent the property.
A security deposit is a payment collected by the landlord from the tenant to cover property damage that may occur during the tenancy. This money is returned to the tenant at the end of their tenancy, provided no excessive damages occur beyond normal wear and tear.
Subletting is the process of a tenant renting a property to a third party rather than living in the property themselves.
A tenant temporarily lives at a property after making an agreement with a landlord.
A tenant application is a form filled out by potential tenants to show their interest in a rental property.
Tenant screening is the process of verifying information about a potential tenant. Screening is done by the landlord or their property management company. The process typically includes interviews, background checks, and credit checks.
Tenancy At Will:
Also known as tenancy at suffrage, tenancy at will occurs when a tenant has no lease but lives at a rental unit with the landlord’s permission.
A vacant property is a property that doesn’t contain any people or personal property.
This is a limited glossary of real estate terms to know, and there are always going to be new words cropping up. Stay updated with the latest real estate terminology by subscribing to RentPrep’s newsletter. We also offer a variety of landlord forms that give great examples of what terms to utilize in your day-to-day property management work.
Still want to learn more about real estate terminology? Study the answers to these frequently asked questions:
Real estate buzzwords are terms commonly used to describe properties in an appealing way. Rental and sale listings include words like these to attract potential tenants and buyers. The right buzzwords differ by area and are targeted to a specific audience.
Examples of buzzwords and phrases include:
- Move-in ready property
- Granite countertops
- Quiet neighborhood
- Convenient commute
- Open floor plan
- Easy maintenance
- New roof
- Upgraded electrical
Remember the buzzwords that will work in your region if you are writing rental listings. Don’t overdo it, but grab people’s interest with this technique.
Individuals who work in the sale of real estate have a variety of appropriate titles:
- Real estate broker
- Real estate agent
- Land agent
- House agent
The correct title depends on the individual’s exact job and accreditations. People often use some of these terms interchangeably without issue.
Real estate agents are licensed individuals who can help you buy and sell real estate. Agents are paid a commission on each deal they help to facilitate. Real estate agents work for buyers and sellers.
Real estate brokers are also qualified to do an agent’s work, but they are also licensed to work independently. They are also permitted to employ real estate agents under their brokerage. Brokers earn commissions on their sales as well as the sales of agents working for them.
Closings are also known as settlements or escrow. The term varies by area, agent, brokerage, lender, etc. If you are still determining the exact term being used or what it implies, always take time to verify the implications with other involved parties.
As a landlord, property manager, or other real estate professional, you’ll become more familiar with the real estate terms defined in today’s guide. Remember, understanding the words you encounter in documents is critical to success.
When you land on unfamiliar terms, dive a little deeper:
- Read for context clues: Is this term being used in lieu of another term you’re more familiar with?
- Search the term online: Discover the exact definition and how it is commonly used in real estate.
- Research industry tips: Learn more about utilizing new real estate terms and techniques through industry professionals’ videos, articles, and advice columns.
Don’t let unfamiliar real estate jargon keep you from expanding your business into new ventures. Speak with confidence about your business as you grow your rental vocabulary.