Glossary
Reference definitions for 223 real-estate terms.
A
Abnormal Transaction
<p>What is an abnormal transaction?</p><p>An abnormal transaction is a property sale that is highly unusual for the market at that time. In some cases, it may indicate an error in the sales record. For instance, a property that was listed for $249,000 but sold for only $249 may be listed as an abnormal transaction. To ask a question about a sale that's flagged as an abnormal transaction, contact a Redfin Agent in your area.</p>
Absorption Rate
<p>Absorption rate is the rate at which homes sell in a specific market over a given period of time, usually a month. The absorption rate is calculated by dividing the number of homes that sold over the given period of time by the total number of homes still for sale. If an area contains homes in two different price ranges, you can calculate the absorption rate just for homes in your price range. The higher the absorption rate, the faster homes are selling.</p><p>For example, if six homes sell in June for between $300,000 and $500,000, and 30 are still for sale at the end of the month, the absorption rate per month at the end of June is 6/30 or 20%. An absorption rate above 20% is generally associated with a seller's market, meaning that homes are selling fast. An absorption rate below 15% is generally associated with a buyer's market, meaning that homes are selling relatively slowly. Learn about the differences between a buyer's market and a seller's market.</p>
Accessory Dwelling Unit (ADU)
<p>What is an Accessory Dwelling Unit (ADU)?</p>An Accessory Dwelling Unit (ADU) is an independent residential structure on the same lot as a single-family home. Also known as mother-in-law-suites or guest houses, ADUs can be an attached addition or detached structure, also known as DADU. Most provisions require the ADU to range from 600-1,000 square feet and have basic amenities, like a kitchen, sleeping area, and bathroom. The rules for ADUs vary by jurisdiction. If you are interested in adding an ADU to your property, check out what to consider before building an ADU.
Accessory land use
<p>What is an accessory land use?</p>An accessory use is a structure or uses unrelated to the building's or land’s principal purpose. Accessory structures also benefit the homeowner's primary use of the property. In residential zoning districts, accessory uses may include sheds for outside storage or animals, garages for cars, ADUs/DADUs for home businesses like daycares or housing guests, and fences for privacy.
Active
<p>What does it mean when a home is "Active" on Redfin.com?</p><p>An "Active" status means that a home is currently available for sale. There are several types of active statuses, and their usage and definitions can vary by market. Talk to a real estate agent if you're interested in an active listing, or learn more about what an active status means.</p>
Active - First Right
<p>What does it mean when a home is "Active - First Right" on Redfin.com?</p><p>When a home is listed as "Active - First Right," it means the seller has made a prior arrangement with a buyer who will be given the opportunity to match any subsequent offers. This is also known as a Right of Refusal.</p><p>This is sometimes done when buyers must first sell their current home before they can commit to buying the seller's home. For example, Bob wants to buy Sally's home, but needs to sell his own home first. Bob makes an offer on the home which includes a contingency that allows him to back out of the deal if he cannot sell his home. Meanwhile, Sally is able to solicit offers from other buyers. If another buyer, Pete, makes an offer on Sally's home, she must give Bob the chance to buy the home under the same terms offered by Pete (i.e. a right of first refusal). If Bob can't or won't match the offer, Pete can buy the home from Sally.</p><p>Talk to a real estate agent if you're interested in a home listed as Active - First Right.</p>
Active - Kick-out
<p>What does it mean when a home is "Active - Kick-out" on Redfin.com?</p><p>"Active - Kick-Out" means that a Purchase and Sale Agreement requires the buyer to purchase only if the buyer is able to sell their current home. Talk to a real estate agent if you're interested in a home listed as Active - Kick-Out.</p>
Active - No-Show
<p>What does it mean when a home is "Active - No-Show" on Redfin.com?</p><p>A home may have an "Active - No-Show" status if the seller has stated that the home cannot be toured at that time. If you're interested in a home that's listed as Active - No-Show, contact a Redfin Agent in your area to get the details.</p>
Active Contingent
<p>What does it mean when a home is "Active Contingent" on Redfin.com?</p><p>When a home is listed as "Active Contingent" or "Active with Contingencies," it means the seller has accepted an offer from a buyer and a Purchase and Sale Agreement exists, but that certain conditions (or contingencies) must be satisfied before the sale can be finalized. These conditions may include a home inspection or getting approved for a mortgage loan. Once these conditions are met, the home is no longer listed as Active Contingent. In certain areas, Active Contingent is also known as Active CAPA (can accept purchase agreement). What is the difference between contingent and pending?</p>
Active Option Contract
<p>What does it mean when a home is "Active Option Contract" on Redfin.com?</p><p>"Active Option Contract" means a seller has accepted an offer to sell a home, but the transaction is in the inspection or "option" period. During this negotiated time period, the buyer usually inspects and evaluates the property with the option of terminating the transaction. In some locations, the active option contract is referred to as a contingency period or due diligence period.</p><p>In Texas, buyers must pay an option fee, which is separate from the earnest money deposit. The option fee cannot be recovered by the buyer if they back out of the sale, even if it's for a reason covered by a contingency in the contract. If the buyer completes the purchase, the option fee will commonly be applied to the final sale price (this is a negotiable term).</p><p>Talk to a real estate agent if you're interested in a home listed as Active Option Contract.</p><p>Related links</p><ul><li>Contingency</li></ul>
Active with Contingencies
<p>What does it mean when a home is "Active with Contingencies" on Redfin.com?</p><p>When a home is listed as "Active with Contingencies" or "Active Contingent," the seller has accepted an offer from a buyer, but the buyer must meet certain conditions (or contingencies) before the sale can be finalized. These conditions may include a home inspection or getting approved for a mortgage loan. Once these conditions are met, the home is no longer listed as Active with Contingencies. In certain areas, Active with Contingencies is also known as Active CAPA (can accept purchase agreement). Learn the differences between contingent and pending.</p>
Addendum
<p>What is an addendum in real estate?</p><p>An addendum is a document added to a the parties' Purchase and Sale Agreementthat includes additional contract terms not included in the agreement. Depending on its language, the addendum can override terms in the Purchase and Sale Agreement.</p><h2>Examples of Addendums</h2><p>Buyers may include an addendum with a request for the sellers to pay a portion of closing costs or to include home appliances like a fridge or dishwasher as part of the transaction.</p><p>Addendums may also include contingencies that must be met to successfully close the deal. For example, a financing addendum states that the transaction is contingent upon the buyer securing a loan.</p><p>Buyers may often encounter an "as-is" addendum when buying a real-estate-owned (REO) home owned by a bank. This addendum states that the buyer is purchasing the home "as-is" in its current state and the bank won't pay for any home repairs discovered through an inspection. This also usually means that the buyer waives its right to a seller disclosure form, which individual sellers are required to provide to buyers in normal sales.</p><p>Synonyms</p><ul><li>Rider</li></ul>
Adjustable-Rate Mortgage (ARM)
<p>What is an adjustable-rate mortgage (ARM)?</p><p>An adjustable-rate mortgage (ARM) is a mortgage loan in which the interest rate is not fixed but instead is adjusted at specific intervals during the life of your loan. For example, a 30-year loan with a 5/1 ARM means that you'll pay a fixed interest rate for five years, and then your rate will change each year after that for the remainder of the loan. The most common ARM loans are for five, seven, or ten years.</p><h2>When do ARM interest rates change?</h2><p>ARM rates typically change based on an economic index, such as the LIBOR. LIBOR measures the rate at which major international banks and lending institutions can borrow money from each other, which then affects the interest rate they charge borrowers. Most lenders will charge borrowers by adding a margin above the index, which is usually expressed as the index LIBOR + 1% or 2%, depending on the terms of the loan. ARMs can make financial sense if the borrower is planning to sell or refinance before the introductory period ends and the rate resets, or if the borrower believes rates will be lower in the future. However, buyers should be aware that a rise in interest rates during the initial period may make it more difficult to refinance or sell when the time comes.</p><p>Find out how much house you can afford with our Home Affordability Calculator.</p><p>Related links</p><ul><li>Fixed-Rate Mortgage</li></ul>
Amenity
<p>What is an amenity?</p><p>An amenity is a desirable feature of a home, such as a fireplace, jacuzzi, garden, or swimming pool. Learn how to find homes with the amenities you want on Redfin.com</p>
Amortization
<p>What is amortization?</p><p>Amortization refers to the repayment of your mortgage loan's principal and interest over time through monthly installments. Amortization schedules let you see how much each monthly mortgage payment contributes toward principal and interest. Typically when your loan begins, you pay more toward interest than principal. With time, the amount you contribute toward principal increases until you pay off your loan in full and own your home outright. Learn more about the mortgage process</p><p>Related Links</p><ul><li>Negative Amortization Loan</li></ul>
Annual Percentage Rate (APR)
<p>What is annual percentage rate (APR)?</p><p>APR is a number that represents the total cost of a loan as a percentage, which allows you to compare total loan costs when deciding on a mortgage loan. APR takes into account your interest rate and all associated fees and rebates, spreads them out over the life of the mortgage, and expresses the total cost as a percentage rate.</p><p>A loan with a lower APR isn't always the best deal. To identify the best deal for you, evaluate the entire cost of the loan for the time you plan to own the home.</p><p>APR is a good place to start when evaluating the total cost of a loan. Your lender will estimate all costs associated with the loan, as well as the APR, in a Loan Estimate. Learn about the differences between interest rate and APR.</p>
Appraisal
<p>What is an appraisal?</p><p>An appraisal is a licensed appraiser's opinion of a home's market value based on comparable recent sales of homes in the neighborhood. Appraisals are usually ordered on behalf of a buyer's lender to protect the interests of the lender. The lender's underwriter will compare the appraisal price to the final purchase price of the home to ensure the buyer is not borrowing more than the house is worth. If the home appraises lower than the final sale price, the buyer may be able to renegotiate a lower price with the seller. If the seller won't lower the price, the buyer's lender may ask that the buyer put more money toward the down payment in order to make up the difference. Get an instant estimate of your home's value or learn how to increase your home's appraisal value.</p><h2>What's the difference between an appraisal and an assessment?</h2><p>An appraisal is conducted by a licensed appraiser for a lender, while an assessment is conducted by a government employee who evaluates the home to determine how much property tax the homeowner will pay.</p>
Appraiser
<p>What is an appraiser?</p><p>An appraiser is a licensed individual who conducts home appraisals. Appraisers primarily conduct appraisals on behalf of mortgage lenders in order to determine the value of a home. Appraisers can also be hired directly by buyers and by sellers and contractors.</p><h2>Calculate your home's value</h2><p>You don't have to hire an appraiser in order to determine how much your home is worth. Real estate agents can perform a comparative market analysis to determine the value of your home. Get a free home-value estimate from a Redfin Agent in your area or learn how to increase your home's appraisal value.</p>
Appreciation
<p>What is appreciation?</p><p>Appreciation is the increase in a home's value over time. How much a home appreciates each year depends on the local real estate market and any improvements to the home. A home's appreciation is calculated based on the fair market value of comparable homes for sale in the neighborhood. To track how much your home appreciates each year, claim your home on Redfin and get an instant home-value estimate online. Learn how to increase your home's appraisal value.</p>
Arm's-Length Transaction
<p>What is an arm's-length transaction?</p><p>An arm's-length transaction is a transaction between a buyer and seller with roughly equal bargaining power who are trying to negotiate the best terms for their respective sides. Presumably, the seller wants the highest price possible and the buyer wants to pay the least amount possible. The majority of private party real estate transactions proceed in this way, and the selling price in an arm's-length transaction likely represents the fair market value of the home.</p><p>An example of a deal that is not an arm's-length transaction would be a father selling his home to his son. In that case, the father may give the son a large discount and the home would sell below market value.</p>
