Common Real Estate Terms - Part 1


Deciding to buy a home can be exciting, confusing and frustrating but most of all, a learning experience. Determining which type of home is right for you can be your first step. Do you want a single family home, town-home or condo? Are you even ready to buy or should you stick with renting for a few more years? Have you ever considered a housing cooperative? What does escrow mean? How much money will you need up front?

We cover a lot of the questions you might have in our article "What is a Co-op?" and we, at Cedarwood Housing Cooperative, are happy to discuss any questions you may have. Please stop by or give us a call to discuss more. Our Housing co-op offers the benefits of home ownership without the hassle of having to maintain a home. Interested? Call us today at 708-747-3833.

Common Real Estate Terms

Explore additional real estate terms in part 2.

Addendum

Any provision added to an existing contract without adjusting the original contract.

Agent

One who acts or has the power to act for another. A licensed real estate broker is a common agent during the home buying process.

Amortized loan

A loan in which the principle and interest are both payable in monthly (or some other periodic) installments over the term of the loan.

Annual Percentage Rate

The relationship of the total finance charges associated with a loan. This must be disclosed to borrowers by lenders under the "Truth in Lending Act".

Appraisal

An estimate of the value of the property; what the property has been deemed worth.

Breach of Contract

Violation of any terms or conditions in a contract without legal excuse. Example: failure to make payment when it's due.

Civil Rights Act of 1866

An act that prohibits racial discrimination in the sale and rental of housing.

Closing

An event that indicates the transaction has been completed. The exchange of money for property, with all legal documents being signed by all parties.

Collateral

Something having value that is given to secure repayment of a debt.

Cooperative

A residential multi-unit building whose title is held by a trust or corporation that is owned by and operated for the benefit of the people living within the building who are the beneficial owners of the trust or shareholders of the corporation, each possessing a proprietary lease.

Counteroffer

A new offer made in response to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror.

Equity

The interest of value that an owner has in property over and above any indebtedness.

Escrow

The closing of a transaction through a third party called an escrow agent, who receives certain funds and documents to be delivered upon the performance of certain conditions outlined in the escrow instructions.

Fixture

An item of personal property that has been converted to real property by being permanently affixed to the property. Example, a ceiling fan.

This list continues in part 2 and is not an exhaustive list. These terms should be explored in more detail prior to making any commitments. Big thanks to the authors of MODERN REAL ESTATE PRACTICE 18th Edition: Fillmore W. Galaty, Wellington J. Allaway and Robert C. Kyle for the above definitions.


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