Our Real Estate Glossary aims to provide you with a comprehensive list of frequently used terms you may come across during your real property transaction. Whether you are engaging in buying, selling, or investing in Florida real estate, this resource serves to enhance your understanding of the industry's language and empowers you to make well-informed decisions.
A
Adjustable-Rate Mortgage (ARM)
A type of mortgage loan where the interest rate is subject to periodic adjustments based on specific market indices. The interest rate on an ARM can fluctuate over time, potentially resulting in changes to the borrower's monthly mortgage payment.
Ad Valorem Tax
A type of tax levied on the assessed value of real estate or personal property, where the tax amount is calculated based on the property's value.
Annual Percentage Rate (APR)
A percentage that represents the total cost of borrowing, including the interest rate and certain upfront fees, expressed as an annualized rate.
Appraisal
An estimate of the value of a property, typically conducted by a licensed appraiser.
Appreciation
An increase in the value of a property over time.
As-Is
A term used to describe a property that is being sold in its current condition, with no repairs or improvements made.
Assessment
Certain charges imposed on the property by a governing authority, such as property taxes or special assessments for public improvements like roads or utilities.
Agency
A relationship between a real estate agent and a buyer or seller, in which the agent represents the interests of their client.
Amortization
The process of paying off a loan over time, with a portion of each payment going towards the principal and a portion going towards interest.
B
Back-Up Offer
A secondary offer made by a potential buyer on a property already under contract, becoming valid only if the initial deal fails. It acts as a safety net for the seller, while the back-up buyer can continue exploring other properties until the offer is activated.
Balloon Payment
A large payment that is due at the end of a mortgage term, typically higher than the monthly payments.
Broker
A real estate broker is a licensed professional who acts as an intermediary between buyers and sellers in real estate transactions, assisting them in buying, selling, or renting properties. They provide expertise, market knowledge, and facilitate negotiations to help clients achieve their real estate goals.
Broker's Price Opinion (BPO)
A non-binding estimate of a property's value prepared by a licensed real estate broker or appraiser. BPOs are often used by lenders to determine how much money they are willing to lend to a borrower, and they can also be used by sellers to set a listing price.
Buyer's Agent
A real estate agent who represents the interests of a buyer in a real estate transaction.
C
Clear Title
A property ownership status that is free from any legal claims, liens, or encumbrances that could affect the transfer of ownership.
Closing
The final step in a real estate transaction, in which the buyer and seller exchange the property and money.
Closing Costs
The fees associated with buying or selling a property, such as title insurance, appraisal fees, and origination fees.
Closing Disclosure
A form that outlines the terms and costs of a mortgage. It is one of the most important documents to check before closing on a home. It shows the final details of the loan, such as the loan amount, interest rate, closing costs, monthly payments, taxes, insurance and other fees.
Cloud on Title
Any document, claim, lien, or encumbrance that might impair or invalidate the title of a property.
Coastal Control Line
Typically represents a designated distance or setback from the shoreline, beyond which certain restrictions or regulations may apply to new construction, renovation, or land use activities.
Comps
Short for comparables, comps are properties that are similar to the one you are buying or selling in terms of size, location, and features.
Comparative Market Analysis (CMA)
A tool used to estimate the value of a property by comparing it to similar properties that have recently sold in the same area. A CMA is typically conducted by a real estate agent or appraiser, and it is based on factors such as the location, size, condition, and features of the property.
Construction-to-Permanent Loan
A financing option that combines the construction phase and long-term mortgage into a single loan. It provides funds for the construction of a new home or major renovations, with the loan converting into a permanent mortgage once the construction is complete.
Contract for Deed
Also known as a land contract, installment contract, or agreement for deed, is a legal agreement where the seller finances the purchase of a property directly to the buyer. The buyer agrees to make regular payments to the seller over a specified period until the full purchase price is paid, at which point the seller transfers the legal title of the property to the buyer.
Contingency
A condition that must be met in order for a real estate contract to go through, such as the buyer obtaining financing or the property passing inspection.
Conventional Loan
A conventional loan is a type of mortgage that is not backed by a government agency, such as the FHA, VA, or USDA. It is available through or guaranteed by a private lender or the two government-sponsored enterprises (GSEs): Fannie Mae and Freddie Mac.