Assessment
<p>What is an assessment?</p><p>An assessment can mean two different things. A home assessment means the value of the home as determined by the local assessor for the purpose of determining property taxes. Home assessments are not the same as appraisals, which are instead conducted by private, licensed appraisers. Home assessments are used only to calculate property tax amounts, while appraisals determine the market value of your home. To see the tax-assessed value of homes on Redfin, look for Taxable Value in the Public Facts section on every listing page.</p><p>A special assessment means a charge levied upon property owners. Homeowners associations will issue special assessments on owner-members to cover the cost of unexpected capital projects that exceed the HOA's current budget. Local governments will also charge special assessments on properties that benefit from a specific improvement to the property's neighborhood, such as new curbs or sewers.</p>
Assessor
<p>What is an assessor?</p><p>An assessor is a government official responsible for determining the value of a property for tax purposes. To see a home's taxable value on Redfin, look on any property detail page under the Public Facts section.</p><p>Related links</p><ul><li>Appraiser</li></ul>
Assessor Parcel Number (APN)
<p>An Assessor Parcel Number (APN) is a unique number assigned to each parcel of land by a county tax assessor. The APN is based on formatting codes depending on the home's location. The local government uses APNs to identify and keep track of land ownership for property tax purposes.</p><h2>Find Your APN</h2><p>To find your home's APN, go to your local county assessor's office website and search for your address. There you can see information regarding your APN, lot size, home type, property tax history, and sale price history. Redfin also shows sold home APNs under Public Facts on the property details page.</p><p>Synonyms</p><ul><li>Assessor's Identification Number (AIN)</li><li>Property Identification Number (PIN)</li><li>Property Account Number</li><li>Tax Account Number</li></ul>
Associate Agent
<p>Associate Agents are independent contractor real estate agents who contract with Redfin as needed to take buyers on home tours and attend open houses and home inspections. Learn about becoming an Associate Agent.</p><p>Related links</p><ul><li>Redfin Agent</li><li>Redfin Transaction Coordinator</li></ul>
Assumable Mortgage
<p>What is an assumable mortgage?</p><p>An assumable mortgage is a type of loan that a home seller can transfer to a buyer. This means the buyer will take over the seller's mortgage when purchasing the home. Buyers may want an assumable mortgage if the seller has a lower interest rate compared to the current interest rates. However, the seller's principal amount on the mortgage may not cover the full home sale price. In that case, the buyer may have to apply for a second loan.</p><p>Related links</p><ul><li>Mortgage loan</li></ul>
B
Backup Offer
<p>What does it mean when a home on Redfin.com has the status of "Backup Offer"?</p><p>After a seller accepts an offer on their home, they may accept backup offers in case the current offer falls through.
Talk to a Redfin Agent in your area if you're interested in making a backup offer on a home, or learn how to win a bidding war.</p>
Talk to a Redfin Agent in your area if you're interested in making a backup offer on a home, or learn how to win a bidding war.</p>
Balloon Mortgage
<p>A balloon mortgage is a mortgage loan that usually requires monthly payments over a relatively short period of time (usually a number of months or a few years) after which the remaining mortgage balance is due in one large lump-sum or "balloon" payment. Balloon mortgages sometimes feature lower interest rates because the loan is fully repaid or refinanced within a shorter period of time than traditional 30-year mortgage loans. Talk to a mortgage loan officer to decide if a balloon mortgage is right for you.</p>
Blue Ribbon School
<p>The National Blue Ribbon Schools Program is a government program that recognizes American schools that demonstrate exemplary achievement. According to the Washington Post, the Blue Ribbon award is the highest honor the U.S. Department of Education can bestow upon an American School.</p><p>References: U.S. Department of Education; Washington Post</p>
Bridge Loan
<p>What is a bridge loan in real estate?</p><p>A bridge loan is a short-term loan intended to "bridge" a gap in available financing. For example, buyers may use a bridge loan to purchase another home before they are able to sell their current home. Qualified buyers can also get a bridge loan to pay for a home at an auction until they have later arranged for a conventional mortgage loan to pay off the bridge loan and pay for the home over time. Bridge loans typically have higher interest rates because of their short-term nature.</p><p>Synonyms</p><ul><li>Swing Loan</li><li>Interim Financing</li></ul>
Broker
<p>What is a broker in real estate?</p><p>A broker is an individual licensed to represent people in the purchase and sale of homes. The requirements to become licensed vary by state. In some states, brokers have more training and hold a managerial role at a real estate brokerage. In other states, real estate broker is synonymous with real estate agent or REALTOR®. Regardless, every real estate broker and brokerage firm must be licensed by the state in which they provide real estate services. Learn more about the differences between a real estate agent, REALTOR®, and broker.</p><p>Related links</p><ul><li>Real Estate Agent</li><li>REALTOR®</li><li>Mortgage Broker</li></ul>
Broker Price Opinion (BPO)
<p>Similar to an appraisal, a Broker Price Opinion (BPO) is a real estate broker's estimate of a home's value. Banks often order BPOs instead of appraisals during short sales, foreclosures, or loan refinancing, since BPOs are typically less than half the cost of an appraisal.</p>
Building Codes
<p>What are building codes?</p><p>Building codes are minimum standards set by local governments for the design and construction of buildings. For example, most cities set building codes for fire-proofing walls or plumbing systems. The government enforces building codes by requiring homeowners to get a permit from the local county office before building a new home.</p><p>With new construction, the inspector should issue a certificate of occupancy confirming that the home is up to code. This document is required at closing, so it's important for the buyer's agent to ensure that the inspector files the certificate before the final papers are signed. Learn more about the closing process.</p>
Bump and Bumpable
<p>What does it mean when a house is listed as "bumpable" on Redfin.com?</p><p>A house listed as "bumpable" means the seller has accepted an offer that is contingent upon the buyer meeting some condition, but the seller can accept a subsequent offer and "bump" the first offer if the subsequent offer does not contain the same contingency. This can occur when a buyer's offer is contingent upon the buyer selling his own home. If a subsequent buyer submits an offer that is not contingent upon selling a home, the seller can accept the subsequent buyer's offer over the first buyer's offer, meaning the first buyer's offer was "bumpable."</p><p>Related links</p><ul><li>Active Contingent</li><li>Active with Contingencies</li><li>Bump Clause</li></ul>
Bump Clause
<p>What is a bump clause in real estate?</p><p>If a buyer's offer contains a condition or a contingency, such as the sale of the buyer's existing home, a bump clause allows the seller to accept the offer but continue receiving offers from other prospective buyers. If the seller receives a subsequent offer satisfactory to the seller that does not contain the same condition or contingency, the seller can "bump" the first offer, requiring the first buyer to waive the condition or contingency or allow the seller to accept the subsequent offer.</p><p>For example, if the first offer is contingent upon the first buyer selling his home, a seller can bump the first offer in favor of a subsequent offer that is not contingent upon the buyer selling his home. </p>
Buyer's Agency Agreement
<p>What is a buyer's agency agreement?</p><p>A buyer's agency agreement, also known as a buyer's representation agreement, is an agreement signed by a prospective buyer that authorizes a licensed brokerage firm, and usually a specific real estate agent at the brokerage firm, to represent the buyer in buying a home. Different markets have different standard forms of agreement, as do many brokerage firms. Prospective buyers sign buyer's agency agreements to confirm their commitment to working with a brokerage firm or an agent, and to assure the firm or agent that they will be compensated if a sale occurs. The term of the agreement is negotiable.</p><p>Before signing a buyer's agency agreement, the buyer should be sure that they want to work with the agent and the brokerage firm. Some buyer's agency agreements require the buyer to pay compensation to the buyer's agent even if that agent does not find the home purchased.</p><p>Buyer's agency agreements also often address the conditions of the brokerage firm and agent's dual agency policy. Dual agency occurs when a brokerage firm or an agent represents both the buyer and the seller in the same transaction. Redfin Agents won't act as both the buyer's agent and listing agent in the same transaction, but you can always work with a Redfin Agent to buy a Redfin listing.</p><h2>Redfin Buyer's Agency Agreement</h2><p>The buyer's agency agreement is necessary to ensure that there are no misunderstandings regarding Redfin's commission fee. If a client submits an offer on a home that isn't accepted, there's no obligation to continue working with Redfin. And if you're ever unhappy with our service, you can cancel your agreement at any time. Learn more about buying or selling with a Redfin Agent.</p>
Buyer's Agent
<p>What is a buyer's agent?</p><p>A buyer's agent is a licensed real estate agent who represents the buyer in a transaction. The buyer's agent has authority to act on behalf of the buyer in negotiating a Purchase and Sale Agreement with the seller's agent.</p><p>You may hear real estate agents refer to the buyer's agent as the "selling agent," which should not be confused with "seller's agent." In the real estate community, the buyer's agent is referred to as the "selling agent" and the seller's agent is referred to as the "listing agent." "Selling agent" is a term used to track a real estate transaction's progress in the Multiple Listing Service (MLS). Learn more about the differences between a real estate agent, REALTOR®, broker, and real estate lawyer.</p>
Buyer's Market
<p>What is a buyer's market?</p><p>A buyer's market is one in which the supply of homes significantly exceeds demand. Since supply is greater than demand, the price of homes is pushed lower, making them more attractive to buyers. In contrast, a seller's market is one in which there are more buyers and relatively fewer homes for sale, which leads to multiple-offer situations that drive up prices.</p><p>A market's absorption rate is the best way to figure out whether a certain area is behaving as a buyer's market or seller's market. The absorption rate is calculated by looking at how many homes sold in a certain month and dividing that number by the total number of homes for sale at the end of the month. An absorption rate of 20% or below is generally deemed a buyer's market, since homes are selling relatively slowly and the number of months of supply (20/100, or 5 months) is high. Learn more about the difference between a buyer's market and seller's market.</p>
C
Cap
<p>What is a cap in real estate?</p><p>A cap is a limit set by a lender on how much a borrower's monthly payment or interest rate can increase or decrease. Adjustable-rate mortgages (ARMs) often include a cap to protect borrowers from big jumps in monthly payments.</p>
Capitalization Rate (Cap Rate)
<p>What is a capitalization rate (cap rate)?</p><p>The cap rate is a ratio used to estimate the return on investment of a real estate property, such as an apartment building. It is calculated by dividing the net operating income of a property in a given year by the purchase price or current value of the property. Net operating income is the income derived from the property after subtracting operating expenses. For example, an apartment building that recently sold for $1,000,000 and generates $100,000 in income after expenses has a capitalization rate of 10%.</p>
Case-Shiller Index
<p>The Case-Shiller index refers to several indices that measure home prices across the United States on a point system (with January 2000 set at 100). The Case-Shiller U.S. National Home Price Index tracks prices of single-family homes in each of the nine U.S. Census divisions. The rest of the Case-Shiller indices rely on data from major metropolitan areas in the U.S. to measure the average change in home prices. The Case Shiller 10-city composite index aggregates data from Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington DC. The Case-Shiller 20-city composite index adds data from the following ten cities: Atlanta, Charlotte, Cleveland, Dallas, Detroit, Minneapolis, Phoenix, Portland, Seattle, and Tampa. Each of these major metropolitan areas has their own Case-Shiller index. All Case-Schiller indices exclude condominiums, apartments, multi-family dwellings, and other properties that are not single-family homes. The indices also exclude new construction and homes that have been significantly altered to improve value (e.g. a one-bedroom home is remodeled to a three-bedroom home).</p><p>Reference: S&P CoreLogic Case-Shiller Home Price Indices Methodology (May 2017).</p>
Cash-Out Refinancing
