Glossary of US Real Estate Terms Commonly Used

Every industry has its own jargon or slang; you need to know the Glossary of US real estate terms commonly used in the industry.

From adjustable-rate mortgages to title insurance to amortization, it can all seem confusing to many in Asia who are new to the business.

We have compiled a list of the most common terms you’ve heard, read, and are most likely to encounter in your journey as a real estate investor with Noble Sky International.

The following Glossary of US real estate terms is a handy reference for anyone curious about the real estate industry.

If you are a newbie investor, a home buyer (or seller), an aspiring real estate agent, and just anyone curious about the industry – feel free to use this real estate glossary as a handy reference.

Glossary of US Real Estate Terms


70% Rule – The 70% rule is a widely accepted rule among rehabbers and real estate investors as a barometer for purchasing a rehab property.


Adjustable-rate mortgage

When it comes to loans- there are two types of conventional loans: the fixed-rate and the adjustable-rate mortgage.

The interest rate can change throughout the loan period; it can be at five, seven, or ten-year intervals.

For homeowners who plan to stay in their home for more than a few years – this type of loan can be risky as rates can suddenly skyrocket depending on market conditions.

After Repair Value (ARV)

The after repair value or ‘re-sale value’ is the property’s estimated value after it’s repaired or renovated.

The after repair value is calculated based upon comparable sales nearby the subject property.

It also means that the valuation will no longer reflect an “As-is” value but the After-repair value instead.

The most common use of ARV is in house flipping, when an investor buys a distressed house, fixes it up then sells it, typically within a year.


Amortization is the process of paying off debt in regular installments over a period of time, typically with a mortgage.

This process combines both interest and principal in payments, rather than merely paying off interest initially, which allows you to build more equity in the home early on.

Amortized Loan

An Amortized Loan is a loan with scheduled periodic payments that include principal and interest payments.

Most Short-Term Flip Loans are Interest Only, while Long-Term Buy-And-Hold Loans are Amortized over time.

Amortization Schedule

The Amortization Schedule is a table detailing each periodic payment of an amortized loan (typically a mortgage).


The appraiser determines the home’s value based on an inspection of the property itself and the sale price of comparable homes in the area.


Suppose the property you bought was built before 1980. In that case, it’s possible that the old floor tiles, textured paint, insulation, or roofing materials were made with asbestos before any significant regulatory actions against the naturally occurring mineral substance.


“As-Is” means in the existing circumstances. When a property is sold at “as-is,” a buyer pays to buy the property, requiring further renovations. Since NSI wouldn’t sell the property at market value without further renovations, it is sold to a wholesaler or another investor.

Asking Price

The initial selling price of a property that the seller is asking for the property.

Assessed Value

The assessed value is how much a home is worth according to a public tax assessor who makes that determination to figure out how much city or state tax the owner owes.


An assignment is a sales transaction with the original buyer of the property (“the assignor”) that allows another buyer (“the assignee”) to take over the buying rights to purchase the property.

Wholesalers often use the assignment to get discounted properties under contract, with the intent to re-assign the buying rights to another buyer for a small profit.


Backup Status

Status of a property that is currently under contract but is allowing backup offers to be submitted.

Backup status is used when the listing agent has reason to believe the current escrow may fall through for any number of reasons.

For this reason, the listing agent sets the property status to Backups to allow future buyer interest and offers.

Bird Dog

A Bird Dog is an individual that spends their time locating properties with investment potential.

Usually, they intend to find distressed properties or sell at a discount that can be rehabbed for a profit.


A real estate broker has different definitions.

A broker generally has more experience and education than an agent, which allows them to work independently or manage an office of real estate agents.

In most states, real estate agents who are not brokers must work under a broker or brokerage.


A brokerage is a company or firm that manages a group of real estate agents.


The acronym BRRRR for a real estate investment strategy stands for Buy, Rehab, Rent, Refinance & Repeat.

BRRRR is the process of buying a distressed property, rehabbing the property, renting the property & refinancing the purchase into a long-term conventional loan.

Upon refinancing, the investor cashes out the equity in the property and repeats the process by using the profits to purchase another BRRRR deal.

Buyer’s Agent

The Buyer’s Agent is a real estate agent that is contractually obligated to help a buyer find a house to purchase.

Buyer’s agent

the agent who represents the buyer in the home-buying process. On the other side is the listing agent, who represents the seller.

