Here is REWealthCoach.com’s constantly updated, wildly helpful glossary of real estate investing terms.
30-Day Sale Price – The price at which a home will sell within 30 days.
Agent – A licensed Real Estate Agent. Someone who is licensed by the state to represent buyers and Sellers in the purchase or sale of a property. Realtor
Appraisal – An estimate of a property’s value given by a licensed third party Real Estate Appraiser.
As-Is Value – The value of a home in its present condition, not taking any future repairs or upgrades into consideration.
Asset – An item that has value and is convertible to cash including but not limited to real estate, cash, automobiles, boats, and stocks
Assignable Loan – A loan that is able to be transferred to another party as long as the new party adheres to the terms of the loan
Bankruptcy – A legal declaration of insolvency and inability of a debtor to pay their creditors
Benefit – An advantage. Something that improves the situation of a person.
BPO Agent – The independent, licensed Real Estate Agent or Broker who has been hired by a Lender to give their opinion of the value of a property that the bank is foreclosing on.
BPO Price – The price that a BPO Agent reports back to the Lender as their opinion of the current value of a property. The primary factor in a bank’s decision to accept or deny a short sale offer.
Real Estate Broker – A person licensed to negotiate and arrange real estate transactions, including writing contracts for listing and purchasing homes, land and commercial properties. The Broker is a higher level license than a Real Estate Agent and is authorized to hire Real Estate Agents to work under the Broker’s supervision
Broker Price Opinion (BPO) – When a Lender hires a licensed Real Estate Agent or Broker to offer an unbiased assessment of the value of a home on which they are foreclosing.
Buyer – A person who purchases a property.
Call to Action – An explicit or implied command to a reader in a marketing communication, such as “Call us now at 555-555-5555.” All marketing must have a call to action.
Closing – The process through which title and ownership of a property is transferred from a Seller to a buyer and funds are allocated to everyone involved in the purchase and sale of the property, including, but not limited to, real estate commissions, lender payoff, money to Sellers, and any taxes on the property.
Commission – A sum or percentage on a sale paid to Real Estate Agents as compensation for their work. Normally a combined 6% of the purchase price for the buyers and sellers agents.
Comparable Properties (Comps) – Recently sold homes that are similar in size, age, condition, and location to a specific home. They are used to determine the value of a home.
Comparative Market Analysis (CMA) – An informal assessment of a property’s value based on a comparison between the property and similar properties from the surrounding area that have are currently listed for sale or have sold in recent months. Usually prepared by a Real Estate Agent when determining a listing price for a home
Condition Report – A report provided by a Seller attesting to the physical condition of a home for sale and that discloses all known problems with the home and repairs necessary
Deed – A document that conveys title and ownership of a property
Discount – The difference between what is owed on a loan and what the Lender is willing to accept as an early payoff for said loan
Drive-By BPO – A less thorough BPO that is obtained merely by driving past a home to view its exterior condition and looking into comparable sales and issues in the area.
End Buyer – The final purchaser of a property when two or more transactions take place on the same property
Exit Strategy – An investor’s plan for how to profit on a real estate transaction, such as sell retail, flip to an investor, rehab, buy and hold, lease option…
Feature – An attribute or characteristic. A feature may provide a benefit or detriment. Central air conditioning or a fireplace are examples of features.
Federal Housing Authority (FHA) – A governmental agency with the goals of improving housing standards and conditions, and providing financing in order to stabilize the housing market.
FHA Loan – A federal assistance mortgage loan that is insured by the Federal Housing Authority (FHA), typically used to help lower income Americans purchase homes
Financial Statement – A form that shows all current incomes, assets, and liabilities for a person. It is used in a Short Sale to prove to a Lender the Seller’s inability to satisfy the terms of a loan.
Flyer – An advertisement printed on a page or leaflet intended for wide distribution
Forbearance – An agreement between a creditor and a borrower to refrain from enforcing a debt when it is due.
Foreclosure – The legal process through which a Lender can repossess collateral on a loan that is in default.