<p>What is cash-out refinancing?</p><p>Cash-out refinancing occurs when a borrower refinances his mortgage for more than he currently owes to pocket the difference in cash up front. Homeowners who need cash to pay for a child's college education or for a new car will often do a cash-out refinance. These loans differ from home equity lines of credit (HELOCs) in that cash-out refinances replace the current mortgage, while a HELOC is a separate loan in addition to the first mortgage. Cash-out refinances often have lower interest rates than HELOCs, but the closing costs are usually higher.</p>
Certificate of Occupancy
<p>A Certificate of Occupancy is a document issued by a local government that certifies a home is ready to be occupied and complies with local building codes. The certificate is issued following an inspection by a licensed inspector on behalf of the local government. Certificates of Occupancy are required for any newly constructed building or conversion from a commercial to a residential building. Check out the building code for your area to find out what's required to receive a certificate of occupancy.</p>
Charter School
<p>What is a charter school?</p><p>According to Uncommon Schools, a nonprofit that starts and manages charter schools, a charter school "is an independently run public school granted greater flexibility in its operations, in return for greater accountability for performance. The 'charter' establishing each school is a performance contract detailing the school's mission, program, students served, performance goals, and methods of assessment."</p>
Closing Costs
<p>What are closing costs in real estate?</p><p>Closing costs are the expenses and fees associated with the purchase and sale of a home, such as taxes, title insurance, appraisal, lender fees, and other services carried out during closing. For buyers taking out a mortgage loan, closing costs are listed on the Closing Disclosure statement the buyer should receive from the lender at least three days before closing. Closing cost amounts vary depending on the buyer's loan program, but they typically range from 2%–5% of the purchase price. The buyer's down payment must also be paid at closing, but it is listed separately from the closing costs. Find out more about the fees included in closing costs.</p>
Closing Disclosure
<p>A Closing Disclosure is a final statement of loan terms and closing costs that the lender must provide to the borrower at least three business days before closing in most transactions that involve a loan. The statement lists the loan terms, projected monthly payments, cash necessary to close the sale, and a detailed accounting of the closing costs. The three-day review period allows the borrower time to review the Closing Disclosure and compare it with the Loan Estimate, which the borrower should have received when he or she applied for the loan. Learn more about how the closing process works.</p>
Coming Soon
<p>What does "Coming Soon" mean on Redfin.com?</p><p>Homes listed as "Coming Soon" are homes that are not yet officially on the market but are expected to be listed for sale within 21 days. A Coming Soon listing allows buyers, real estate agents, and other sellers to preview the home with limited information. Full home details and photos are available once the home is listed for sale. If you're a buyer interested in a Coming Soon home, talk to a local Redfin Agent about the home right away.</p>
Comparables
<p>What are comparables?</p><p>Comparables are homes of similar size, condition, age, and style that recently sold in a certain neighborhood. Evaluating comparable homes and their prices can help determine a fair market value for a home.</p><p>Comparables are examined by buyers, sellers, and real estate agents in a comparative market analysis (CMA) to establish a price range for a home based on current market activity. Comparables are also used by appraisers to determine the fair market value of a home during an appraisal.</p><p>A quality comparable is most similar to the home in question in terms of:</p><ul><li>Last sale price</li><li>Number of bedrooms and baths</li><li>Age and style of home</li><li>Condition of home</li><li>Lot size and condition</li><li>Views and waterfront access</li></ul>
<p>Related links</p><ul><li>Redfin Estimate</li></ul>
<p>Related links</p><ul><li>Redfin Estimate</li></ul>
Comparative Market Analysis (CMA)
<p>A comparative market analysis (CMA) is an evaluation of a home's value based on similar, recently sold homes (called comparables) in the same neighborhood. A comparative market analysis is not the same as an appraisal, which is performed by a licensed appraiser. A CMA is prepared by a real estate agent. Get an instant estimate of your home's value.</p>
D
Debt-to-Income Ratio (DTI)
<p>What is a debt-to-income ratio?</p><p>Your debt-to-income ratio (DTI) is the percentage of your gross monthly income (what you earn before taxes) that goes towards paying off debts. Debts can include car payments, credit card bills, child support payments, and student loans. When figuring out how much money you can afford to borrow, your lender will factor in the total percentage of your income that you pay toward debt every month. This number is your DTI, and it affects your credit rating.</p><p>Find out how much house you can afford to buy.</p><p>Related links</p><ul><li>Calculate Your DTI</li></ul>
Deed
<p>What is a deed in real estate?</p><p>A deed is a legal document filed with the county that documents the transfer of home ownership. The seller signs a deed in favor of the buyer when the deal closes. After recording, the original deed is provided to the buyer and the seller receives a copy. Learn more about the closing process.</p>
Deed-in-Lieu
<p>What is a deed-in-lieu?</p><p>A deed-in-lieu is a deed that transfers ownership of a home from a borrower to the borrower's lender to avoid foreclosure proceedings. A borrower signs a deed-in-lieu once he is in default. Lenders verify that the borrower can no longer afford his mortgage by investigating his financial situation and job status. If the lender accepts the deed-in-lieu, the former homeowner must move out of the home.</p><p>The main advantage of a deed-in-lieu is that it releases the borrower from most or all of the debt associated with his mortgage loan. The disadvantage is that the borrower's credit score will go down, making it more difficult to get a loan in the future. </p><p>Lenders often will not accept deeds-in-lieu, since they may be able to get more money for the home by foreclosing and selling it as an REO (real-estate-owned home). If the lender won't accept a deed-in-lieu, the homeowner may try to sell the home as a short sale. If that fails, the lender will proceed with the foreclosure process and sell the home at a foreclosure sale.</p>
Default
<p>What does "default" mean in real estate?</p><p>A default occurs when a party to a contract fails to perform as the contract requires. In the case of a mortgage, a default occurs when a borrower falls behind on mortgage loan payments or otherwise breaches the terms of the mortgage loan. Upon default, the lender may issue a notice of default to the borrower before the home goes into foreclosure.</p>
Department of Housing and Urban Development (HUD)
<p>What is the Department of Housing and Urban Development (HUD)?</p><p>Established in 1965, the Department of Housing and Urban Development (HUD) is a government agency that enforces fair housing laws and controls the Federal Housing Administration, the main insurer of non-conventional mortgage loans.</p>
Depreciation
<p>What is depreciation?</p><p>Depreciation is the decrease in the value of a home over time. Market conditions, wear and tear on a home, and changes in the neighborhood affect the value of a home. Home prices will depreciate depending on the fair market value of the home (the price at which the buyer is willing to pay and the seller is willing to accept). Home prices tend to depreciate during an economic recession because people buy fewer homes, creating a supply of homes that's greater than the demand. Learn how to increase your home's appraisal value.</p>
Discount Point
<p>What is a discount point?</p><p>A discount point is a type of mortgage loan fee that enables a borrower to lower monthly interest rate payments by paying more upfront. A discount point may cost approximately 1% of the loan amount and can lower a borrower's interest rate by 0.25%–0.5%. Point options vary by lender or broker, but borrowers should think about how much they're ready to invest upfront and the length of time they expect to have the mortgage loan when deciding whether to buy points.</p><p>If a buyer expects to own the home for a long time, buyers will often consider paying more upfront to benefit from a lower interest rate for the life of the loan. On the other hand, if a buyer plans to refinance or sell the home, buyers are more likely to avoid discount points and accept the higher interest rate.</p>
Down Payment
<p>What is a down payment in real estate?</p><p>A down payment is the amount of money a buyer pays at closing to fund a home purchase, usually expressed as a percentage of the total home price. The required down payment amount varies depending on the type of loan, ranging from as little as 3% for an FHA loan to more than 20% for some conventional loans. Mortgage insurance is required for borrowers with a down payment of less than 20%. Down payments are usually paid via cashier's check or wire transfer and must be paid at closing. </p><p>Find out how much house you can afford to buy.</p>
Dual Agency
<p>What is dual agency?</p><p>Dual agency occurs when the same real estate agent represents both the seller and buyer. In most cases, it's not a good idea for one agent to represent both parties in a real estate transaction. The listing agent's job is to sell a home at the highest possible price, while the buyer's agent aims to negotiate the lowest price for the buyer. In this case, the agent and his client's interests aren't aligned.</p><p>Some buyers feel that a dual agent will be more motivated to write an offer on his own listing since he'll get double the commission from both sides of the deal. This is a possibility, but buyers and sellers should be sure to understand all potential conflicts of interest before entering into a dual agency relationship. </p><p>Learn about the top 15 questions to ask a real estate agent.</p>
E
Earnest Money
<p>What is earnest money in real estate?</p><p>Earnest money is the money you pay soon after a home seller has accepted your offer on a home. How much earnest money you pay varies, but it's typically 1%–3% of the sale price of the home. In some areas, earnest money is a fixed amount.</p><p>You'll pay earnest money by cashier's check, personal check, or wire transfer. Your earnest money will be deposited into an escrow account or held by the listing agent. Once the sale of the home has been completed, the earnest money you paid will be applied toward your closing costs. If you back out of the sale due to a failed contingency (e.g., inspection report), you can recover your earnest money in full. If you back out of the sale for reasons not covered by contingencies, you will forfeit your earnest money.</p><p>Before signing a Purchase and Sale Agreement to buy a home, carefully review all contingencies to understand how much earnest money you'll pay and how to successfully recover your earnest money if you need to back out of the sale. </p><p>Learn more about how the closing process works.</p><p>Synonyms</p><ul><li>Good faith deposit</li></ul>
Easement
<p>What is an easement?</p><p>An easement is a limited right to use another person's land for a specific purpose. For example, an easement may be granted by a homeowner to a neighbor to cross the homeowner's land for access to a road. The easement allows the neighbor to use the land for that specific purpose, and the neighbor has no right of possession or the authority to build or plant on the land without the homeowner's permission. Other common examples are easements granted for the placement of utility poles, water lines, and sewer lines. Easements are documented in a title report and may affect what a buyer can build or plant on a property. </p><p>Learn more about what to look for in a title report.</p>
Encroachment
<p>What is an encroachment?</p><p>An encroachment occurs when a fence, roof, or something else on a neighboring property crosses the property line without permission. Encroachments usually occur by mistake, and disputes over encroachments can be resolved by a property line adjustment or by granting an easement that allows the encroachment on specific terms. Either solution is likely to be documented on title. Learn more about what to look for in a title report.</p>
Equity
<p>What is equity?</p><p>Equity is the amount of a home's value that the owner actually owns, calculated by taking the final sale price of the home and subtracting the amount the owner still owes on the mortgage loan. In practical terms, the equity is the amount of money you would get from the sale of a home after paying off the bank. If you borrow $400,000 to buy a $500,000 house, your equity on the day you move into the house is $100,000, and it increases as your mortgage payments reduce what you owe the bank, assuming the market value remains constant.</p><p>Your equity can also increase if the value of the home increases. If your $500,000 home increases in value to $600,000, your equity will be $200,000 (assuming the same, $400,000 loan). On the other hand, the amount of equity you have in a home decreases if the home's value decreases or you have a negative-amortizing loan (where your mortgage payment is too low to cover even the interest, so your loan gets larger over time). In a steeply declining market, the same $500,000 home can be worth only $300,000. If you owe the bank $400,000, you have negative equity because you're underwater by $100,000. Learn how to calculate your home equity.</p>
Escrow