Covenants, Conditions, and Restrictions (CC&Rs)
A set of rules that govern the use of a property, typically found in a homeowners association (HOA).
D
Deed
A legal document that transfers ownership of a property from one person to another.
Depreciation
A decrease in the value of a property over time.
Developer
A company that purchases land or existing properties with the intention of improving, redeveloping, or constructing new structures on the site. Developers are involved in various aspects of the real estate development process, including acquiring the land, obtaining necessary permits, designing and planning the project, and overseeing its construction or renovation.
Down Payment
A portion of the purchase price of a property that is paid upfront by the buyer.
Due Diligence
The process of investigating a property before buying it, such as getting a home inspection and reviewing the property's history.
E
Earnest Money Deposit
A sum of money provided by the buyer as a demonstration of their seriousness and commitment to the transaction. It is typically paid upfront and is held in escrow until the closing of the transaction, at which point it is applied towards the buyer's down payment or closing costs.
Equity
The difference between the value of a property and the amount of money that is owed on it.
Encumbrance
A lien or other claim against a property, such as a mortgage or a judgment.
Equity Loan
A loan that is secured by the equity in a property.
Escrow
A neutral third party who holds the funds associated with a real estate transaction until the closing.
Estate
The total assets, including property, money, and possessions, owned by a deceased person that are subject to administration and distribution according to the laws of inheritance.
Eviction
The legal process of removing a tenant from a property.
Exclusions
Items that are not included in the sale of a property, such as personal property or appliances.
F
Fair Market Value
Refers to the estimated price at which a property would sell assuming a reasonable time frame and in an open and unrestricted market, without any undue influence or pressure, and with both parties having access to relevant information.
Fee Simple
The highest and most complete form of property ownership, where the owner has absolute and unrestricted rights over the property for an indefinite period.
FHA Loan
A type of mortgage that is insured by the Federal Housing Administration. An FHA loan is designed to help low- and moderate-income borrowers qualify for home financing. Borrowers can obtain an FHA loan with a lower credit score and down payment than a conventional loan, but have to pay mortgage insurance premiums, which protect the lender in case of default.
Fiduciary Duty
A legal obligation that a real estate agent owes to their client to act in their best interest.
Fixed-Rate Mortgage
A mortgage with an interest rate that does not change over the life of the loan.
Foreclosure
The legal process by which a lender takes possession of a property after the borrower defaults on their mortgage.
Foreign Investment in Real Property Tax Act (FIRPTA)
A U.S. federal law that imposes withholding requirements on the sale of real estate by foreign individuals or entities. It requires the buyer to withhold a portion of the sale proceeds and remit it to the Internal Revenue Service (IRS) to ensure payment of any applicable taxes on the transaction by the foreign seller.
Foundation
The part of a building that supports the weight of the structure.
Furniture Allowance
A sum of money that is given to a buyer to help offset the cost of purchasing furniture for a new home.
G
Government loan
A loan that is insured or guaranteed by the government, such as a VA loan or an FHA loan.
Grant
A sum of money that is given to someone for a specific purpose, such as buying a home.
Grantee
The party who receives ownership or interest in a property from the grantor through a legal transfer.
Grantor
The party who legally transfers ownership or interest in a property to another party, known as the grantee.
Gross Rent
The total amount of rent that is paid for a property, before any deductions.
Guarantor
A person who agrees to be responsible for the repayment of a loan if the borrower defaults.
H
Home Builder
A company involved in the construction and development of residential properties. They are responsible for overseeing the entire process of building a home, including planning, design, construction, and ensuring adherence to building codes and regulations.
Home Inspection
A home inspection is a professional evaluation of a residential property conducted by a certified inspector during a real estate transaction. It involves a comprehensive examination of the home's structure and systems, such as plumbing, electrical etc.
Homeowners Association (HOA)
A group of homeowners who manage the common areas of a property, such as a condo or a townhouse.
Home Warranty
A contract that protects the buyer of a home from unexpected repairs or replacements.
Housing Market
The conditions in the market for buying and selling homes.
HUD-1 Statement
A document that lists all of the costs associated with buying a home.
I
Impound Account
A savings account that is maintained by the mortgagee on behalf of the mortgagor, which is used to pay the property taxes and hazard insurance.
Improved Land
Property that has undergone development or construction, such as the addition of buildings, infrastructure, or other enhancements, increasing its utility and value.
