Real Estate Glossary
This glossary was created by a team of real estate professionals. It contains terms regarding real estate buying and selling, home finance, home improvement, as well as legal terms. For your convenience, the glossary is searchable alphabetically.
A loss in value of real property caused by changes either internal or external
to the property. See economic obsolescence, functional obsolescence, and physical
A proposal to enter into an agreement with another person. An offer must express
the intent of the person making the offer to form a contract, must contain some
essential terms--including the price and subject matter of the contract--and must
be communicated by the person making the offer. A legally valid acceptance of
the offer will create a binding contract
An opportunity for prospective buyers to view a house in a low pressure environment
A listing under which the principal (owner) reserves the right to list his property
with other brokers
The right to purchase property within a definite time at a specified price. There
is no obligation to purchase, but the seller is obligated to sell if the option
holder exercise the right to purchase. For the option to be valid, it must include
An amount of money payed by a prospective Buyer, to a Seller, in order to obtain
an option period, as specified in Paragraph 7 of a TREC promulagated earnest money
contract. If a Buyer decides to close on the property, the option fee may be credited
to his funds at closing.
During this period, the length of which is negotiable, the Buyer has a right to inspect the
property and has an absolute right to terminate the offer/contract for any reason,
without penalty. In exchange for this option period, the Buyer pays an option
fee to the Seller. If the Buyer decides to continue with the sale of the property,
this option fee may be credited to him at closing. Typical option periods run
from 7 to 14 days long.
A law adopted by a town or city council, county board of supervisors or other
municipal governing board. Typically, local governments issue ordinances establishing
zoning and parking rules and regulating noise, garbage removal, and the operation
of parks and other areas that affect people who live or do business within the
A fee charged by lenders, in addition to interest, for services in connection
with granting of a loan. Usually a percentage of the loan amount.