<p>What is escrow in real estate?</p><p>Escrow is a neutral third party or attorney that handles the exchange of money and documents in compliance with the Purchase and Sale Agreement and any escrow instructions. Escrow handles the transfer of the buyer's loan documents and property taxes and works with a buyer's lender and real estate agent to make sure the title of the home is clear of liens before the transfer of ownership.</p>
Estate Sale
<p>What is an estate sale?</p><p>An estate sale occurs when a homeowner dies or moves to an assisted-living facility. Those who inherit the home get the proceeds from the sale. If the owner dies without bequeathing the home to someone or naming a person to sell it, the probate court appoints a relative or friend of the deceased to have what is called a probate sale. Talk to a Redfin Agent if you're interested in purchasing a home in an estate sale.</p>
Estoppel Certificate
<p>What is an estoppel certificate?</p><p>An estoppel certificate is a signed statement of facts that cannot later be contradicted by the signer. It is used in mortgage negotiations to establish facts and financial obligations, such as outstanding amounts due that can affect the settlement of a loan. The assessments and payments outlined in the estoppel certificate are incorporated into the amounts due at closing.</p><p>For example, an estoppel certificate may be used to assess the existing terms of lease obligations of existing tenants in a tenant-occupied property transaction. The content of an estoppel certificate can vary widely, but it will generally ask the tenants for the following information:</p><ul><li>A copy of the existing lease</li><li>Date of and expiration of the existing lease</li><li>Names of tenants</li><li>Current monthly rent</li><li>Security deposit</li><li>Parking and storage allotments</li><li>Confirmation of standard leasing terms</li></ul><p>Once all information is gathered on the estoppel certificate, both the tenant and landlord sign the certificate to attest to its accuracy.</p>
Excise Tax
<p>What is an excise tax in real estate?</p><p>An excise tax is a tax on the transfer of ownership from the seller to the buyer paid at closing. The tax amount is based on the sale price of the home and varies by state and local government. It's paid by the seller to the escrow agent or the attorney responsible for closing the deal, who then pays it to the government. Not exclusive to real estate, excise taxes are paid on most goods produced within a country.</p><p>Related links</p><ul><li>Tax Implications of Buying a Home</li><li>Tax Implications of Selling a Home</li></ul>
Exclusive Agency Listing
<p>What does "exclusive agency" mean in real estate?</p><p>An Exclusive Agency Listing is an agreement between a seller and a real estate firm or agent granting the firm or agent the right to be the only firm or agent to market and sell a property, except the seller retains the right to market and sell the home to a buyer without having to pay a commission to the listing agent, if the seller finds the buyer independently of the agent or firm.</p><p>This is different from an "exclusive right of sale" listing, in which the listing broker receives a commission from the seller regardless of who brings the buyer into the purchase.</p><p>Related links</p><ul><li>Exclusive listing</li><li>Exclusive right</li></ul>
Exclusive Right
<p>What does "exclusive right" mean in real estate?</p><p>"Exclusive right" refers to a listing agent's exclusive right to sell a home and receive a commission, regardless of who brings the buyer. This is the most common type of listing agreement. It is different from an "exclusive agency" listing agreement, in which the seller is allowed to procure and sell to a buyer without paying the listing broker a commission.</p><p>Related links</p><ul><li>Exclusive agency</li><li>Exclusive listing</li></ul>
Exclusive Right to Sell Listing
<p>What is an exclusive right to sell listing?</p><p>An "exclusive right to sell listing" is a listing agreement between a seller and a real estate firm or agent granting the listing agent or firm the exclusive right to market and sell a property. The seller agrees to pay the agent or firm a commission if the property sells during the term of the listing, regardless of how it is sold.</p><p>Related links</p><ul><li>Exclusive agency</li><li>Exclusive right</li></ul>
Expired
<p>What does "expired" mean in real estate?</p><p>When a homeowner contracts with an agent to sell a home, the listing agreement has a set expiration date. A listing expires when this expiration date has passed without the property being sold, and without the homeowner renewing the listing contract with the real estate agent. Similarly, potential buyers will often include offer expiration dates when submitting offers to sellers. If the offer expiration date passes before the seller accepts, the offer "expires" and can no longer be accepted by the seller.</p>
F
Fair Housing Act
<p>What is the Fair Housing Act?</p><p>The Fair Housing Act is a law enacted as part of civil rights legislation that prohibits discrimination in home sales, rentals, and financing based on race, color, national origin, religion, sex, familial status, or disability.</p>
Fair Market Value
<p>What is fair market value in real estate?</p><p>Fair market value is the home price that a buyer and seller in an arm's-length transaction would be willing to agree upon on the open market. For example, if a son buys a home from his mother at an unusually low price, that price is not the fair market value because it was not an arm's-length transaction. The mother would sell the home at a much higher price if she sold it on the open market to an unrelated buyer. </p><p>Get an instant estimate of your home's value.</p>
Fannie Mae
<p>What is Fannie Mae?</p><p>The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a government-sponsored enterprise that buys loans from mortgage lenders, packages them together, and sells them as a mortgage-backed security to investors on the open market. This increases the supply of money available for mortgage lending and increases the money available for new home purchases.</p><p>A similar entity called Freddie Mac has a nearly identical structure and function. Because Fannie and Freddie are willing to buy loans from lenders, they allow banks to loan money at rates that are 0.25%–1.5% lower than what a buyer would otherwise pay. The loans that Fannie and Freddie are willing to support are called conforming loans because the loans conform to Fannie and Freddie's rules. Loans that are too big to conform to Fannie and Freddie limits are known as jumbo mortgages.</p>
Fed
<p>What is the Fed?</p><p>Short for the Federal Reserve, the Fed is the central banking system of the United States. It controls monetary policy by regulating banks, controlling inflation, maintaining money supply, and monitoring the domestic and international financial market. The Fed matters in real estate because it has a significant effect on changes in interest rates. If the economy is headed toward inflation, the Fed will increase interest rates to increase the cost of borrowing money, which is meant to decrease borrowing and total debt.</p><p>Related links</p><ul><li>Federal Reserve Mortgage Foreclosure Resources</li></ul>
Fee Simple
<p>What does "fee simple" mean in real estate?</p><p>Fee simple is a legal term describing the most common and absolute type of property ownership. The owner's property rights are indefinite and can be freely transferred or inherited as the owner desires. The property may still be subject to government regulations like property taxes, and the owner can place voluntary encumbrances on the property like security for a mortgage loan. Fee simple can be contrasted with lease ownership, meaning the owners have complete access to the land, but they don't actually own it. Owners of single-family residences have fee simple ownership, but condo and many townhouse owners don't, since they own only their individual unit, not the land on which the development is built. A condo or townhome development will list the type of ownership available in the Covenants, Conditions and Restrictions (CC&Rs) document.</p><p>What are the differences between single-family homes, condos, and townhouses?</p>
FHA
<p>What is the FHA?</p><p>The Federal Housing Administration (FHA) is a government agency that provides insurance for loans granted by FHA-approved lenders throughout the US. The FHA insures banks that provide loans to borrowers with low down payments, usually 3.5%–5%, and competitive interest rates. The FHA sets the guidelines for the various types of loans it makes available to borrowers. As part of their monthly loan payments, borrowers must pay a mortgage insurance premium that goes to the FHA. If a borrower defaults on a loan and the lender has to foreclose on the home, the FHA will provide loan funding to the lender through these public mortgage insurance premiums paid by borrowers.</p>
FHA Loan
<p>What is an FHA loan?</p><p>Like a Veterans Affairs loan, a Federal Housing Administration (FHA) loan is one alternative to a conventional loan. FHA loans are insured by the FHA. If the buyer can't pay the loan, the government pays the lender for any losses. Because of the government's insurance, lenders are willing to offer FHA loans with smaller down payments, as low as 3.5%. Each mortgage lender, bank, or broker will offer different rates, terms, and fees for FHA loans, so it's best to shop around to find the best loan. To pay for FHA mortgage insurance, the buyer is charged a monthly mortgage insurance premium and an upfront mortgage insurance premium, which can be financed into the monthly mortgage payments. Learn more about how to get an FHA loan.</p><p>Advantages:</p><ul><li>Lower credit score requirements</li><li>Smaller down payment</li><li>Greater flexibility for buyers with recent bankruptcies</li><li>No pre-payment penalty for paying off a loan early</li></ul>
Fiduciary
<p>What is a fiduciary in real estate?</p><p>Fiduciary refers to a legal relationship of confidence that gives one the right to act on behalf of another person or entity (the principal). A fiduciary relationship gives rise to specific duties of loyalty, disclosure, good faith, and due care. In a real estate transaction, real estate agents are in a fiduciary relationship with their clients. When a buyer or seller signs an agency agreement, he or she puts trust in the agent to handle the transaction and keep his or her best interests in mind.</p>
Fixed-Rate Mortgage
<p>What is a fixed-rate mortgage?</p><p>A fixed-rate mortgage is a loan with a set interest rate throughout the life of the loan, regardless of whether rates go up or down. The most common mortgage is known as a 30-year fixed, which means the loan is paid over a 30-year period and the interest rate is fixed at the time of the purchase. Most FHA loans and VA loans are fixed-rate mortgages. The other main type of mortgage is an adjustable-rate mortgage (ARM), which has a variable interest rate.</p><p>Find out how much house you can afford to buy.</p>
Fixer-Upper
<p>What is a fixer-upper in real estate?</p><p>A fixer-upper is a home that can usually be lived in but needs maintenance work (redecoration, redesign, or reconstruction) and is typically offered at a low purchase price. Fixer-uppers can be attractive to buyers looking for more house for the money, or to investors looking to flip the property and make a profit.</p><p>There are several things you should consider before buying a fixer-upper: your intended use of the property (home or resale), the potential market value of the renovated property, and how much time and money it'll take to renovate it. Speak with a Redfin Agent before deciding to buy a fixer-upper, and be sure to have a well-qualified inspector and contractor assess the home before you're locked into a purchase contract.</p><p>You can search for fixer-uppers on Redfin by checking the appropriate box under Listing Status in your Filters.</p><p>Search for homes on Redfin.</p>
Flipping
<p>What does "flipping" mean in real estate?</p><p>"Flipping" refers to the practice of buying a home and quickly reselling it for a profit, usually after making repairs or improvements. Investors who flip homes risk losing money on their investment if housing prices fall. Learn how to avoid common mistakes when flipping a home.</p>
Float-Down
<p>What is a float-down?</p><p>When a borrower locks in an interest rate on a loan, a float-down option allows the borrower to take advantage of a lower interest rate if rates drop during the 20–45 days it usually takes to fund a loan. Even without a float-down, a borrower trying to take advantage of a rate drop can walk away from a locked loan before it funds. However, this may involve talking to other lenders, delaying the closing, and incurring new fees, so it may not be a realistic option. The float-down option allows the borrower to get the lower rate while staying with one lender and closing without delay. Lenders charge borrowers more for a loan with a float-down option, and usually only allow the borrower to reset the price once.</p>
Flood Insurance
<p>What is flood insurance?</p><p>Flood insurance protects a homeowner against losses from a flood. It is often subsidized by the federal government. If the home is located in a flood plain, the lender will require you to purchase flood insurance before approving your loan. Lenders will check the tax records on the home that indicate whether the home is in a flood plain.</p>
Floor Area Ratio (FAR)
<p>What is a Floor Area Ratio (FAR)?</p>Floor Area Ratio or FAR is the ratio between the square footage of a building’s floor area and the area of the land on which it stands. The FAR does not include unoccupied areas like elevator shafts, stairs, basements, etc. A larger FAR number indicates that denser developments are likely to be planned. For example, commercial and office use in downtown areas typically have a high FAR, while residential zones are set with a low FAR. Allowable FARs vary on the area's land use and are increasingly used to limit and control the scale of development.
