Reference Library
Real Estate Glossary
Every term you're likely to see on a purchase contract, title report, or closing statement, explained without the jargon.
A
- As Is Sale
- A sale in which the buyer accepts the property in its current condition, with no requirement on the seller to make repairs, cleanup, or improvements before closing.
- Assignment of Contract
- The transfer of a purchase contract's rights and obligations from the original buyer to a third party, common when a direct buyer coordinates the closing with an end investor.
B
- Basis (Cost Basis)
- The original value of a property for tax purposes, adjusted for improvements and depreciation. Determines capital gains at sale.
C
- Cash Offer
- A written offer to purchase a property funded from the buyer's own capital rather than a mortgage. No lender contingencies and typically faster closings.
- Chain of Title
- The historical sequence of owners for a property, evidenced through recorded deeds. Gaps or defects in the chain can delay a sale.
- Closing (Settlement)
- The final step where the deed is signed, funds are wired, and title is legally transferred to the new owner.
- Cloud on Title
- Any claim, lien, or encumbrance recorded against a property that raises doubts about ownership and must be resolved before a clean sale.
- Comparable Sales (Comps)
- Recent sales of similar properties in the same area used to estimate current market value.
- Contingency
- A condition written into a purchase contract (financing, inspection, appraisal) that must be satisfied for the deal to close. Direct cash offers typically waive most contingencies.
D
- Deed
- The legal instrument that transfers title from seller to buyer. Common types: warranty deed, special warranty deed, and quitclaim deed.
- Distressed Property
- A property that is physically damaged, financially underwater, or under legal pressure such as foreclosure or code enforcement.
- Due Diligence
- The buyer's investigation of a property, title, condition, zoning, environmental, before finalizing a purchase.
E
- Earnest Money
- A refundable deposit placed with escrow to demonstrate the buyer's commitment. Applied to the purchase price at closing.
- Easement
- A legal right for a non owner to use part of the property (utility line, shared driveway, access road).
- Encumbrance
- Any claim against a property, including mortgages, liens, easements, and restrictions.
- Equity
- The portion of a property's value the owner actually owns, market value minus mortgage balance and other liens.
- Escrow
- A neutral third party account (title company or attorney) that holds funds and documents until all closing conditions are met.
F
- Fair Market Value
- The price a willing buyer and willing seller would agree on in an open market with reasonable knowledge and no pressure.
- Foreclosure
- The legal process a lender uses to recover a loan balance by forcing the sale of the property securing the loan.
H
- HUD 1 / Closing Disclosure
- The itemized settlement statement showing every credit and debit for buyer and seller at closing.
I
- Iron Clad Offer
- A firm written offer with no financing contingency and minimal escape clauses, the number quoted is the number paid at closing.
L
- Lien
- A legal claim against a property for an unpaid debt (mortgage, tax, judgment, mechanic's). Must generally be cleared at or before closing.
- Lis Pendens
- A public notice that a lawsuit affecting title has been filed. Freezes most transfers until resolved.
O
- Off Market Sale
- A property sold directly to a buyer without ever being publicly listed on the MLS. Common with direct cash buyers.
P
- Probate
- The court supervised process for administering a deceased owner's estate, including any real estate they held.
Q
- Quitclaim Deed
- A deed that transfers whatever interest the grantor has in a property, without warranties. Common between family members and in probate.
S
- Section 1031 Exchange
- An IRS provision that lets an investor defer capital gains tax by reinvesting proceeds from a sold property into a like kind property within strict deadlines.
- Short Sale
- A sale in which the lender agrees to accept less than the full mortgage balance because the property is worth less than what is owed.
- Special Warranty Deed
- A deed in which the seller only warrants against title defects that arose during their ownership, not before.
T
- Tax Deed / Tax Lien Sale
- A public sale by a county to recover unpaid property taxes. The purchaser may receive a lien or, in some states, the property itself.
- Title Insurance
- An insurance policy protecting the buyer (or lender) against losses from defects in title discovered after closing.
V
- Vacant Land
- Unimproved parcels, no permanent structures. Valuation depends on zoning, utilities, access, and buildable area.
W
- Warranty Deed
- A deed in which the seller guarantees clean title against all prior claims. Offers the highest level of buyer protection.
- Wire Fraud
- A common closing scam in which fraudsters impersonate the title company and redirect the buyer's or seller's wire. Always verify wiring instructions by phone with a known number.
Z
- Zoning
- Local rules classifying how land may be used, residential, commercial, agricultural, mixed, and what may be built on it.