Buying Costs

Buying costs are associated with buying real estate, such as brokerage fees, title work, inspection costs & lending fees.


Cash Reserves

The cash reserves are the money left over for the buyer after the down payment and the closing costs.


Closing is the final step in completing a real estate transaction.

On the closing date, buyers and sellers sign the final documents, and the buyer makes the down payment and pays closing costs.

Ownership of the property is transferred from the seller to the buyer of the property.

Closing Costs

Closing costs are costs the buyer or seller must pay at the time of closing.

Closing costs can include application fees, home inspection costs, appraisals, property taxes, title insurance, attorney’s fees, escrow fees, recording fees, etc.

A buyer or seller of a property can find the itemized lists of Closing Costs on a standardized form called the Closing Disclosure, which the settlement agent will fill out.

Typically, home buyers will pay between 2 to 5 percent of the purchase of their home in closing fees.

Comparative Market Analysis

Comparative market analysis (CMA) is a report on comparable homes in the area used to derive an accurate value for the home in question.


A commission is a fee paid to a broker or an agent for facilitating the purchase or sale of real estate.

Generally, commissions are roughly 3% each (6% total) for the Buyer’s Agent & Seller’s Agent w/ the commissions being paid entirely by the seller.


This term refers to conditions that have to be met to purchase a home to be finalized.

For example, there may be contingencies that the loan must be approved or the appraised value must be near the final sale price.

Construction Contingency

Construction contingency is added to your construction budget to cover unforeseen budget overages and change orders on the project.

Depending on the risk of the project, a flipper may include anywhere from as little as 5% up to 25%.

Contract Contingency

A contract contingency is a condition put on an offer to buy a home, such as the prospective buyer making an offer contingent on their property sale.

Conventional Loan

Conventional Loans are not insured or guaranteed by the Federal Government (such as FHA or VA loans).

Unlike federally insured loans, conventional loans carry no guarantees for the loan if you fail to repay the loan.

For this reason, conventional loans generally require a 20% down payment, or you will be required to pay private mortgage insurance.

Counter Offer

A seller can accept, reject, or counter any offer. When the seller counters an offer, the seller can change the price, dates, contingencies, or other purchase agreement terms.


Covenants are neighborhood rules created and enforced by Home Owners Associations.

Covenants can restrict the use of the property, such as limitations of leasing the property or using the property for commercial use.

Covenants can also restrict the architectural appearances allowed in the neighborhood, such as exterior paint colors, fences, and landscaping, to name a few.

Crowd Funding Lender

A Crowd Funding Lender is a lender that funds real estate deals by crowdsourcing funding from many investors.


Debt to Income Ratio

Debt to Income Ratio is a ratio that lenders evaluate when qualifying a buyer to purchase a property. Most lenders will like to see a debt-to-income ratio of 45% or lower.


Disclosures are any material facts or defects that a Seller must disclose on a Sellers Disclosure document.

Distressed Property

A distressed property is any property that is under foreclosure or being sold by the lender.

Typically, a distressed property results from a homeowner who cannot keep up with the mortgage payments or pay the property tax.

A distressed property is commonly be sold below market value at a bank or county auction.

Double Closing

Wholesalers use a double closing strategy to purchase and sell the property for a quick profit.

The wholesaler purchases a property from a seller at a discounted price and then resells the property to a buyer for a small profit.

It is called a double closing because the wholesaler participates in two closings (the purchase & the sale).

Dual Agency

Dual agency is when one agent represents both sides, rather than a buyer’s agent and a listing agent.



An easement gives an individual or entity the right to cross or use someone else’s property.

Easements are generally established for public access rights-of-way or utility company easements to allow utilities to pass through an individual’s property.

Earnest Money Deposit

Earnest Money Deposit is money provided by the buyer to a seller to show good faith that they are serious about purchasing the property.

Earnest Money is generally between $500 to $1,000, but a buyer can offer a larger earnest money deposit to entice the seller to accept their offer.


Equity is ownership. In homeownership, equity refers to how much of your home you own—meaning how much of the principal you’ve paid off.

The more equity you have, the more financial flexibility you have, as you can refinance against whatever equity you’ve built.

Put another way, equity is the difference between the fair market value of the home and the unpaid balance of the mortgage.

If you have a $200,000 home and still owe $150,000 on it, you have $50,000 in equity.


Funds for a real estate transaction are ‘held in escrow’ in which a third party, generally a Title Company, receives and distributes the funds of the transaction.



