REAL ESTATE TERMS

It sometimes seems that real estate is its own language, filled with legal and industry terms that are heavy on jargon and short on communication.

General Real Estate Terms

1. Addendum

If one or both parties wants to make a change to a legal agreement, such as a lease, they can add an extra section detailing the new information without altering the whole document. This additional section is the addendum, and doesn’t affect the rest of the agreement.

2. As-Is

Sellers can offer goods “as is,” meaning that the buyer is responsible for accepting them in their current state. While the buyer can examine the goods, such as a property, before buying, any defects discovered after purchase are not the responsibility of the seller.

3. Broker

Brokers are real estate professionals who have taken advanced courses and licensing to understand real estate and property management law. They manage a team of real estate agents, who are required by law to work under the supervision of a brokerage.

4. Closing

Closing is the last step in a real estate transaction, typically used most often in buying a property. On the agreed-upon closing date, the property officially transfers ownership from the seller to the buyer.

5. Contingency

A contingency is a part of the agreement that must be met, otherwise the other party can cancel the contract. For example, a buyer interested in a home may place an offer that is contingent upon the building being cleared by a certified home inspector. If it isn’t cleared, the contingency has not been met and the buyer can negate the agreement.

6. Days on the Market (DOM)

DOM measures the number of days between a property being actively listed for sale and the contract being signed by the seller and buyer. It’s used to determine whether the market is, on average, better for sellers (low DOM) or for buyers (high DOM).

7. Deed

A deed is a legal, written document detailing ownership of a piece of property. When a property is sold, the deed is transferred from the seller to the new buyer.

8. Deed-in-Lieu of Foreclosure

When a homeowner can’t afford to pay their mortgage, they risk foreclosure, wherein the lender (usually their bank) reclaims the property and forces the homeowner to relocate. In order to avoid these often public and embarrassing proceedings, the homeowner can instead ask for a deed-in-lieu of foreclosure, where they transfer the title of the property to the bank willingly while given time to relocate.

9. Default

Defaulting or being in default of a loan is when a borrower, such as a homeowner, doesn’t make their required payments. For homeowners, this typically happens when they don’t pay for three months or more. When a loan is in default, the lender can demand the full repayment of the sum.

10. Delinquency

A delinquent loan is when a borrower fails to make the required payments. A loan is typically considered delinquent when the repayment is over a month late. Borrowers can clear their delinquent status by repaying all outstanding bills. Loans that remain in a delinquent state will be declared defaulted after several missed payments.