Hardship – An unfortunate situation or series of occurrences that have led to a homeowner becoming unable to meet their obligations on a loan. Some examples are illness, job loss, death of a spouse, or divorce.
Hardship Letter – A letter from a borrower explaining to their lender the circumstances that led to their inability to make their mortgage payments and any steps taken to remedy the situation before a short sale was considered.
Housing and Urban Development (HUD) – A department of the United States government whose purpose is to develop and carry out policy on housing and cities
In Default (loan default) – A borrower is in default when they have failed to meet financial obligations, i.e. missed a payment.
Investment Criteria – The specific requirements an investor has that a prospective deal must meet in order to move forward with the deal. It can be a minimum profit, minimum equity, a minimum price range, a minimum potential cash flow, etc.
Junior Lien – A legal claim on a property for a debt that is subordinate to another lien. When the Lender on a junior lien forecloses, it must satisfy all previous loans secured by the property before it receives payment on its own lien.
Lender – An individual or organization that provides financing to people or businesses in order to fund their purchases in exchange for a security interest in the property.
Letter of Authorization – Also known as an Authorization to Release Information. A letter from a Borrower to a Lender authorizing them to release the details and information of a loan to a third party
Lien – A legal claim of one person upon the property of another in order to secure payment on a debt or a purchase on credit.
Limited Warranty Deed – A “Limited Warranty Deed” is a deed that warrants the state of title while the Seller owned the property. A “Limited Warranty” deed’s warranty is limited to the time the grantor owned the property, while a “General Warranty” deed warranty also covers all the time the property was owned by prior owners.
Listed Property – A property that is for sale and represented by a licensed Real Estate Agent or Broker.
Listing Price – The price at which a home is advertised for sale by a licensed Real Estate Agent or Broker.
Logo – Short for logotype. A graphic representation of a company name, abbreviation, or trademark. Critical for building brand or company awareness and loyalty in your market.
Loss Mitigation – The division of a bank or Lender whose duty it is to negotiate terms for a homeowner to prevent foreclosure by means including but not limited to Short Sales
Market – A geographical region in which homes’ prices are interdependent.
Marketing – Efforts intended to expand awareness and knowledge of a company and its products or services, and facilitate an exchange between individuals and organizations.
Mortgage Broker – A third party who helps Buyers secure financing through the Broker’s access to multiple Lending sources.
Multiple Listing Service (MLS) – A group of private databases on which Real Estate Agents and Brokers can share information about properties for sale. Provides users with a source to search for and find properties for sale in a certain market. Access to most Multiple Listing Services is limited to members of a local board or association of Realtors.
Short Sale Negotiator – A person who acts as an intermediary between the bank and a homeowner in order to secure a Short Sale on a property
Note – A mortgage or loan.
Notice of Default (NOD) – A letter of notification from a Lender to a borrower that he or she has not made their payments by the deadline. It supplies a total amount due including all penalties and late fees and states that if the payment is not received by the new deadline, the Lender may choose to foreclose on the property.
Over-Leveraged – When the amount owed on a home is more than the house could sell for on the market.
PITI – The total monthly payment on a home, including the principal loan payment, interest payment on the loan, taxes on the property, and insurance on the home.
Power of Attorney – An authorization to act on behalf of someone on a legal or business matter.
Pre-Foreclosure – The period of time between when a borrower receives a Notice of Default and when the Lender forecloses on the home or property.
Preliminary Net Sheet – An estimated closing document that shows all of the costs of a sale, including all unpaid balances, outstanding payments, late fees, and real estate commissions
Pretty House – A home that is in perfect or near-perfect condition and needs no major repairs of any kind beyond simple wear and tear such as new paint and carpet.
Purchase and Sale Agreement – A signed, written document between a homeowner and a buyer stating the terms and conditions of a sale.
Qualified Buyer – A potential Buyer who is able to put a significant amount of money down towards the purchase of a property and has a high enough credit score that they can secure financing on a home.
