Real Estate List of Terms
Our Guide to Real Estate Definitions, Abbreviations, and Jargon
If you've begun the process of buying a home or listing your property, you have probably been exposed to what at times can sound like another language. Look—we don't mean to come off like we have a clandestine communication code that only Realtors can decipher. It's just that we are pressed for time and using acronyms and euphemisms is our way of being concise and descriptive.
Here are some terms that you are pretty much guaranteed to encounter at one time or another. We've assembled a mix of acronyms, abbreviations, descriptors, and jargon that is tossed between not just Realtors - but escrow agents, title reps, lenders and even the home inspectors. Some you've heard - we're sure - but with our tongue placed firmly in our collective cheek we hope to provide a new slant on the slang. We hope it sheds some light and provides some helpful context prior to your real estate journey.
A) DESCRIPTIVE EUPHEMISM
'coveted' - This a synonym for expensive property. It can also refer to a 'recession-proof' neighborhood has great schools and is located near a body of water.
'charming' - typically this means 'small' and often can be an example of what the Japanese consider to be 'roomy'
'cozy property in a rural location' - the house is likely cramped, and the closest store is at least a 30 minute drive.
'curb appeal' - the house looks pretty good from the street, akin to a heavily made-up blind date. Sometimes the interior is surprisingly ideal as well, other times you feel manipulated by the flowerbed and fresh paint.
'freeway close' - located in the proximity of intersecting freeways, but hopefully not so close that you have to worry about white noise and air quality.
'motivated sellers' - subtract 15% from the asking price, and then determine how motivated they are in relation to your desire to purchase based on current inventory levels.
'pet-friendly neighborhood' – you can usually count on a neighborhood with a large lot / backyard. The downside: organic matter often deposited on the front lawn.
'vintage décor' - get ready for avocado green appliances and shag carpet that could be anywhere from yellow to orange to dark brown. Possibly still has original vinyl flooring, too!
B) ACRONYMS & ABBREVIATIONS
AVID - Agent Visual Inspection Disclosure The purchase contract requires both the buyer's agent and seller's agent to "conduct a reasonable competent and diligent visual inspection of the property and to disclose all facts materially affecting the value of the property". This happens late in the transaction after all repairs have been completed.
CMA - Comparative Market Analysis A report, usually compiled by a Realtor, which gives you information about houses similar to yours (often referred to as "comps"). A good CMA can reveal what homes like yours are selling for, how long it's taken them to sell, and what their sales prices were in relation to their list prices. It's vital to pay attention to the prices of 'pending' rather than 'closed' sales since these are the most recent. The erratic "Zestimates" that continue to dog agents and sellers make a professional CMA all the more intrinsic to the listing process.
EMD – Earnest Money Deposit To show that an offer is made in good faith, the prospective home buyer will write a check for a percentage of the purchase price (typically 1-2%). This should be deposited into escrow within 3 days max of the offer being accepted and escrow opened.
FSBO - For Sale by Owner Yeah, it's pretty self-explanatory and often pronounced 'fizbo' by Realtors. You'd be surprised how many homeowners think there really is nothing to it. As if selling a property that you own is akin to listing a vintage Spooner shirt on eBay. Do yourself a huge favor and hire an experienced Realtor that is honest and hard-working. You can often determine their level of expertise by their social media content and frequency of updates. Click here to see why FSBO's are NOT a good idea.
HOA - Homeowner Association This is a group of property owners (usually condo owners) whose purpose is to provide a common basis and sense of direction for maintaining and enhancing their building and surrounding common areas.
PITI - (sometimes pronounced 'pity') In relation to a mortgage loan, this stands for the sum of monthly Principal, Interest, Taxes and Insurance. Typically it's the numerical amount of the check you will cheerfully write to the mortgage servicer of your home loan.
PUD - Planned Unit Development (click here for more info) This is a term describing a housing development that isn't subject to the standard zoning requirements for the area. Despite its Orwellian ring, these areas are often coveted locations and can include shopping centers and recreation centers and parks. Think Turtle Rock.
RLA - Residential Listing Agreement In case you were getting this confused with the Russian Library Association, you're not even close. Once you have decided on a Realtor to market and sell your property, you will enter into a legally binding contract called the listing agreement. It stipulates the listing price, the listing time period and the broker's commission.
SFR - Single-Family Residence
'three-two' or 3/2 - Three Bedrooms, Two Baths Quite possibly the most commonly requested property year after year. If the bath does not have a tub and only a shower, it's known as a ¾ bath. If you see a 3/2/2 the third number represents a 2-car garage.
C) TERMS & JARGON
1031 exchange - The §1031 Tax Deferred Exchange is one of the last tax shelters allowed by the Internal Revenue Service (IRS). It is a transaction in which a taxpayer exchanges investment property for like-kind investment property, which defers the payment of capital gain taxes and the recapture of Depreciation taxes.
as-is - This refers to the fact that the seller is disclaiming any warranties regarding the condition of the property, and the seller will not be paying for any repairs that are not mandated by law. Note: even though the property will transfer in 'as-is condition,' the seller cannot hide any latent defects.
condo - A condominium is a form of ownership which involves a separation of property into individual ownership elements and common elements. (click here for more info)
easement - An easement is a right of use over the property of another for a specific purpose. Under California law, an easement may be established in the following ways: Express Grant; Prescriptions; Implied Grant or Reservation; and Necessity. (click here for more info)
fixer-upper - Where some see a collection of headaches, others see ripe opportunity. This refers to a property that will require reconstruction, redesign or redecoration after the sale is completed. They are popular with investors who wish to raise the potential value of the property in a short period of time, aka 'flipping' a property.
gentrification - The process by which the original residents of an area are displaced and consequently the whole character of the neighborhood changes, with 'improvements' and the attendant rising property values and retail prices - making it a challenging transition for a proportion of the population.
good bones - This usually refers to a property that some combination of the following: a good floor plan, quality construction, well-proportioned rooms, character or 'personality' and solid infrastructure (foundation, plumbing, heating, roof etc.) Sometimes, they just don't build 'em like they used to; so check out dem bones!
good starter home - This term still has a lot of ambiguity attached. It used to mean one's first SFR or condo purchase, but now connotes a small 1 or 2 bedroom house that is typically older but as a trade-off it's "affordable" and meant to be a stepping stone purchase. You'd be surprised how many insist on having ALL of their requirements / 'must-haves' in their first home. The key is to be realistic and start building equity RIGHT AWAY in a location close to a Trader Joe's or Whole Foods if at all possible.
townhome - A Townhome is a dwelling unit, generally having two or more stories and attached to other similar units via party walls. Townhomes are often used in PUD and Condominium developments, which provide for clustered or attached housing and common area open space. As a Townhome is merely an architectural design, it has no bearing on the title policy other than it may indicate that there are party wall agreements that may be rerecorded or be a part of the governing documents. (click here for more info)
turnkey - This is a word that translates roughly as "the property is clean, no repairs are needed, it's in good condition, and it's ready for you to move into." Years ago I was told that the origin of the word is literal, in other words "all you have to do is put the key in the door and turn the key." In other words, just bring your clothes, your books, and your toothbrush – you're all set to settle in.
Now it's your turn. Let us know if there are any terms you've recently encountered that needed clarification. And remember the reason that clichés become clichés is that they are the hammers and screwdrivers in the toolbox of communication.
Now, go out and start your journey of real estate discovery with a clear head and an experienced Realtor at your side.