Income Property
A property that is rented out to tenants.
Inspection Contingency
A clause in a real estate contract that allows the buyer to cancel the contract if the home inspection reveals any major problems.
Interest
The amount of money that is charged on a loan, expressed as a percentage of the principal.
Interest Rate
The amount of interest that is charged on a loan, expressed as a percentage of the principal.
J
Joint Tenancy
A form of property ownership where multiple individuals have equal and undivided ownership rights. It includes the right of survivorship, meaning that when one joint tenant passes away, their share automatically transfers to the remaining joint tenants.
Jumbo Loan
A mortgage that is larger than the conforming loan limit.
Junior Lien
A lien that is subordinate to another lien, such as a mortgage.
Judgment
A court order that requires a person to pay a debt.
Just Cause
A legal requirement that a landlord must have in order to evict a tenant.
K
Key Money
A sum of money that is paid to a landlord in order to secure a lease.
Kick-Out Clause
A clause in a real estate contract allowing a seller to continue marketing a property and accept other offers. If the seller receives a better offer, the original buyer has a set period of time to remove their contingencies and proceed with the purchase, or the contract is canceled.
L
Landlord
The owner of a property that is rented out to tenants.
Lease
A contract between a landlord and a tenant that outlines the terms of the rental agreement.
Legal Description
A detailed and precise description of a property's boundaries and location, using specific survey measurements, landmarks, and reference points that are legally recognized.
Lien
A legal claim against a property, such as a mortgage or a judgment.
Life Estate
A type of property ownership where an individual, known as the life tenant, possesses the right to use and enjoy the property for the duration of their lifetime, after which ownership reverts to another party, known as the remainderman.
Loan
A sum of money that is borrowed from a lender and repaid over time with interest.
Loan Origination
The process of creating and initiating a new loan, including the application, underwriting, and approval stages, before the funds are disbursed to the borrower.
Loan-to-Value Ratio (LTV)
The ratio of the amount of money that is borrowed to the value of the property that is being financed.
Listing
A property that is being offered for sale by a real estate agent.
Listing Agreement
A contract between a seller and a real estate agent that outlines the terms of the listing.
Lot
A parcel of land that is used for building a home or other structure.
M
Market Value
The price that a property would sell for in an open market.
Mortgage
A loan that is secured by a property.
Mortgage Broker
A licensed professional who helps borrowers find and obtain mortgages.
Mortgage Insurance
Insurance that protects the lender in the event that the borrower defaults on their mortgage.
Multiple Listing Service (MLS)
A database of properties that are for sale or rent.
N
New Construction
The process of building residential properties / homes, typically on vacant land or lots. It involves the complete construction of a dwelling, including the foundation, structural components, interior and exterior finishes, and the installation of necessary systems such as plumbing and electrical.
Non-Conforming Loan
A mortgage that is larger than the conforming loan limit.
Note
A legal document that outlines the terms of a loan.
O
Offer
A written proposal to purchase a property.
Option
A contract that gives the buyer the right, but not the obligation, to purchase a property at a specified price within a specified period of time.
Open House
An event where a property is open to the public for viewing.
Origination Fee
A fee that is charged by a lender to process a loan application.
Overbid
An offer that is higher than the asking price of a property.
Owner Builder
An individual who acts as both the owner and the builder of a residential property. They assume the responsibility of managing and overseeing the construction process themselves, including obtaining permits, hiring contractors, and ensuring compliance with building codes and regulations.
Owner's Title Insurance
Insurance that protects the owner of a property from title defects.
P
Paid-In-Full
A term used to describe a loan that has been fully repaid.
Personal property
The movable assets that are not permanently affixed to real property. It includes items such as furniture, appliances, electronics, vehicles, and other belongings that can be easily transported.
Piggyback Loan
A second mortgage that is taken out in addition to a first mortgage.
PITI
An acronym that represents the four main components of a monthly mortgage payment: Principal, Interest, Taxes, and Insurance.
Point
A fee that is charged by a lender for processing a loan application.
Pre-Approval
A lender's commitment to lend a certain amount of money to a borrower, subject to certain conditions.
Pre-Qualification
A lender's estimate of how much money a borrower can borrow, based on the borrower's financial information.
Property Taxes
Taxes that are assessed on the value of a property.
