Ready to purchase a home? Test your knowledge of real estate vocabulary.
The process of purchasing a home, particularly for first-time buyers, can be stressful and confusing. And buyers in today’s market may feel the odds are stacked higher against them.
Simply finding a home is the first challenge: The U.S. housing market is short 6.5 million homes, according to an analysis by Realtor.com, and in many major U.S. cities, inventory is at record lows. But even for buyers who can find their dream home, affording it is tougher than ever. Since 2021, federal interest rates have jumped more than 3 percentage points, and mortgages have climbed in tandem. With a 20 percent down payment, a monthly mortgage bill for a $425,000 house is now about $2,573, up from $1,772 just a few years ago.
There are also more all-cash buyers purchasing homes now than ever before, so even well-qualified buyers with excellent credit are finding it difficult to compete.
In a series of articles over the next few months, The New York Times will guide readers through every stage of the home buying process, from searching for the right home to closing the deal.
Along the way, you’ll encounter real estate jargon that can be difficult to understand. So before we dive in, let’s review the lingo. The stronger your grasp, the better prepared you’ll be to conquer (or at least navigate) the housing market.
How does your knowledge stack up? Take our quiz and find out.
What’s the difference between a real estate agent and a broker?
A real estate agent holds a license to buy and sell real estate, and receives a commission at the close of a deal. A broker is a person who helps negotiate the terms of a sale and determines how much commission both buyers’ agents and sellers’ agents receive at close.
Both real estate agents and brokers are licensed agents who can buy and sell homes. The terms are interchangeable.
A real estate agent holds a license to buy real estate, and always represents a home buyer. A broker holds a license to sell real estate, and always represents a seller. Some professionals are licensed to serve as both real estate agents and brokers.
A real estate agent holds a license to buy and sell real estate, and receives a commission at the close of a deal. A broker is a real estate agent who has completed additional training and can work independently – or open a brokerage and hire real estate agents.
What is a pocket listing?
A real estate listing that isn’t available to the general public but shared by agents via word of mouth to an exclusive list of buyers
A listing for a smaller home, generally under 600 square feet
A real estate listing that is only available to buyers who subscribe to certain private databases
A specific set of details and parameters of a home, traditionally written on scraps of paper and kept in a real estate agent’s pocket for easy reference
What is a short sale?
When a homeowner is facing a financial crisis and sells a property for an amount that is lower than what is owed on the mortgage
A sale on any home or commercial building that is three stories or fewer
A sale that happens in less than 72 hours
When a homeowner purchases a home with all cash rather than taking out a traditional 15-year or 30-year mortgage
What is a blind offer?
When a seller allows a buyer to make an offer without setting an asking price first
When a seller is presented with the various bids of buyers, but no identifying information about any of the buyers
When a buyer offers an extra payment to include blinds, curtains or other removable items originally excluded from the sale
An offer made on a property by a buyer who has never viewed it in person
What is earnest money?
A small amount paid by a buyer prior to closing that shows they are serious about the offer
A cash bonus offered by a buyer’s agent to a seller’s agent to sweeten the deal
The dollar amount that remains in a buyer’s escrow account after one year of homeownership
A term for hard-earned down payment money gained from serious, determined work (as opposed to inheritance or gifting)
What is a title search?
A term for adding filters to your home search on an online portal such as Zillow or StreetEasy
Another way of describing a first-time home buyer’s search
The process of looking up public records to confirm the legal owner of a property
When a home buyer is searching only for homes previously owned by notable people, such as celebrities and nobility
What does the acronym ARM stand for?
Apartment requires management, a term indicating that the home buyer will be required to pay additional HOA or co-op fees
Ad regem meliora, a Latin term that means “better to the king” and refers to a buyer searching for properties out of their price range
Adjustable rate mortgage, a type of home loan with an interest rate that can fluctuate over time
It’s not an acronym. It refers to one of the two limbs that extend out of a human’s shoulders.
What is a balloon mortgage?
A mortgage with an interest rate that begins below market rate, then rises slowly over time
A slang term for a shady mortgage that is cheap to attain but can easily pop or implode
A cut-rate mortgage offered to homeowners who sell their homes to developers, named after the home lifted by balloons in the film “Up”
A real estate mortgage that begins with low monthly payments or none at all, followed by a lump sum that must be paid in full
What is a rate lock?
A high-security deadbolt lock common on commercial buildings
A guarantee from a seller that the asking price for a home will not rise after you’ve made an offer
A guarantee from your mortgage lender that the interest rate offered will not change between the time of your application and the time your purchase closes
A term for a highly qualified buyer who is likely to secure a lower interest rate based on credit score and assets
What is underwriting?
The process of making edits to the text of a closing agreement prior to signing
A service provided by a financial institution that guarantees payment on a loan
A catch-all term for the paperwork required to close a deal
A term for words or slogans on underwear
What is a quitclaim deed?
A property deed that can be canceled for any reason, with no obligation to notify the buyer
A property deed that is valid in state court but not federal court
A type of property deed that quickly transfers a title, but does so with little protection for the new owner
A property deed that is offered as damages in a legal case, in exchange for one party cancelling its claims
What is appreciation in real estate?
The increase in a property’s value over time
The feeling of attachment to one’s home that grows in proportion to the amount of time lived there
The growth of the interest, minus the principal, on a mortgage payment
A number that refers to the current value of your own home in proportion to the median sale price of a comparable home in your market
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Do You Speak Real Estate? Take Our Home Buyer's Quiz. – The New York Times