The Federal Housing Administration is a US agency that offers mortgage insurance for federally qualified lenders.

FHA Loan

An FHA loan is a loan provided by federally qualified lenders and insured by the Federal Housing Administration.

Since the FHA federally insures FHA loans, it allows lenders to provide less stringent and more flexible qualification requirements, including down payments as little as 3.5%.

An FHA 203k loan can be utilized to finance both the purchase and the repairs of the property.

Financing Costs

Financing Costs are costs incurred for utilizing outside funding to fund your flip project.

A typical lender will charge financing a loan origination fee/points upfront to originate the loan and process the paperwork of 2 to 3%.

The lender will also charge monthly or the length of the loan period.

Fixed-Rate Loan

A fixed interest rate loan is a loan where the interest rate is fixed & does not change or fluctuate over the life of the loan.

This allows a borrower to predict future loan payments accurately. In contrast, variable rate loans fluctuate based upon the underlying benchmark rate or prime rate.

Fixed-rate mortgage

There are two types of conventional loans: fixed-rate and adjustable-rate mortgage.

In a fixed-rate mortgage, the interest rate stays the same throughout the life of the loan.


Hard Money Lender

A hard money lender generally provides short-term (6 to 12 months), interest-only financing for fix-and-flip projects, with relatively high-interest rates (10 to 15%).

HOA (Home Owner’s Association)

A Home Owner’s Association is a private association formed by a neighborhood, subdivision, or condominium that creates and enforces rules (covenants) for the association.

HOA’s will also manage/maintain common areas, pool facilities, landscaping, utilities, trash collection, etc., for the association.

HOA Dues

Home Owner’s Association Dues are generally monthly or annual fees that are paid to your Home Owner’s Association to manage/maintain common areas, pool facilities, landscaping, utilities, trash collection, etc., for the association.

Holding Costs

Holding costs are associated with holding real estate, such as loan payments, taxes, utilities, and maintenance expenses.

Homeowner’s Insurance

Homeowner’s Insurance protects against damage to your property, contents of your property, as well as liability for accidents that may happen on your property.

Lenders will require that you insure your home to protect your and their investment in the property.

For a flip project, you will likely need a Vacant Home policy, as well as a Builder’s Risk policy.

You may also want to consider an Umbrella General Liability policy as well.

Home warranty

This warranty protects from future problems such as plumbing and heating, which can be extremely expensive to fix.

HUD Home

A HUD Home is a foreclosed property owned and sold by Federal Housing & Urban Development (HUD).

If a property initially financed through a government-insured loan (FHA) falls into foreclosure, HUD pays off the defaulted loan, takes possession of the property, and sells the property on HUD Home Store.



Home inspections are required once a potential buyer makes an offer.

Typically, they cost a few hundred dollars. The purpose is to check that the house’s plumbing, foundation, appliances, and other features are up to code.

Issues that may turn up during an inspection may factor into the negotiation on a final price.

Failing to do an inspection may result in surprise costly repairs down the road for the home buyer.


A property inspection is a process of inspecting the condition of a property, which can be performed by the buyer or by a professional inspection company.

Generally, real estate contracts allow a 10 to 14-day window to allow the property buyer to inspect the property.


This is the cost of borrowing money for a home. Interest is combined with the principal to determine monthly mortgage payments.

The longer a mortgage is, the more you will pay in interest when you finally pay off the loan.

Interest-Only Loan

An Interest-Only Loan is a loan in which the borrower only pays interest and does not pay any principal. Most Short-Term Flip Loans are Interest Only, while Long-Term Buy-And-Hold Loans are Amortized over time.

Interest Rate

The interest rate is the annual interest rate a lender charges for loaning money for your property.



Real estate is essentially a home for sale listed on the MLS (Multiple Listing Service).

Listing Agent

The listing agent represents the seller in the home-buying process. On the other side is the buyer’s agent, who represents the buyer.

Lead-Based Paint

Lead-Based Paint was utilized throughout the United States until 1978, when the Federal Government outlawed it.

If you are buying a property that was built before 1978, there is a good chance your property has lead-based paint.

In properties with lead-based paint, the EPA requires certified contractors/renovators to follow-lead safe work practices.


A Lease is a contractual agreement between the Lessor (landlord) and the Lessee (tenant) to rent a property for a specified number of months or years.


A lender is a person or entity that provides funding for your flip project.