Redemption Rights – 1. The right of any person who is in the process of being foreclosed on to pay back in full the amount due on a loan, including all penalties and fees, before the home is sold or repossessed. Upon the payment, the property will be returned to them free of any debt to the foreclosing lien holder.
2. The right of any lien holder to take ownership of a property on which they have an interest by paying off all senior debts.
The right held by certain government institutions such as the IRS to reclaim a house on which it holds a lien.
Reinstatement – When a Lender agrees to accept all back payments, penalties and fees on a defaulted loan and to continue the loan according to the existing conditions.
Release of Lien – When a Lender agrees to lift their claim to a property to allow it to be sold, but do not forgive the amount that remains beyond the amount agreed upon for the release.
Satisfaction of Lien – When a Lender agrees to take an agreed amount as full payoff for an outstanding loan and forgives the difference
Seasoning – Title held in the same name for a period of time.
Seller – The person with a home to be sold.
Senior Lien – A legal claim on a property of the highest priority. A senior Lien is the first one secured by a property, chronologically. When a senior Lien forecloses on a property, it must recover all debt, including any back payments, late fees, penalties, costs to foreclose, and legal fees before any junior Liens receive any compensation.
Settlement Statement – The Settlement Statement is the form used to close a real estate transaction. The most commonly used form is the HUD-1, issued by the U.S. Department of Housing and Urban Development. You can download a HUD-1 form directly from them at: http://www.hud.gov/offices/adm/hudclips/forms/hud1.cfm
In a Short Sale negotiation, the HUD-1 Settlement Statement is also used to present your offer to the Lender. You will provide an updated HUD-1 Settlement Statement each time your offer changes during the negotiation.
Short Sale – A Lender’s voluntary acceptance of less money than is owed on a property to be sold as an alternative to foreclosure.
Short Sale Package – The package of information a Lender requires from a Borrower when the Borrower seeks a Short Sale. It usually includes a hardship letter, financial statements, tax returns, paycheck stubs, and bank statements at minimum.
Short Sale Prospect – A home that is over-leveraged, whose owner is behind on their mortgage payments and does not have the financial means to pay off the remainder of the loan.
Simultaneous Close – A simultaneous close occurs when the selling and buying closings take place the same day, often within minutes of each other and usually with the same attorney.
A “dry” simultaneous close is when the funds from the ultimate Buyer of the property are used to fund your purchase of the property which you are selling to the ultimate buyer. In other words, you use the Buyer’s funds to close your transaction. Normally you will first close with your Buyers and then use their funds to close on your purchase. THIS IS NO LONGER A VALID WAY TO CLOSE. WE DO NOT RECOMMEND IT AT ALL.
A “wet” simultaneous close is when you actually bring funds to close on your purchase of the property which you then sell to the ultimate Buyer, who also brings their own funds to the closing. As with any simultaneous close, the two transactions may be minutes or hours apart. It’s also known as a “back-to-back closing”
Terms – The conditions on which a loan is granted. These include the interest rate, whether or not the rate is fixed or adjustable, monthly payment, amortization, balloon payment deadlines, etc.
Testimonial – A written expression of gratitude or confirmation of a person’s character or conduct.. Offers great social proof to convince sellers to work with you.
Title – The legal right to the possession of a home or property.
Title Search – A search performed to seek out all possible claims to ownership on a property.
Ugly House – A home that is in extremely poor physical condition due to deferred maintenance and has a poor physical appearance.
Unconventional/ Obsolete House – A home that would be hard to sell because it has unusual or out of date design elements, or is very different from homes in the surrounding area. Examples are dome houses, earthen homes, or a modern home surrounded by traditional homes.
Victim House – A house whose value is adversely affected by its surroundings. Examples are a prison or nuclear power plant being built adjacent to the house’s neighborhood.
Walk-Through BPO – A BPO during which a BPO Agent actually walks through a house to get a more detailed idea of a home’s worth to report back to a Lender. A more accurate method of determining a home’s value and condition than a Drive-By BPO.