For-Sale-By-Owner (FSBO)
<p>What is For-Sale-By-Owner (FSBO)?</p><p>For-sale-by-owner refers to a home that the owner is selling without the services of a licensed real estate agent. In the industry, a for-sale-by-owner home is known as a FSBO (pronounced FIZZ-BO). Not only does the owner avoid paying an agent to sell his own house, but he sometimes avoids paying a commission to a buyer's agent. As a result, buyer's agents don't have an incentive to show the property to their clients, and the home cannot appear in the Multiple Listing Service (MLS) because it is a broker-maintained database of homes for sale. This also means that for-sale-by-owner listings don't appear on most brokerage websites, which are powered by the MLS.</p>
Foreclosed Home
<p>What is a foreclosed home?</p><p>A foreclosed home is one that has been repossessed by a lender because the owner was unable to make the mortgage loan payments. These homes are usually not for sale until the entire foreclosure process is complete and the lender lists it on the local Multiple Listing Service (MLS). The foreclosure process can vary by state and according to the terms of the loan, but it generally involves three stages:</p><ol><li>Pre-foreclosure: The bank files a notice of default saying that the owner has fallen behind on the mortgage payments or otherwise defaulted on the mortgage loan. At that point, the owner usually has two to three months to refinance or pay the loan or attempt to sell the home as a short sale with the lender's consent.</li><li>Auction: If the owner is unable to make up the missed payments, refinance, or sell the home, the lender will typically schedule an auction to sell the home "as-is" (meaning what you see is what you get) to the highest bidder. If the owner comes up with money at the last minute to begin making the mortgage payments, the bank may cancel the auction, but may not be required to do so.</li><li>Bank-owned: If the home fails to sell to a third party at an auction, the lender may take the property, be paid off through private mortgage insurance, and take a loss on the investment. If the lender takes the property, it is known as REO (real-estate-owned). The lender is now the owner and will usually list the home with a real estate agent on the local MLS.</li></ol><p>Learn how to buy a foreclosed home or talk to a Redfin Agent if you're interested in touring or purchasing a foreclosed home.</p>
Foreclosure
<p>Foreclosure is a process that transfers the right of home ownership from the owner to the bank or lender after the owner defaults on his loan. Once an owner receives a notice of default, she usually has an opportunity to make up the missed mortgage payments, get out of default, and continue making monthly payments before the bank officially forecloses on the home. Foreclosure is a costly process and can have negative impacts on the homeowner's credit score.</p><p>The foreclosure process can vary by state and according to the terms of the loan, but it generally involves three stages:</p><ul><li>Pre-foreclosure: The bank files a notice of default saying that the owner has fallen behind on the mortgage payments or otherwise defaulted on the mortgage loan. At that point, the owner usually has two to three months to refinance the loan or attempt to sell the home as a short sale.</li><li>Auction: If the owner is unable to make up the missed payments, refinance, or sell the home, the bank will typically schedule an auction to sell the home "as-is" (meaning what you see is what you get) to the highest bidder. If the owner comes up with money at the last minute to begin making the mortgage payments, the bank may cancel the auction.</li><li>Bank-owned: If the home fails to sell at an auction, the lien holders of the home are paid off through private mortgage insurance or take a loss on the investment. These homes are also known as REOs (real-estate-owned). The bank with the primary mortgage on the home is now the owner and will usually list the home with a real estate agent on the local MLS.</li></ul><p>Learn how to buy a foreclosed home or talk to a Redfin Agent if you're interested in touring or purchasing a foreclosed home.</p>
Freddie Mac
<p>What is Freddie Mac?</p><p>The Federal Home Loan Mortgage Corporation, known as Freddie Mac, is a government-sponsored enterprise that buys loans from mortgage lenders, packages them together, and sells them as a mortgage-backed security to investors on the open market. This increases the supply of money available for mortgage lending and increases the money available for new home purchases.</p><p>A similar entity known as Fannie Mae has a nearly identical structure and function. Because lenders can depend on Fannie Mae and Freddie Mac to buy conforming mortgage loans on the secondary mortgage market, lenders will loan money at lower interest rates than what a buyer would otherwise pay. The loans that Fannie and Freddie are willing to support are called conforming loans because the loans conform to Fannie and Freddie's rules. The primary rule is a limit on the loan's amount. Loans that are too big to conform to Fannie and Freddie limits are known as jumbo loans.</p>
G
GreatSchools Rating
<p>What is a GreatSchools Rating?</p><p>When searching for homes on Redfin, you can check the GreatSchools Rating for nearby schools, when available, in the Neighborhood section of each property details page. GreatSchools is an independent nonprofit that publishes ratings to give parents an understanding of the quality of nearby schools. </p><p>According to GreatSchools.org, a GreatSchools Rating "provides an overall snapshot of school quality based on how well a school prepares all its students for postsecondary success—be it college or career. The Summary Rating calculation is based on five of the school's themed ratings (the Test Score Rating, Student or Academic Progress Rating, College Readiness Rating, Equity Rating and Advanced Courses Rating) and flags for discipline and attendance disparities at a school. . . GreatSchools does not produce a Summary Rating for a school if they lack sufficient data to calculate one."</p><p>For more about how the GreatSchools rating is calculated, visit GreatSchools.org.</p><p>Related links</p><ul><li>Student-Teacher Ratio</li></ul>
H
Home Equity Line of Credit (HELOC)
<p>What is a home equity line of credit (HELOC)?</p><p>A home equity line of credit (HELOC) allows homeowners to borrow cash to spend as they like, using their home equity as collateral. A HELOC functions as a second mortgage, with the borrower withdrawing and repaying funds on a more flexible schedule, and the government allowing a tax deduction for interest payments. Unlike traditional first or second mortgages, a HELOC interest rate is not fixed; the rate varies from month to month with the prime rate. As with all loans based on the value of the home, if the borrower can't make the payments, the lender may foreclose on the home.</p>
Home Valuation Code of Conduct (HVCC)
<p>What is the Home Valuation Code of Conduct (HVCC)?</p><p>The Home Valuation Code of Conduct (HVCC) is a set of federal guidelines designed to make the home appraisal process more reliable. The HVCC prohibits mortgage brokers and real estate agents from selecting or paying appraisers. Instead, lenders or third-party companies selected by the lenders are the only parties allowed to contact, retain, and compensate appraisers. This adds a buffer between the appraiser and the interested parties trying to close the deal. Conventional conforming loans backed by Fannie Mae and Freddie Mac must comply with the HVCC. FHA loans and VA loans are excluded from compliance with the HVCC.</p>
Homeowners Association (HOA)
<p>What is a homeowners association (HOA)?</p><p>A homeowners association (HOA) is a nonprofit organization that manages a shared housing complex, such as condos, co-ops, and other planned developments. All owners within the complex will usually be members of the HOA, and an elected HOA board will be responsible for enforcing the community rules and providing building maintenance. Most of these rules are contained in the HOA Covenants, Conditions, and Restrictions (CC&Rs), which a buyer usually receives within one week after the buyer's offer is accepted. The HOA provides funding for repairs, grounds maintenance, and security by collecting money from homeowners, usually in the form of monthly dues.</p><p>Learn about the pros and cons of condos and other shared housing types.</p>
Homeowners Association (HOA) Dues
<p>What are homeowners association (HOA) dues?</p><p>Homeowners association (HOA) dues are the monthly maintenance fees required by shared housing developments such as condo buildings and townhouses to pay for building repairs and operation costs.</p><p>Learn about the pros and cons of condos and other shared housing types.</p><p>Related links</p><ul><li>Homeowners Association</li></ul>
Homeowners Insurance
<p>What is homeowners insurance?</p><p>Homeowners insurance is a combination of property insurance, which protects homeowners from future damages to a home, and liability insurance, which protects homeowners from claims by third parties for accidents that happen in the home. The form of the policy will vary depending on the type of property being insured (e.g. condominium, mobile home, single-family residence, etc.) and the amount of coverage the owner desires. Lenders require that buyers obtain homeowners insurance so insurance premiums will automatically be included in monthly mortgage payments and the transaction closing costs. Learn more about the costs you pay at closing.</p>
I
Inspection
<p>What is an inspection?</p><p>An inspection is a thorough investigation of a home by a licensed inspector. Once an offer is accepted (mutual acceptance), the buyer's agent will usually provide the buyer with a list of recommended inspectors and then facilitate scheduling the inspection. A thorough inspection is necessary to discover any material defects or necessary repairs before buying the home. The inspector may also recommend an additional inspection of the roof, sewage system, or other part of the house by a specialist. </p><p>Buyers should pay special attention to the results of their inspection, because many states hold a buyer responsible for understanding and investigating issues raised during inspections. In addition, if there is an inspection contingency, buyers have a chance to negotiate with sellers to cover the costs of certain repairs, ask for concessions, or back out of the sale.</p><p>When submitting an offer on an REO (Real Estate Owned home), buyers may want to schedule a "pre-inspection" before making the offer. Banks usually include an "as-is" addendum with the Purchase and Sale Agreement, stating that the buyer can get an inspection but that the bank won't pay for any home repairs. In this case, getting the home inspected before making an offer may save the buyer a lot of hassle and money down the road. The buyer's agent should contact the listing agent to make sure all the utilities in the home are turned on so the inspector can be thorough.</p><p>General inspections typically cover:</p><ul><li>Plumbing</li><li>Electrical</li><li>Foundation, wall, doors, windows, ceiling, and floor structure</li><li>Water heater, air conditioner, and furnace functionality</li><li>Issues with home appliances like the dishwasher and refrigerator</li></ul><h2>Additional Inspections</h2><p>In some markets, inspections for termites/pests are handled separately from the general inspection and are scheduled by the buyer's agent. Additional inspections may also be necessary for the roof, sewage system, stucco, mold, radon, and lead-based paint.</p><p>An inspection is typically part of the closing process when you buy or sell a home. Learn about other important steps in the closing process.</p>
Interest Rate
<p>What is an interest rate?</p><p>The interest rate is the amount charged by a lender in exchange for loaning money to a buyer. It is expressed as a yearly percentage of the total loan amount and is paid on a monthly basis as part of the mortgage loan payments. Interest rates change daily, but once a borrower locks a rate for a fixed-rate mortgage, the borrower will make payments according to this rate for the entire life of the loan. Learn what it takes to get pre-approved for a mortgage. Use our Mortgage Calculator with PMI.</p>
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Jumbo Mortgage