As a flipper/investor, you will have lender several options for your rehab projects: Conventional Lender, Portfolio Lender, Private Money Lender, Hard Money Lender, Crowd Funding Lender.

Loan Term

The Loan Term is the amount of time a borrower makes payments on the loan.

A loan can be a Short-Term Loan ranging from only 6 to 12 months or be a long-term loan from 10 years up to 30 years.

Most financing for flip projects will be short-term, interest-only loans for 6 to 12 months.


Maximum Purchase Price

The Maximum Purchase Price is the maximum price you can offer for a flip property to earn your desired profit. The Maximum Purchase Price is calculated as follows:

MLS (Multiple Listing Service)

The MLS is a data service provided by a group of cooperating Real Estate Brokers that hosts & lists real estate properties for sale in a consolidated online database.

The participating Real Estate Brokers share this information in a typical local/regional MLS system, which is then provided to consumers on the broker’s websites.


After Repair Value – Repairs – Buying Costs – Holding Costs – Selling Costs – Financing Costs – Profit


A mortgage is a type of loan used to purchase real estate, with the real estate itself being the collateral for the loan.

The mortgagee (the borrower) must make monthly payments with principal and interest until the borrower eventually pays off the loan balance.

If the borrower stops making payments, the lender can foreclose and take possession of the property.

Mortgage Broker

A mortgage broker is a 3rd-party (either an individual or company) shops loans from different banks and lending institutions to find the best mortgage deals, interest rates & terms for their borrowers.

Multi-Family Property

A multi-family property is a property that has more than one living unit on the same property. Examples of multi-family property are duplexes, triplexes, quadplexes, or apartment buildings/apartment complexes.


New Construction

New Construction refers to the construction/development process of building an entirely new residential/commercial building from the ground up.

New Construction includes Site Preparation, Foundations, Utilities & Structural Framing, and Exterior Siding Work, typically not included in a Rehab Project.



The Offer is the initial price offered by a prospective buyer to the seller.

A seller may accept the offer, reject it, or counter with a different offer.

OPM (Other People’s Money)

Other People’s Money is a term commonly used to describe the strategy to utilized other people’s money to fund your rehab projects, which will decrease your risk and increase your ROI.

Origination Fee

A loan origination fee is a fee that a lender charges upfront for entering into a loan agreement and processing the loan application/documents.

Loan origination fees can generally be around 0.5% to 1% of the loan value.


Pending Status

Pending status is the status of a property once an offer has been accepted on a property, and the seller no longer wants to accept backup offers.


Loan points are fees paid to the lender upfront at closing. Generally, a Hard Money Lender will charge 2 to 3% of the loan value upfront.

Pre-approval Letter

Before buying a home, a buyer can obtain a pre-approval letter from a bank, which estimates how much the bank will lend that person.

This letter will help determine what the buyer can afford.


Loan Pre-qualification is the process of getting pre-qualified for a loan by submitting proof of income, assets, and liabilities to your lender.


An Amortized Loan has both Principal and Interest payments.

The Principal is the portion of a mortgage payment used to pay off the loan balance borrowed to purchase a home.

Paying off the principal allows a buyer to build equity in a home.

The principal is combined with interest to determine the monthly mortgage payment.

Private Mortgage Insurance

Private mortgage insurance (PMI) is an insurance premium that the buyer pays to the lender to protect the lender from default on a mortgage.

These insurance payments typically end once the buyer builds up 20% equity in a home.

Private Money Lender

A Private Money Lender is a non-institutional individual or company that lends money for purchasing real estate.

A Private Money Lender can be a family member, friend, colleague, or passive local investor with money to invest in your rehab projects.


The profit is the amount of gross profit you want to make on the project.

Rehab profit is calculated by multiplying the profit % by the After Repair Value.

Property Taxes

Property Tax is tax assessed on real estate by the local government, usually based upon a property’s assessed value.

Generally, your property’s tax amount can be found by searching the local county assessors’ website.



Radon is a naturally occurring radioactive gas that comes from the ground that can cause cancer.

Radon can only be detected by testing and can be mitigated by installing a radon mitigation system that generally costs around $750 to $1,000.

Real Estate Agent

A real estate agent is a licensed real estate professional representing buyers and sellers in a real estate transaction.

Most agents work for a real estate brokerage firm that manages a group of agents.

Agents generally charge a commission for selling the property of 3% each for the buyer’s & seller’s agent (6% total).

