The world of real estate is full of jargon, short forms, acronyms, and words you don’t use every day (unless you’re a realtor, of course!). If you are buying or selling a home and want to look and sound like a pro, our real estate glossary helps break down common terms to help you communicate easily with agents, lawyers and mortgage brokers.
Real Estate Glossary
An addendum is an addition to a real estate contract or purchase agreement.
Amortization is the action of repaying debt over a specified time.
An appraisal shows the approximate value of your home based on various factors, including the condition of the house and the price of similar properties in the area.
Appreciation is the increase in a property’s value over time.
The ‘as-is’ condition refers to the state of the property when the offer was written. Often times, when buyers list a property ‘as-is,’ they are unwilling to make any updates or improvements and are selling the home in the condition it is in (think fixer-upper).
You can make a blind offer if you haven’t seen a property but want to purchase it. This is often used in highly competitive markets to be the first bid and win quickly.
Buyer’s agent/listing agent
A buyer’s agent is a licenced real estate professional who helps the buyer locate and purchase a property. They represent the buyer’s best interests and negotiate on their behalf to secure the best price and favourable buying conditions.
The listing agent is a licenced real estate agent who represents the seller’s best interest. They negotiate for the seller to secure the best price and selling conditions possible.
Closing is the final step in the home buying process when everything is considered final. All parties have signed, paid monies owed, and met conditions. Once complete, the buyer is regarded as the new homeowner.
The buyer pays closing costs when closing a real estate transaction. They include charges such as fees paid to lawyers, taxing authorities and insurance companies.
Days on Market (DOM)
DOM is the number of days a home has been listed for sale. It begins on the date the property is listed and ends when the seller has an signed and accepted contract.
Debt-to-income is used by mortgage lenders when determining how much you can afford to pay monthly for a mortgage. It is calculated by totaling debt expenses with monthly housing expenses, dividing by your gross monthly income, and multiplying by 100.
A down payment is an amount of money paid upfront to purchase a property (typically 5-20% of the home’s cost).
A due diligence period, also known as conditional period, might be available in the purchase agreement, giving the buyer a specified time frame to thoroughly examine a property and organize financing.
Equity is the investment a homeowner has in their property. It is calculated by taking the home’s market value and subtracting any mortgages or liens against the property.
Fair market value
Fair market value is the amount a property would sell for in a competitive market.
Fixed-rate mortgages have interest rates that stay the same for the loan duration.
Home sale contingency
Home sale contingency is a condition put on the purchase of a home by the buyer. It states that the purchase relies on the buyer’s ability to finalize a sale on their current property.
To ensure the home is in good condition, a buyer may pay a licensed professional to visit the house, prepare a report on its state, and point out any needed repairs or deficiencies.
This condition can be added to an offer to grant the buyer a predetermined amount of time to perform an inspection by a licensed home inspector.
Traditionally, you own both the home and the land it is on, but you may purchase the home while paying rent to the landowner in some circumstances.
Also called conditon of financing, a loan contingency is a condition added in that states the buyer can decide to not move forward on the deal if they are unable to secure a mortgage within a fixed period of time.
Getting pre-approved for a mortgage gives buyers an idea of what they can afford when searching for a home. A pre-approval outlines the terms, loan type and loan amount, checking the lender’s debt-to-income ratio and credit history.
Multiple listing service (or MLS)
MLS is a database where real estate agents and broker members can access and add information about properties for sale.
A buyer makes a formal offer on the property they want to purchase. They can offer either the total list price or what they deem fair market value (which can be lower or higher than asking).
The buyer’s agent will put the offer in the writing, ask the buyer to review and sign, and then submit it to the seller’s agent. The seller may accept, reject, or make a counteroffer.
The principal balance of a mortgage loan is the amount of money owed to the lender, not including interest. (i.e. you borrow $400,000, the principal amount, and then pay interest on top of that).
Purchase and sale agreement (PSA)
The purchase and sale agreement is a written contract between the buyer and seller outlining the terms to sell and purchase a property.
Land transfer tax is charged when ownership of a property is transferred.
We hope our real estate glossary helps clarify some common terms. If you have any other questions, please don’t hesitate to ask. Feel free to reach out.