Glossary of Real Estate Terms

Agency - the status of the agents involved in the transaction as to whom each agent represents

Appraisal - a written estimate of value of real property

Appreciation - an increase in the value of real estate

Closing - the meeting of all parties involved in the transaction to finalize the sale

Closing costs - generally refers to the costs associated with closing the sale, comprised of mortgage closing costs, prepaid items, tax prorations and escrow accounts

Condominium - a system of individual fee ownership of units combined with joint ownership of common area of the structure and the land

Counter offer - changes made on the purchase agreement by the seller to the purchaser's original offer, sent back to the purchaser for consideration

Deed - also warranty deed; the recorded document showing transfer of title and ownership

Discount points - additional charges made by a lender at the time a loan is made. Expressed in terms of percentage of mortgage amount. Usually does not exceed 2%

Earnest money deposit - known as good faith money; used to show the Seller the "seriousness" of your offer

Easement - the right, privilege or interest which one party has in the land of another. Example: right of way

Equity - the difference between the current market value of the property and all outstanding loans and lein

Escrow - funds held by a 3rd party to pay for things in the future; usually refers to the funds collected by lender to pay for future property taxes, homeowners insurance

Fee simple - the type of ownership in a home as evidenced by the warranty deed

Fixtures - those items in a property included in the sale by virtue of being a permanent attachment to the property

Home inspection - an inspection conducted by a licensed inspector or contractor, paid for by the Purchaser, to ascertain the condition of the property

Home protection plan - an insurance policy against defects in certain items in the property

Initial investment - commonly called the down payment, this is the cash amount required from you; the difference between the sales price and the mortgage amount

Land contract - a contract used to sell property where the buyer pays the seller a down payment, then continues to make the monthly payments directly to the seller

Listing - the copy of the individual homes for sale showing the information as distributed in the multiple listing service (MLS)

Marketable title - title free and clear of objectionable liens or encumbrances

MLS - multiple listing service; the database where information about individual homes is stored

Monthly investment - the total of principal, interest, taxes, insurance, and private mortgage insurance (PITI) paid monthly on the mortgage

Mortgage - the loan obtained from a lender to purchase or refinance a home

Occupancy - the date the Purchaser assumes possession of the property; usually stated in terms of "days after closing."

Personal property - items included in the sale that are not real property

Purchase agreement - sometimes called the offer or bid; the paperwork that is the entire agreement between all the parties involved in the sale and purchase

Seller's disclosure statement - required by law in Michigan, the seller has to disclose pertinent information about the property to potential buyers

Seller's intent - a non-binding form of negotiation used by the seller to keep all options open

Site condominium - form of ownership where the home and the "envelope" around the home belong to the owner and the other common areas are owned by the association. Developers use this to get their developments on-line faster and have greater control over what gets built there

Special assessment - charges against real estate for public improvements

Subdivision - traditional development where owners own all of the lot their home is built on

Title insurance - an insurance policy guaranteeing marketable title to the buyer and first lein for the lender

Total investment - the sales price