Real Estate Broker

A real estate broker is a real estate agent who has passed a state broker’s exam and met a minimum number of transactions.

These brokers can work on their own or hire their agents.


A realtor is a real estate professional who is a member of the NAR (National Association of Realtors).

NAR has a code of standards and ethics that members must adhere to.

Realtors include real estate agents for residential and commercial properties and salespeople, property managers, & appraisers.


Refinancing is when you restructure your home loan, replacing your old loan with an entirely new loan with different rates and payment structures.

People refinance their home loans to get a lower interest rate on their mortgage, therefore lowering the monthly payment and the overall debt owed.

Recording Fees

Recording fees are fees charged by your local County Recorder’s Office for registering and filing the property purchase or sale records as a matter of public record.

Recording fees are generally only $50 to $100.


REI is a commonly used acronym that stands for Real Estate Investing.

Rent-to-Own – Rent-to-Own is an alternative buying strategy in which a buyer leases the property for a set period, with the option to purchase the property when or before the lease expires.


REO is a commonly used acronym that stands for Real Estate Owned. REO properties are owned by a bank or lender that were generally acquired through the foreclosure process.

Selling Costs
Selling costs are associated with selling real estate, such as realtor commissions, Seller-assisted closing costs & home warranties. Generally, selling costs on a typical rehab project will be around 7 to 10% of the After Repair Value.

Septic System
A Septic System is an on-site wastewater treatment system utilized in areas that do not have public wastewater treatment drainage systems.


SFR is a commonly used acronym that stands for Single Family Residence.

A single-family residence is a property that is zoned for one family.

Short Sale

A Short Sale is a sale of a property in which the net proceeds of the sale will fall short of the balance owed on the property.

In a Short Sale, the lender allows a homeowner to sell the property for less than the amount that is owed to the lender.


Staging is the process of preparing a property to sell by ‘staging’ the property with furniture and furnishings to make the property as appealing as possible to potential buyers.

Survey – A survey is a process of measuring/laying out property boundaries, easements, and encroachments for a parcel of land as described in a deed.


Title Company

A Title Company is a company that performs a title search and provides title insurance for a property.

Title Companies also provide closing and escrow services for real estate transactions.

Tax Deed

The term tax deed refers to a legal document granting property ownership to a government body when the owner fails to pay any associated property taxes.

A tax deed gives the government agency the authority to sell the property to collect the delinquent taxes.

Title Insurance

Title Insurance is insurance provided by a Title Company that ensures the property has no debts, liens, or judgments and the title is free and clear.

Title insurance is often required as part of the closing costs.

Tax Lien

A Tax Lien is a lien imposed on a property to secure the payment of taxes.

A Tax Lien can be placed on a property if a homeowner fails to pay their property taxes or income taxes.

Tenant – A Tenant is an individual or entity that leases the property from a property owner.

Title Search

A Title Search is an examination of public records performed by a Title Company to determine and confirm a property’s legal ownership and check for any outstanding debts, liens, or judgments against the property.

Total Investment

The total investment is the total investment needed to fund the project, including the purchase costs, fixed costs, & repair costs.

Transactional Funding

Transaction Funding is a form of Short-Term funding. A wholesaler uses the funding to purchase a wholesale deal and wholesale the property to an end buyer, usually within 3 to 7 days.


Under Contract

Property is under contract when a buyer and a seller accept a contract for the property.


Utilities are holding costs that you will incur when you are rehabbing a property or holding a property long-term that includes public services such as electric utilities, gas utilities, water supply/wastewater services.


Valuation Price

“Valuation Price” means the property’s value at its current condition and interchanges with the “as-is” deals.



A Home Warranty is generally a one-year service agreement provided by a third-party service company to repair or replace any major home system components or appliances.

Generally, a Home Warranty will cost around $400 to $500 for one year’s coverage.


A wholesaler is a real estate investor that ‘wholesales’ properties – see wholesaling below.


Wholesaling is the process of finding deals at a discount, getting the property under contract, and re-assigning the contract to an end buyer for a small profit of $5,000 to $10,000.d re-assigning the contract to the end buyer for a small profit of $5,000 to $10,000.


At Noble Sky International, we have other resources for learning about the real estate industry.

Find out how you can start earning your 1st Rental Income from your property investment without a bank loan or flying to the United States.

If you are looking into buying your first home or just want to learn more about the industry, we’ve got more resources to help you. Drop us an email, and we will contact you immediately.