Basic Real Estate Terms You Must Know

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Every subject and industry is susceptible to developing its own lingo, and real estate proves to be no different. When you first join the market, it can be a bit confusing when it comes to understanding the terms that people with it are using. 

It would be in your best interest to have a general understanding of some of the basic real estate terms, so that you’re able to get things done smoothly and avoid facing any sort of trouble.

Fortunately, we’ve compiled a list for you, which covers some of the most commonly used, yet most simple, real estate words.

Check out these frequently used real estate terms to get you speaking “real estate lingo


Amortization is the process of combining of principal and interest through regular payments, as opposed to paying it all off at the beginning of the process. This is done over a great deal of time.


Prior to receiving a loan from the bank allowing you to buy a home, the home has to get appraised so that the bank can determine whether or not they’re letting you borrow the necessary amount of money. In order to find the lending amount, the home will be evaluated individually, as well as through comparisons of similar homes, so that an appraiser can decide it’s value.

Closing and Closing Cost

Closing is a meeting that is conducted as a result of the finalization of a home sale. This is where all final documents are signed and any necessary payments are made. The closing cost is an additional fee, which usually makes up about 2-5% of the homes total cost, excluding the down payment. These fees could be anything from title insurance, to loan processing costs.

Comparative Market Analysis

The Comparative Market Analysis is a report that is created to compare homes in a given area to get a good estimate of its value.


Escrow is a document that enables a lender to receive monthly payments from a buyer.

Buyer’s Agent VS Listing Agent

A buyer’s agent is the representative of the buyer.

A listing agents are similar to this, but instead, they represent the seller.

Pre-Approval Letter

A pre-approval letter provides an estimate of how much a buyer can receive in loans for a home. This should be obtained prior to making any purchases, so you know what you can and can’t afford.

Real Estate Broker VS Real Estate Agent

The difference between these two is very minuscule. A real estate agent is a person who has received a real estate license and works for a brokerage to assist buyers and sellers.

A real estate broker an agent who has passed the broker exam, as well as met the minimum number of transactions.


Interest is a regular monetary payment that grows at a specific rate. The longer your mortgage is, the more interest you will have to pay in the end, so it is better to pay it back as soon as possible.


MLS stands for Multiple Listing Service and acts as the main database for real estate listings. Searching the MLS can yield all the details needed of a home listed for rent or sale including square footage, value, year built and specifics of the property including age, the number of bathrooms and bedrooms.

Title Search 

A title search is an act of determining (proving) that the person or party that states ownership of a property actually does own that property. This usually takes place toward the end of the real estate process and is a requirement before closing can occur.

Listing Agreement 

A listing agreement is a contract made between a seller and their listing broker. It outlines the listing details including the desired sale price, the anticipated selling time as well as details related to a commission.

Adjustable Rate Mortgage VS Fixed Rate Mortgage 

An Adjustable Rate Mortgage (also referred as an ARM) is a mortgage interest rate that is tied to a designated market indicator such as the U.S. Treasury Bill. When market rates are low, this kind of term can benefit the borrower. When rates begin to climb, it can significantly increase the monthly payment.

A Fixed Rate Mortgage has an interest that remains constant throughout the duration of the loan. This is the more practical choice for homeowners who intend on living somewhere for a long time.

Private Mortgage Insurance 

This is optional and is purchased by the borrower to protect them from default in the event that they cannot make their mortgage payment.


This means the seller is offering a property for sale without doing any necessary repairs. Anything that is noted in the inspection will, most likely, not reduce the price and will be the responsibility of the buyer.

Assumable Mortgage

An assumable mortgage allows the buyer to take over the seller’s payments. The buyer becomes the owner of the loan and agrees to follow any other terms of the existing loan.

Capital Gain

A capital gain is the profit realized from an increase in a property’s value. The capital gain is taxable and assessed at the time of sale.


In accounting terms, equity equals assets minus liabilities. In terms of real estate, equity is the current value of the property less what is owed on the property.

Final Words

Before coming to any buying, renting, or selling decisions, make sure you familiarize yourself with these definitions. Doing so will help the process run so much smoother and help you avoid many problems along the way. 

If you still have any questions regarding these terms, or about real estate in general, feel free to contact the team here at beycome!

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