Purchase Agreement
A legally binding contract between a buyer and seller that outlines the terms and conditions of the property purchase, including the purchase price, contingencies, and closing details.
Q
Qualifying Ratio
A measure of a borrower's ability to repay a loan, calculated by dividing the borrower's monthly debt payments by their monthly income.
Quitclaim Deed
A quitclaim deed is a type of deed that conveys ownership of a property without any warranties or representations. This means that the seller is not guaranteeing that the property is free of liens or other encumbrances. Quitclaim deeds are often used when the seller does not have clear title to the property, or when they are simply giving up their interest in the property.
R
Real Estate Agent
A licensed professional who helps buyers and sellers buy, sell, or rent real estate.
Real Estate Investment Trust (REIT)
A company that invests in real estate.
Real Estate Market
The conditions in the market for buying and selling real estate.
Real Estate Mortgage Investment Conduit (REMIC)
A type of security that is backed by mortgage loans.
Real Estate Owned (REO)
Refers to a type of property that is owned by a bank or lender as a result of foreclosure proceedings.
REALTOR®
A professional designation and trademarked term used to refer to a licensed real estate agent who is a member of the National Association of Realtors (NAR).
Refinance
To obtain a new mortgage to replace an existing mortgage.
Remainder Estate
A future interest in a property that is granted to a third party and takes effect after the termination of a prior estate or interest, such as a life estate.
Residential Property
A type of real estate that is primarily used by individuals and families for residential purposes. It can include various types of dwellings, such as single-family homes, townhouses, condominiums, apartments, and duplexes.
S
Satisfaction
The complete repayment of the mortgage debt by the borrower, resulting in the release of the mortgage lien on the property, indicating that the mortgage obligation has been fulfilled.
Second Mortgage
A mortgage that is taken out in addition to a first mortgage.
Settlement
The final step in a real estate transaction, in which the buyer and seller exchange the property and money.
Sold-As-Is
A term used to describe a property that is being sold in its current condition, with no repairs or improvements made.
Speculation
The act of buying a property with the intention of selling it for a profit in the future.
Survey
A professional assessment or measurement of a property's boundaries, features, and physical characteristics.
T
Tenants in Common
A form of property ownership where two or more individuals hold separate and distinct ownership shares in a property. Tenants in common do not have the right of survivorship. Each tenant has the freedom to transfer, sell, or mortgage their share independently, and their share is inherited by their designated heirs upon their death. The ownership shares can be unequal.
Title
The legal document that proves ownership of a property.
Title Company
A firm that conducts title searches to identify any issues that may affect the property's ownership, provides title insurance to protect against future claims, and facilitates the smooth transfer of funds and legal documents during the closing process.
Title Insurance
Insurance that protects the buyer of a property from title defects.
Title Search
The process of examining public records to verify the ownership history, liens, encumbrances, and other relevant information about a property in order to determine the legal status of its title.
Townhouse
A type of housing that is attached to other units on one or more sides.
Transaction Costs
The fees and expenses associated with buying or selling a property, such as closing costs, appraisal fees, and origination fees.
Turnkey Property
A property that is ready to move into, with no repairs or improvements needed.
U
Underwriting
The process of evaluating a loan application to determine the risk of default.
Undisclosed Principal
A person who is involved in a real estate transaction but whose identity is not disclosed to the other parties.
Unimproved Land
Land that does not have any buildings or other improvements on it.
V
Valuation
The process of estimating the value of a property.
Variance
A permit that allows a property to be developed in a way that is not in accordance with zoning regulations.
Vested Interest
A legal right to ownership of a property.
W
Waiver
The act of giving up a right or claim.
Walk-Through
A final inspection of a property that is being purchased. Typically performed just before closing, to ensure that the property being conveyed is in the condition that was agreed to between buyer and seller.
Waterfront Property
Property that is located on a body of water, such as a lake, river, or ocean.
Wetlands
Refers to areas of land that are characterized by the presence of water, either permanently or seasonally. Real estate development projects that involve wetlands may require special permits and approvals to ensure compliance with environmental regulations.
X
Xeriscaping
A type of landscaping that uses drought-tolerant plants.
Y
Year-Round Property
A property that can be used year-round, as opposed to a seasonal property.
Z
Zoning
The regulations that govern the use of land in a particular area.
