Real Estate Terms and Definitions

Real estate jargon doesn’t need to feel like a foreign language.

From learning how to prioritize your buying or selling goals to understanding wealth-building through real estate, we want to help you know what it all means for you, your life, and your future. That way, you can start making confident choices because you know what you want, how to achieve it, and how to make a wise investment in real estate.

 

  • You are “under Contract” when both you and the other party [buyer or seller] have signed [“executed”] the Contract to Buy and Sell Real Estate. This document starts out as the “offer” and turns into the contract once signed by both buyer and seller. This executed document binds you to the terms of the Contract.

  • The right to [or ownership of] the property and the “bundle of rights” that come with that property: possession, control, enjoyment, exclusion, disposition [the right to will, sell, or transfer the property], and encumbrance [the right to “burden” the property, such as with a mortgage lien].

  • The company that provides a Title Commitment, conducts the closing and provides Title Insurance for the property being sold.

  • A commitment to issue a Title Policy to the buyer once the property has been sold to the buyer.

  • An agreement between the Title Insurance Company and the buyer that the Title Insurance Company will protect the buyer against certain claims by third parties to title rights of the property. There are exceptions, conditions, exclusions, and stipulations to these protections, and these are included in what’s called Schedule B of your Title Commitment.

  • Funds from the buyer [and held on behalf of both seller and buyer by the title company] that typically vary from 1%-3% of the purchase price of the property. These funds represent “good faith” money that the seller has rights to if the buyer defaults [breaks the terms] of the Contract. If the buyer does not default on the Contract, the Earnest Money is applied to the purchase price of the property on behalf of the buyer at Closing.

  • A third-party Inspector will typically inspect the property, pointing out and identifying different features as well as items that may need repair or replacement.

  • An Objection is a legal right in a Contract to Buy and Sell Real Estate that allows a buyer to bring up issues at a specific milestone in the under contract process. If a Resolution is not achieved once an Objection has been made, the Contract automatically terminates.

  • A Resolution is a legally binding agreement between buyer and seller that addresses objections brought up in an Objection.

  • A real estate Closing conducts the legal transfer of a property from seller to buyer.