<p>What is a jumbo mortgage?</p><p>A jumbo mortgage is a loan whose principal value exceeds the standard limits for Fannie Mae and Freddie Mac, the government-sponsored enterprises that buy loans from banks. As a result, the interest rates on these loans are higher because lenders don't have the assurance that Fannie or Freddie will guarantee the purchase of the loans. Brokers and lenders must be willing to take on greater risk to fund jumbo mortgages.</p><p>Advantages of a jumbo mortgage:</p><ul><li>Allows the buyer to borrow a larger amount than allowed by Fannie Mae or Freddie Mac</li><li>Available to borrowers who do not qualify for a conforming loan</li><li>Commonly used for luxury homes</li></ul><p>Learn what it takes to get pre-approved for a mortgage. Use our Mortgage Calculator with PMI.</p>
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Lien
<p>What is a lien?</p><p>A lien is a legal claim against the property of another, usually to secure an unpaid debt. Liens commonly arise when a homeowner pledges his or her home as collateral to borrow money. Utility companies, contractors, local governments, and other creditors can also sometimes file a lien to collect unpaid amounts. Buyers should review title reports closely with this in mind. If the report contains any liens, the buyer should consult an escrow agent or attorney to investigate. Such liens may need be cleared before the buyer can legally own the home.</p><p>Find out what to look for in a title report when buying a home.</p>
Lis Pendens
<p>What is a lis pendens?</p><p>A lis pendens is a recorded document that gives notice that a home is subject to a pending legal action, such as a judicial foreclosure. Recording a lis pendens with the county and providing it to the borrower begins the judicial foreclosure process in which the lender will repossess the home. The borrower still has the option to try to sell the home as a short sale or refinance to stay in the home. But the home is considered to be in pre-foreclosure from the time a lis pendens is recorded. Once foreclosure is completed or no longer pending, the lis pendens is removed from county records and the home's chain of title.</p>
List Price
<p>What is a list price in real estate?</p><p>A list price is the price of a home for sale set by the a seller and her listing agent. The list price can be reduced multiple times throughout the life of the listing. It's important to watch how the list price changes for homes you're interested in, as it can indicate how willing a seller may be to drop the final sale price.</p><p>The ratio of the final sale-to-list price indicates the discount that a buyer gets off of the last listing price when a home is sold. This number helps you set an offer price for a comparable home on the market.</p>
Listing
<p>What is a real estate listing?</p><p>A listing refers to any property that has been "listed" for sale with a real estate agent in accordance with a written listing agreement. The property is usually published on the regional Multiple Listing Service (MLS) or on a bank's website if the property is REO or bank-owned.</p><p>Interested in buying or selling a home? Talk to a local Redfin Agent.</p>
Listing Agent
<p>What is a listing agent?</p><p>A listing agent is the real estate agent that represents the seller. Listing agents list homes for sale on the regional Multiple Listing Service (MLS) and negotiate the best possible price and terms for their client.</p><p>Redfin listing agents can help you sell your home. To find out what your home is worth, contact a top-rated Redfin Agent in your area.</p>
Loan Commitment Letter
<p>What is a loan commitment letter?</p><p>A loan commitment letter contains a lender's binding promise to provide a borrower with a loan at an agreed-upon interest rate and terms. A borrower needs to provide the seller with this document within a certain timeframe once they've reached mutual acceptance on an offer to satisfy the financing contingency.</p>
Loan Estimate
<p>What is a loan estimate?</p><p>A Loan Estimate is a three-page form created by the Consumer Financial Protection Bureau (CFPB) that provides a borrower with important details about a loan the borrower has applied for, including an estimate of the interest rate, monthly payment amount, and total closing costs. If the loan has special features, such as early payment penalties or increases in mortgage loan balances, the form will also include these details.</p><p>The lender is required to provide a borrower with this form within three business days after receipt of the loan application. All lenders are required to use the same Loan Estimate form, making it easier for borrowers to compare mortgage loans. The Loan Estimate is not an approval or denial of a loan application, but shows a borrower the terms the lender expects to offer if the borrower decides to move forward with the loan.</p><p>Reference: Consumer Financial Protection Bureau</p>
Loan-to-Value Ratio (LTV)
<p>What is a listing loan-to-value ratio (LTV)?</p><p>A loan-to-value ratio (LTV) is the ratio of the amount of money borrowed over the appraised value of the home, expressed as a percentage. The difference between these two numbers is the amount of the buyer's down payment. For example, a borrower may purchase a home appraised at $400,000 with a down payment of $80,000. This means he has a loan-to-value ratio of 80%. In other words, he has 20% equity in the home.</p><p>The LTV is a key risk factor that lenders consider when evaluating a loan application. If a borrower's LTV is greater than 80%, the lender will most likely require the borrower to purchase mortgage insurance.</p>
Lock-In (Rate Lock)
<p>What is a lock-in (rate lock)?</p><p>A lock-in, also known as a rate lock, is a lender's guarantee to provide a borrower a certain interest rate and loan terms for a specified period of time. This is an important step in the process of getting a mortgage. It's best to lock in at the lowest rate possible. A borrower needs to inform the lender when the borrower wants to lock in a rate once the loan is approved. Once a borrower locks a rate, the lender may offer a float-down option if rates continue to decrease before the loan is approved. This means the borrower could lock in at an even lower rate, but the lender may require the borrower to pay more up front in discount point fees.</p>
Loss Mitigation
<p>What is loss mitigation?</p><p>Loss mitigation is the process of modifying or refinancing the cost of a loan in order to avoid foreclosure. Borrowers who can't afford their monthly payments and are in danger of defaulting on a loan often work with their lenders to attempt loss mitigation.</p>
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Magnet School
<p>What is a magnet school?</p><p>Magnet schools are public elementary and secondary schools open to all students regardless of where they live. Magnet schools typically focus on specific education subjects or themes, such as world languages, STEM (Science, Technology, Engineering, and Mathematics), Performing Arts, International Baccalaureate, or Career and Technical Education (CTE). They are strictly non-profit organizations and are operated and supervised by the same local school district that governs traditional public schools.</p><p>Reference: Magnet Schools of America</p><p>Related links</p><ul><li>GreatSchools Rating</li><li>Student-Teacher Ratio</li></ul>
Median
<p>What is a median in real estate?</p><p>A median is the center value of an ordered set of data. For example, in a set of five homes worth $100,000, $150,000, $200,000, $250,000, and $600,000, the median value would be $200,000, and the average value would be $260,000. When looking at a neighborhood's home prices, the median price is usually a better reflection of a typical home price, since it is less affected by a few very expensive or inexpensive homes in the sample.</p><h2>Medians on Redfin</h2><p>On Redfin, we use both averages and medians. We average all data points when calculating the ratio of the final sale price to the list price for a neighborhood because most buyers want to take into account every value, even outliers. But we calculate the median price per square foot ($/sq. ft.) for homes in an area so that a few fixer-uppers or high-end properties don't distract us from the price of a typical home.</p><p>Check out the latest housing market data in the Redfin Data Center.</p>
Mello-Roos
<p>What is Mello-Roos?</p><p>Mello-Roos is a California state property tax that goes toward developing the infrastructure in the community surrounding a home. Mello-Roos districts sell public bonds to provide funds for public services and then impose an assessment on residents to make principal and interest payments on the bond. Services include maintenance for streets, water, sewage, electricity, infrastructure, schools, and parks.</p><p>Synonyms</p><ul><li>Community Facility and District Act</li></ul>
Months of Supply
<p>What does "months of supply" mean in real estate?</p><p>This number tells you how many months it would take for all the current homes for sale on the market to sell, given a monthly sales volume. Four to five months of supply is average. A lower number means that buyers are dominating the market and there are relatively few sellers; a higher number means there are more sellers than buyers.</p><p>You can calculate the months of supply by dividing the total number of homes for sale over the number of homes sold in one month. For example, if you search in a neighborhood and notice that there are 30 homes for sale but only 10 homes actually sold last month, it means that there are 3 months of supply left in the market.</p><p>Related links</p><ul><li>Absorption Rate</li><li>Buyer's Market</li><li>Seller's Market</li></ul>
Mortgage Broker
<p>What is a mortgage broker?</p><p>A mortgage broker is a middle-man between borrowers and mortgage lenders who shops around to find the best rate and fees for the borrower. While mortgage brokers may handle some of the funding paperwork, the mortgage lender is ultimately responsible for underwriting approval. Mortgage brokers may charge a fee or a percentage of the loan's interest from the lender, called a yield spread premium (YSP). Use our Mortgage Calculator with PMI.</p>
Mortgage Fees
<p>What are mortgage fees?</p><p>Mortgage fees include all of the costs associated with getting a mortgage loan that lenders and brokers include in the Good Faith Estimate. Lenders and brokers may try to tack on extra costs, so look closely at application and processing fees. When working with a mortgage broker, ask how they calculate a yield spread premium (YSP). Each lender and broker will have their own list of fees, but here are the most common:</p><ul><li>Appraisal fee: The cost to have an appraisal of the home, usually $300–$500.</li><li>Origination fee: The cost to create your loan, usually 1% of its total value.</li><li>Yield spread premium (YSP): If there is no origination fee, there will most likely be a YSP, in which you will pay an interest rate above the market rate.</li><li>Processing fee: A fee for all the tasks involved in creating your loan, such as ordering the title and homeowners insurance.</li><li>Underwriting fee: The cost involved in verifying all your documents, title, insurance, and the appraisal to finalize your loan. When working with a mortgage broker, make sure there isn't a charge for both a broker underwriting fee and a lender underwriting fee. A broker's processing department will send the loan to the lender for underwriting, so this fee should only be paid once.</li><li>Flood certification fee: All lenders must certify that the property you are purchasing is not located in a flood zone by checking the tax records. If the property is in a flood zone, the lender requires the borrower to purchase flood insurance.</li><li><p>Tax service fee: A maintenance charge ensuring that tax information from the assessor's office is sent to both the homeowners and the lender.</p><p>Learn more about what you'll pay in closing costs.</p></li></ul>
Mortgage Insurance
<p>What is mortgage insurance?</p><p>Mortgage insurance protects the mortgage lender against loss if a borrower defaults on a loan. Private mortgage insurance is required for borrowers of conventional loans with a down payment of less than 20%. FHA loans and VA loans are essentially public mortgage insurance, as borrowers pay higher insurance premiums in exchange for a low down payment. These funds allow the FHA to insure lenders against losses if borrowers default on FHA-approved loans.</p><p>Mortgage insurance costs are included as part of the monthly loan payment. FHA-insured loans have two mortgage insurance components: an upfront premium and a monthly payment. The upfront premium is paid at closing, whereas the monthly payment is paid until the borrowers reach a certain loan-to-value ratio on their mortgage loan, based on the final sale price of the home.</p>
Mortgage Lender
