Abstract of title: The condensed history of a title to a particular parcel of Real Estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate.

Agent: One who acts or has the power to act for another. A fiduciary relationship is created under the laws of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed real estate broker to be his or her agent. Also, an agency relationship is created when a buyer executes a buyer agency contract with a licensed Real Estate broker for the purposes of finding a home.

American Land Title Association: The American Land Title Association, founded in 1907, is the national trade association and voice of the abstract* and title insurance industry. ALTA members search, review and insure land titles to protect home buyers and mortgage lenders who invest in real estate. ALTA is headquartered in Washington, DC.

Amortized loan: A loan in which the principal as well as the interest is payable in monthly or other periodic installments over the term of the loan.

Appraisal: An estimate of the quantity, quality, or value of something. The process through which conclusions of property value are obtained; also refers to the report that sets forth the process of estimation and conclusion of value.

Appreciation: An increase in the worth or value of a property due to economic or related causes, which may prove to be either temporary or permanent; opposite of depreciation.

Balloon Payment: A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.

Breach of Contract: Failure to perform a contract, in whole or part, without legal excuse.

Building code: An ordinance that specifies minimum standards of construction for buildings in order to protect public safety and health.

Certificate of Title: A statement of opinion on the status of the title to a parcel of real property based on an examination of specified public records.

Cloud on Title: An irregularity, possible claim, or encumbrance which, if valid, would adversely affect or impair the title.

Closing: The process of completing a financial transaction. For mortgage loans, the process of signing mortgage documents, disbursing funds, and, if applicable, transferring ownership of the property. In some jurisdictions, closing is referred to as “escrow,” a process by which a buyer and seller deliver legal documents to a third party who completes the transaction in accordance with their instructions.

Closing Agent: An individual who represents a buyer and handles the closing and the legal transfer of title and ownership from the seller to the buyer.Also called a settlement agent.

Closing Cost: The fees charged in connection with a mortgage loan transaction. Money paid by a buyer (and/or seller or other third party, if applicable) to effect the closing of a mortgage loan, generally including, but not limited to a loan origination fee, title examination and insurance, survey, attorneys fees, and prepaid items, such as escrow deposits for taxes and insurance.

Closing Date: The date on which the sale of a property is to be finalized and a loan transaction completed. Often, a real estate sales professional coordinates the setting of this date with the buyer, the seller, the closing agent, and the lender.

Commission: Payment to a broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.

Comparables: Properties listed in an appraisal report that are substantially equivalent to the subject property.

Comparative market analysis: A comparison of the prices of recently sold homes that are similar to the subject property.

Contract: A legally enforceable promise or set of promises that must be performed and for which, if a breach of the promise occurs, the law provides a remedy. A contract may be either unilateral, where only one party is bound to act, or bilateral, where all parties to the instrument are legally bound to act as prescribed.

Conventional Loan: A loan that is not insured or guaranteed by a government or private source.

Cooperating Brokerage Fee: A fee that is paid to a real estate broker for producing a bidder or purchaser, that results in the sale of the property and a successful closing of your transaction. The fee is usually 2 to 3 percent of the sales price.

Counteroffer: A new offer made as a reply to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror.

Deed: A written instrument that, when executed and delivered, conveys title to or an interest in Real Estate. Deed

Developer: One who constructs buildings on lots and sells them.

Discount Points: An added loan fee charged by a lender to make the yield on a lower-than-market-value loan competitive with higher-interest loa

Equity: The interest or value that an owner has in his or her property over and above any mortgage indebtedness.

Executory Period: The time between the contract is entered into and the performance is made.

Exclusive-Agency Listing: A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner’s stated terms, for a commission. The owner reserves the right to sell without paying anyone a commission if he or she sells to a prospect who has not been introduced or claimed by the broker.

FannieMae: Fannie Mae provides stability, liquidity, and affordability to the nation's housing finance system under all economic conditions. We exist to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. The government established Fannie Mae in order to expand the flow of mortgage funds in all communities, at all times, under all economic conditions, and to help lower the costs to buy a home.

Freddie Mac: Freddie Mac's mission is to provide liquidity, stability and affordability to the housing market. Congress defined this mission in our 1970 charter [PDF 54K], which lays the foundation of our business and the ideals that power our goals.

Full Disclosure: In real estate, revealing all the known facts which may affect the decision of a buyer or tenant. A broker must disclose known defects in the property for sale or lease.

FHA Loan: A loan insured by the Federal Housing Administration and made by an approved lender in accordance with the FHAs regulations.

Homeowner’s insurance policy: A standardized package insurance policy that covers a residential Real Estate owner against financial loss from fire, theft, public liability, and other common risks.

