Resources · Terminology

Real estate glossary.

Residential, investment, title, escrow, and mortgage terms, explained in plain language. Search for a term or browse by category.

Residential

Appraisal: A licensed appraiser's opinion of a home's market value, usually ordered by the lender.
Comparable sales (comps): Recently sold homes similar in size, age, condition, and location, used to estimate value.
Contingency: A condition in the purchase contract that must be met (or removed) for the sale to move forward, such as inspection, appraisal, or loan approval.
Counteroffer: A response to an offer that changes one or more terms, such as price, timeline, or credits.
Disclosures: Required documents where the seller shares known facts about the property's condition and history.
Earnest money deposit (EMD): The buyer's good-faith deposit, held in escrow and applied to the purchase at closing.
HOA: Homeowners association. Sets community rules and collects dues for shared amenities and maintenance.
Home warranty: A service contract that helps cover repair or replacement of home systems and appliances, often for the first year.
Mello-Roos: A special tax in some California communities that funds local infrastructure, paid with property taxes.
Seller credit: Money the seller agrees to contribute toward the buyer's closing costs or repairs.

ARV (after-repair value): The estimated value of a property after renovations are complete.
BRRRR: Buy, Rehab, Rent, Refinance, Repeat. A strategy for recycling capital into additional rentals.
Cap rate: Net operating income divided by property value. A quick way to compare income properties.
Cash-on-cash return: Annual pre-tax cash flow divided by the total cash invested.
DSCR loan: A loan qualified by the property's rental income (debt service coverage ratio) rather than personal income.
Hard money: Short-term, asset-based financing often used for flips, typically with higher rates and fast closings.
MAO (maximum allowable offer): The highest price an investor can pay and still hit their profit target, after rehab, holding, and selling costs.
NOI (net operating income): Rental income minus operating expenses, before mortgage payments.
Off-market: A property sold without being publicly listed on the MLS.
Wholesaling: Contracting a property and assigning that contract to another buyer for a fee.

Close of escrow (COE): The date the deed records, funds are disbursed, and ownership transfers.
Deed: The legal document that transfers ownership of real property.
Easement: A right for someone else to use part of the property for a specific purpose, such as utilities.
Escrow: A neutral third party holding funds and documents until all conditions of the sale are met.
Lien: A legal claim against a property for an unpaid debt.
Preliminary title report: An early report showing ownership, liens, easements, and conditions to clear before closing.
Recording: Filing the deed and loan documents with the county recorder to make them part of the public record.
Vesting: How title is held, such as joint tenancy, community property, or a trust.

APR: Annual percentage rate. The loan's yearly cost including interest and certain fees.
Closing costs: Fees for the loan, title, escrow, and other services, typically 2–5% of the purchase price.
Debt-to-income ratio (DTI): Monthly debt payments divided by gross monthly income. A key qualifying factor.
Loan estimate: A standardized form showing your estimated rate, payment, and closing costs.
PITI: Principal, interest, taxes, and insurance. The core parts of a monthly mortgage payment.
PMI / MIP: Mortgage insurance that protects the lender, typically required with less than 20% down (PMI for conventional, MIP for FHA).
Preapproval: A lender's conditional commitment after reviewing your income, assets, and credit.
Rate lock: A lender's guarantee of your interest rate for a set period while your loan is processed.