<p>What is a mortgage lender?</p><p>Lenders are banks, mortgage banks, or other financial institutions that issue loans. Lenders can control the whole process—from application to underwriting to funding your mortgage—if borrowers apply directly to the lender for a loan. Alternatively, borrowers can hire mortgage brokers to shop around to find the lender and loan that offers the best rate and fees for the borrower. Learn what it takes to get pre-approved for a mortgage. Use our Mortgage Calculator with PMI.</p>
Mortgage Loan
<p>What is a mortgage loan?</p><p>A mortgage loan covers the funds borrowed from a mortgage lender to finance the purchase of a home. Conventional loans, FHA loans, and VA loans are different types of mortgage loans available. Learn more about the different types of mortgage loans. Use our Mortgage Calculator with PMI.</p>
Multi-Family
<p>What does multi-family mean in real estate?</p><p>A multi-family building or home has multiple units owned by one or more parties. Condo buildings and duplexes can be considered multi-family residences, but with a duplex, both the property and the land are recorded on one deed. With a condo, the owners own their individual units and have a tenancy in common with all of the owners in the complex for the shared space.</p><h2>Multi-family homes on Redfin</h2><p>Redfin shows all the multi-family homes for sale in the MLS. Schedule a home tour with a local Redfin Agent to go see one.</p>
Multi-Property Sale
<p>What is a multi-property sale?</p><p>A multi-property sale occurs when a buyer purchases more than one piece of property at once. Multi-property sales may take a variety of forms, such as a buyer purchasing a single-family home and an adjoining lot to create a single, larger property, or purchasing multiple units in one condominium building.</p><p>Since properties of different values can be purchased under a single transaction, multi-property sales may not provide a good apples-to-apples benchmark for property values when conducting a comparative market analysis.</p>
Multiple Listing Service (MLS)
<p>The Multiple Listing Service, or MLS, is a local or regional service that compiles available real estate for sale submitted by member brokers and agents, along with detailed information that brokers and agents can access online. Local MLS organizations have their own rules and systems for providing listing information. Over half of the MLSs in the United States are affiliated with the National Association of REALTORS (NAR); in other cases, MLSs operate as private businesses but with oversight from major local brokers. Some MLSs publish their own websites for consumers to access listing data directly from the MLS, but most share data by offering a data feed so that member brokerages (such as Redfin) can build their own websites.</p><p>Since Redfin is a brokerage, our website and mobile apps are powered by the MLS, so you'll get access to the same information as real estate agents, including notifications when new homes hit the market. New listings are updated every 10 minutes on Redfin.com.</p>
Mutual Acceptance
<p>What is "mutual acceptance" in real estate?</p><p>Mutual acceptance is the point at which both the buyer and seller agree on the price and terms of a deal and a binding contract is entered into. In most states, the Purchase and Sale Agreement is signed at mutual acceptance.</p>
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National Association of REALTORS®
<p>What is the National Association of REALTORS®?</p><p>The National Association of REALTORS® (NAR) is an organization made up of more than one million REALTORS®, brokers, appraisers, and other real estate professionals who are involved in the residential and commercial real estate industries. A real estate agent can only be called a REALTOR® if he or she belongs to the National Association of REALTORS®.</p><p>Related links</p><ul><li>REALTORS®</li><li>Real Estate Agent</li></ul>
Natural Hazard Disclosure Act
<p>What is the Natural Hazard Disclosure Act?</p><p>The Natural Hazards Disclosure Act is a California state law requiring sellers and their listing agents to provide prospective buyers with a Natural Hazards Disclosure statement that designates whether the home they're selling is located in a hazard area. Hazard areas include flood, fire, earthquake fault, and seismic hazard zones. The disclosure should also note whether the home is subject to Mello-Roos tax. Paid for by the sellers, the disclosure is prepared by a city engineer, geologist, or land surveyor. Buyers should get the disclosure during the inspection contingency period and will have three days to decide if they want to rescind their offer based on the report's findings. It must be signed by all parties before the transaction can close.</p><p>Related links</p><ul><li>Information about the Natural Hazards Disclosure Act from the California state Department of Conservation</li></ul>
Negative Amortization Loan
<p>What is a negative amortization loan?</p><p>Amortization refers to the repayment of your mortgage loan's principal and interest over time through monthly installments. With a negative amortization loan, borrowers are allowed to make monthly payments that are less than the actual monthly interest owed. The difference between the amount paid and the amount owed is then added to the total amount of the loan, so the size of the loan increases over time. These loans assume that home prices will go up to offset the increasing size of the loan. But if home values don't increase enough, the borrower ends up owing more on the mortgage than the home is worth. The borrower may also be subject to significantly higher monthly payments later in the life of the loan.</p>
Net Proceeds
<p>What are net proceeds in real estate?</p><p>Net proceeds refers to the amount of money a seller takes away from selling a home. This is different from the homeowner's equity in the home because it takes into account agent commissions and closing costs, which are paid by the seller and subtracted from the sale price. Closing costs include:</p><ul><li>Balance of all outstanding mortgages and additional liens on the property</li><li>Commission to the seller's agent</li><li>Commission to the buyer's agent</li><li>Excise tax (varies by state)</li><li>Any additional closing costs owed by the seller (buyers and sellers can sometimes negotiate over who pays which fees)</li></ul><p>While you may know your mortgage balance, the remaining costs can vary and depend on your specific home, location, and type of transaction. If net proceeds are negative, the seller must either bring money to the closing table to ensure all mortgages are paid off, or get bank approval for a short sale. Your agent can help you determine whether your net proceeds on the sale of your home will be sufficient to avoid a short sale.</p><p>Find out how much you could make from selling your home.</p>
New Construction
<p>What is new construction?</p><p>A new construction home is one that has not been previously occupied. Typically, the seller of a new construction home is the builder. On Redfin.com, we define homes for sale as new construction based on whether the listing agent marked them as such in the Multiple Listing Service (MLS). Otherwise, Redfin marks homes as new construction if they were built within the past year and a half. Find out how to buy a new construction home. </p>
Non-Disclosure State
<p>What is a non-disclosure state?</p><p>A non-disclosure state is one that doesn't require the sale prices of properties to be reported to the local assessor's office. In some of these states, the info is submitted to local assessor but not made available to the public. In others, the data is not submitted to the assessor at all. It may be difficult, if not impossible, to find the sale price of a property from public records in a non-disclosure state.</p>
Notice of Default
<p>What is a notice of default in real estate?</p><p>A notice of default is a note from a lender indicating that the borrower has fallen behind on his payments or otherwise breached the terms of the mortgage loan. At this point, the borrower usually has an opportunity to make up his missed payments and get out of default before the bank officially forecloses on the home. The lender records the notice of default in the county where the home is located and sends a copy to the borrower. The borrower may work with his lender to refinance the loan or try to sell the home as a short sale if he owes more on the mortgage than the home is worth.</p><p>Related Terms:</p><ul><li>Lis pendens</li></ul>
O
Offer and Acceptance
<p>What does "offer and acceptance" mean in real estate?</p><p>Offer and acceptance are the key elements to a binding contract. Offer and acceptance occur when the seller accepts a buyer's offer on the home, usually by signing a Purchase and Sale Agreement already signed by the buyer. This concept is also known as mutual acceptance.</p>
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Par Rate
<p>What is a par rate?</p><p>The par rate is the wholesale interest rate. It represents the interest rate before payments to the mortgage broker or lender, such as a Yield Spread Premium (YSP), are added into the rate.</p>
Parking minimum
<p>What is a parking minimum?</p>Based on the building’s size and use, parking minimums are set to ensure that any new development has enough parking spaces. In some instances, municipalities may also set parking maximums that limit the number of parking spaces allowed for a particular use. Parking maximums help control how much land is dedicated to parking in an area.
Pending
<p>What does "pending" mean in real estate?</p><p>A home's status is changed to "Pending" or "Pending Offer" once it's set to close and all contingencies have been satisfied or waived. This is when the lender and the escrow agent or attorney process the loan and title documents to make sure the deal closes on time. Sometimes the sellers may still accept backup offers on pending listings, but it's best to contact your agent to find out if it's possible to submit this type of offer. Learn the differences between contingent and pending.</p><p>Related links</p><ul><li>Contingent</li><li>Under Contract</li></ul>
Pending - Over 4 Months
<p>What does "Pending - Over 4 Months" mean?</p><p>A home's status changes from "Pending" to "Pending - Over 4 Months" automatically when the listing's pending status has remained unchanged for four months. Listings with a "Pending - Over 4 Months" status may simply be taking a longer-than-usual time to close due to slow construction progress or extended negotiations between the buyer and seller. However, this status may also be displayed when the listing agent forgets to change a home's status from "Pending" to "Sold" after a sale is completed. </p><p>Learn the differences between contingent and pending.</p>
Pending - Taking Backups
<p>What does "Pending - Taking Backups" mean?</p><p>After a seller has accepted a buyer's offer, the deal may run into a snag; for instance, the buyer may have trouble qualifying for a mortgage. The seller's listing agent can change the home's status to "Pending - Taking Backups," which will allow the seller to consider backup offers in case the original offer falls through. Learn the differences between contingent and pending.</p>
Pending Short Sale
<p>What does "Pending Short Sale" mean?</p><p>When a buyer and seller enter into a Purchase and Sale Agreement for a short sale, the offer must go to the seller's lender or bank for approval. At this point, some Multiple Listing Services (MLSs) require the home's status be changed to "Pending Short Sale." There is often more than one lender or bank that must approve the offer, and they may take several months to respond—and can ultimately reject it. </p><p>Learn the differences between contingent and pending.</p><p>Related links</p><ul><li>Short sale</li></ul>
Per Diem
<p>What does "per diem" mean in real estate?</p><p>Latin for "per day," per diem charges may result if a buyer's loan isn't approved by the expected date. Such per diem charges will appear on the Closing Disclosure, payable to the lender. Sellers may also charge the buyer per diem fees if the deal doesn't close by the closing date listed on the Purchase and Sale Agreement.</p>
Permitted land use
<p>What is a permitted “as-of-right” land use?</p>Permitted land use or "as-of-right" uses refers to the allowed land use of the property and structures in accordance with the local zoning district. Permitted land uses do not require special approval or permits by a local municipality. In zoning districts, land uses that are considered ‘uses by right’ vary by district. Examples of permitted “as-of-right” include detached dwelling units and ADUs. Although your property will have permitted land uses, you may still need to acquire a permit.