HUD-1 Settlement Statement: A document that lists all closing costs on a real estate purchase or refinance transaction. Also known as the “closing statement” or “settlement sheet.”

Joint tenancy: Ownership of Real Estate between two or more parties who have been named in one conveyance as joint tenants. If the instrument creating the joint tenancy specifically provides for survivorship, upon the death of a joint tenant his or her interest passes to the surviving joint tenant or tenants by the right of survivorship.

Limited Service Agreement: A limited service listing agreement is an agreement by which a broker provides fewer services than those services provided for in a traditional real estate listing agreement. A limited service agreement may provide for a menu of services, such as only listing the real estate in the MLS for a flat fee, rather than a full commission for the complete range of brokerage services generally found in a traditional real estate agency relationship.

Listing Agreement: A contract between a landowner (as principal) and a licensed Real Estate broker (as agent) by which the broker is employed as agent to sell Real Estate on the owner’s terms within a given time, for whose service the landowner agrees to pay a commission.

Listing broker: The broker in a multiple-listing situation from whose office a listing agreement is initiated, as opposed to the selling broker, from whose office negotiations leading up to a sale are initiated. The listing broker and the selling broker may be the same person. See also Multiple listing.

Marketable title: Good or clear title reasonably free from the risk of litigation over possible defect.

Multiple listing: A exclusive listing (an exclusive right to sell or exclusive agency) with the additional authority and obligation on the part of the listing broker to distribute the listing to other brokers in the multiple-listing organization.

Multiple Listing Service: “MLS”or “Multiple Listing Service” means a system by which authorized Participants and Subscribers make blanket unilateral offers of compensation to other Members (acting either as buyer agents or in other agency or non-agency capacities as defined by law) during the course of which the Compilation is accumulated and disseminated to enable Members to serve their customers, clients and the public, and includes data entry of listings, terminal support, program support and educational classes on its computer system.

Real Estate: Land; a portion of the earth’s surface extending downward to the center of the earth and upward into space, including all things permanently attached thereto, whether by nature or by a person; any and every interest in land.

Real Estate Broker: Any person, partnership, association, or corporation who sells (or offers to sell), buys (or offers to buy), or negotiates the purchase, sale, or exchange of Real Estate or who leases (or offers to lease) or rents (or offers to rent) any Real Estate or the improvements thereon for others for a compensation or valuable consideration. A Real Estate broker may not conduct business without a Real Estate broker’s license.

Real Property: Any interest or estate in land and any interest in business enterprises or business opportunities, including any assignment, leasehold, subleasehold, or mineral right; however, the term does not include any cemetery lot or right of burial in any cemetery; nor does the term include the renting of a mobile home lot or recreational vehicle lot in a mobile home park or travel park.

Realtor: A registered trademark term reserved for the sole use of active members of local Realtor boards affiliated with the National Association of Realtors.

Restrictions: Clauses in a deed limiting the future uses of the property. Deed restrictions may impose a vast variety of limitations and conditions — for example, they may limit the density of buildings, dictate the types of structures that can be erected, or prevent buildings from being used for specific purposes or even from being used at all.

Single Agent: A broker who represents, as a fiduciary, either the buyer or seller but not both in the same transaction.

Special Warranty Deed: A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of his or her tenure and ownership of the property and not against defects existing before that time, generally using the language, “by, through, or under the grantor but not otherwise.”

Subdivision: A tract of land divided by the owner, known as the subdivider, into blocks, building lots, and streets according to a recorded subdivision plat, which must comply with local ordinances and regulations.

Survey: The process by which boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions, and position of a house on a lot, including the determination of any existing encroachments or easements.

Title: The right to or ownership of land, and the evidence of ownership of land.

Title Insurance: A policy insuring the owner or mortgagee against loss by reason of defects in the title to a parcel of Real Estate, other than encumbrances, defects, and matters specifically excluded by the policy.

Transaction Broker: A broker who provides limited representation to a buyer, a seller, or both, in a real estate transaction, but does not represent either in a fiduciary capacity or as a single agent. In a transaction broker relationship, a buyer or seller is not responsible for the acts of a licensee. Additionally, the parties to a real estate transaction are giving up their rights to the undivided loyalty of a licensee. This aspect of limited representation allows a licensee to facilitate a real estate transaction by assisting both the buyer and the seller, but a licensee will not work to represent one party to the detriment of the other party when acting as a transaction broker to both parties.

Valid contract: A contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it.

VA Loan: A mortgage loan on approved property made to a qualified veteran by an authorized lender and guaranteed by the Veterans Administration in order to limit the lender’s possible loss.

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