PITI
<p>What is PITI?</p><p>Principal, Interest, Taxes, and Insurance (PITI) make up a total monthly mortgage payment. Principal is the amount borrowed from a lender, not including interest or additional fees. Depending upon the lender's requirements, property taxes, homeowners insurance, HOA dues, and mortgage insurance may also be calculated into the monthly mortgage payments.</p>
Planned Unit Development (PUD)
<p>A Planned Unit Development (PUD) is a housing development not subject to standard zoning requirements for the area. With permission from the local government, a developer establishes criteria that determine the private and common areas and building guidelines. These may include street lighting designs, street width standards, architectural styles, building height standards, land coverage ratios, and common area park or amenity requirements. Planned unit developments are often used to cluster homes closer together than would otherwise be allowed by local zoning laws. Learn more about planned unit developments.</p>
Pocket Listing
<p>What is a pocket listing in real estate?</p><p>A pocket listing is a listing of property for sale that a real estate agent or broker advertises online or markets to his own clients before or without listing the home in the Multiple Listing Service (MLS). Most MLS's require that brokers submit listings to the MLS promptly after the seller signs a listing agreement. Redfin updates MLS listings every 10 minutes, so you'll see listings as soon as they appear in the MLS.</p>
Possession: Close of Escrow
<p>What does "Possession: Close of Escrow" mean?</p><p>"Possession: Close of Escrow" refers to the transfer of ownership from the seller to the buyer. This type of transfer is the norm with most home sales. When the sale is recorded with the local government, and the purchase funds have been received by the seller, ownership of the home is transferred to the buyer and the buyer has the right to possess the home.</p><p>Alternatively, it's possible for the buyer to take possession of the home before or after the sale closes. For instance, the buyer may request to move into the home before the sale closes in order to start repairing the home. Or the seller may request some extra time in the home after the sale to complete their move.</p><p>Having the possession date fall before or after the sale closes can result in some sticky legal situations for both buyers and sellers. If a buyer moves in early, and the sale does not go through, the seller may be forced to evict. On the other hand, if the seller asks to stay in the home for some time after the purchase completes, the buyer will usually collect rent from the seller, and will need to make sure that the seller moves out in time for the buyer to move in. Caution should be exercised anytime the right of possession does not coincide with closing. </p><p>Related links</p><ul><li>How Much Are Closing Costs?</li></ul>
Possession: Subject to Home Choice
<p>What does "Possession: Subject to Home Choice" mean?</p><p>This term is used by sellers in the original listing agreement to let potential buyers know that the sellers need to buy a new home before the buyer can take possession of the home for sale. It allows the sellers the option of asking the buyers to let the sellers rent the home after the sale until the sellers can move into their new place. This type of possession is usually negotiable and caution should be exercised anytime the right of possession does not coincide with closing. </p>
Pre-approval
<p>What is a pre-approval?</p><p>A pre-approval is a document from a lender or mortgage broker confirming they've reviewed a buyer's finances and are willing to lend a specific amount of money to buy a home. It tells the buyer how much he or she can afford. Getting pre-approved does not guarantee a loan.</p><p>To process a pre-approval application, the lender or broker checks the buyer's credit report and verifies employment history, income, and down payment amount. Full review of the pre-approval application can take 12–24 hours. In markets with multiple offers, it's important for buyers to be pre-approved during the touring process so they can act quickly and put in a competitive offer when they find the right place. Home sellers expect buyers to be pre-approved, since there's less risk that the deal will fall through due to financing.</p><p>Pre-approval is different from pre-qualification, which is an informal process to estimate how much a borrower can afford. Learn what it takes to get pre-approved for a mortgage. Use our Mortgage Calculator with PMI.</p>
Pre-Payment Penalty
<p>What is a pre-payment penalty?</p><p>A pre-payment penalty is a fee that a lender charges a borrower for paying off a loan early or refinancing. The pre-payment penalty amount is usually based on the remaining mortgage principal balance or a certain number of months' worth of interest. When a borrower applies for a loan, the Loan Estimate provided by the lender will indicate whether the borrower will be subject to a pre-payment penalty.</p><p>Pre-payment penalties can substantially increase the cost of refinancing. Buyers should be aware of the risks and costs associated with pre-payment penalties before selecting a loan with such a penalty.</p>
Pre-qualification
<p>What is pre-qualification?</p><p>Pre-qualification is an informal estimate of how much a buyer can afford to borrow for a mortgage. The main difference between pre-qualification and pre-approval is that for a pre-qualification, the lender doesn't verify any information the borrower provides. For pre-approval, lenders verify credit, income, employment, and assets. Learn what it takes to get pre-approved for a mortgage. Use our Mortgage Calculator with PMI.</p>
Price Adjustment
<p>What is price adjustment in real estate?</p><p>When conducting a comparative market analysis to determine the current market value of a home, a real estate agent or appraiser may use price adjustments to arrive at a more accurate home value. Price adjustments account for the differences between the subject home and comparable homes. You can also use price adjustments yourself when looking at the sale prices of comparable homes in your area. We recommend talking to an agent if you have questions about how to make price adjustments.</p><p>Examples of Price Adjustments</p><ul><li>If a recent home sold for $500,000 but is 5% larger than your home, you would adjust the sale price down by 5% to see what your home would sell for at the same price per square foot.</li><li>Your neighbor recently sold their house for $500,000. Your house is very similar, except that yours has a new roof that cost $20,000. You would adjust the neighbor's sale price up by $20,000 to account for that difference and get an estimated value of $520,000 for your home.</li><li>In your condo building, a unit with the same floorplan as yours but on a lower floor recently sold. You would adjust that sale price up to account for the better view that your unit has.</li><li>In some areas, short sales or bank-owned properties typically sell for a significant discount, which can be accounted for in a price adjustment. An agent can help determine whether an adjustment for short sale status is appropriate in your area.</li></ul>
Price/Square Foot ($/Sq. Ft.)
<p>What is Price/Square Foot ($/Sq. Ft.)?</p><p>This is the list or sale price of a home divided by the number of finished square feet. It determines how much a buyer will pay for a square foot of space and is helpful when comparing the sold prices of several homes of similar size.</p><p>For every city, county, zip code, and neighborhood, Redfin graphs the median listing $/sq. ft. for homes active on the market in the week ending on the date shown on the graph, as well as the median sold $/sq.ft., expressed as a 90-day moving average.</p>
Private Mortgage Insurance (PMI)
<p>What is private mortgage insurance (PMI)?</p><p>Mortgage insurance protects the mortgage lender against loss if a borrower defaults on a loan. Private mortgage insurance is required for borrowers of conventional loans with a down payment of less than 20%. FHA loans and VA loans are essentially public mortgage insurance, as borrowers pay higher insurance premiums in exchange for a low down payment. These funds allow the FHA to insure lenders against losses if borrowers default on FHA-approved loans. Mortgage insurance costs are included as part of the monthly loan payment.</p><p>Related links</p><ul><li>Mortgage insurance</li></ul>
Probate Sale
<p>What is a probate sale?</p><p>Probate is the legal process by which a court oversees the settlement of an individual's estate after his death. If the deceased's will doesn't specify who should inherit his property after his death, the property is turned over to the courts, which eventually appoint the closest relative to sell the property. Prospective buyers usually need to make a court appearance with their agent after making an offer on the home. The process can be difficult and involves extra fees for court and attorney costs to settle any lien disputes over the estate. Because the process of buying a probate sale can be long and complicated without much guarantee of success, Redfin does not represent buyers or sellers in the sale of these homes.</p>
Procuring Cause
<p>What is a procuring cause in real estate?</p><p>The procuring cause of a real estate transaction is the interaction between a buyer or seller and a real estate agent that results in the purchase or sale of a property and merits a commission for that real estate agent. A procuring cause dispute can arise when the buyer or seller has worked with multiple real estate agents to buy or sell a home, and more than one agent feels that they are the procuring cause of the sale.</p><p>One way real estate agents try to avoid procuring cause disputes is by asking clients to sign a buyer's agency agreement or a listing agreement. These documents detail the relationship between the agent and the client and clearly state to whom commission should be paid at the conclusion of the transaction. To learn more about procuring cause or to book a free home tour with an agent, contact a Redfin Agent in your area.</p>
Property Tax
<p>What is property tax?</p><p>Property tax is a tax on property paid by owners to state or local governments. The amount of the tax is determined by an assessment. Homeowners pay this tax annually, semi-annually, or as part of a monthly mortgage payment. Depending on what time of year the buyer closes on the loan, some of this property tax may be due at the time of closing. Learn more about property tax.</p><p>Related links</p><ul><li>Tax Implications of Buying a Home</li><li>Tax Implications of Selling a Home</li></ul>
Public Offering Statement (POS)
<p>A Public Offering Statement is a document prepared by the attorneys representing the builder of a newly constructed condominium building. The statement includes information about the number and type of units in the building, the homeowners association's rights and duties to owners, and a list of any easements or liens affecting the title of the building. In most cases, buyers looking to purchase a new construction condo can get the Public Offering Statement from their agent before making an offer. View a sample POS.</p>
Purchase and Sale Agreement
<p>A Purchase and Sale Agreement (PSA) is a written contract to buy and sell real estate which contains all of the agreed-upon terms for the transaction, such as the final sale price. The specific items in this contract vary by transaction and state, but will almost always include the following:</p><ul><li>Final sale price</li><li>Earnest money amount, deposit method, and due date</li><li>Closing date</li><li>Title company information</li><li>Title condition</li><li>Contingencies commonly included for financing, inspection, appraisal, and title</li><li>Addendums explaining any additional terms of the offer not included in the actual document</li></ul><p>In states where escrow agents handle the closing process, the buyer's agent is likely responsible for preparing this document. In areas where attorneys handle the closing, the attorneys will likely prepare the document. It must be signed by the buyer, seller, and their respective agents. Addendums for inspections, financing, and the title are usually included.</p>
Q
Quitclaim Deed
<p>What is a quitclaim deed?</p><p>A quitclaim deed is a legal document that transfers ownership of a home from one party to another party. A quitclaim deed does not give any guarantee as to what is being transferred; it simply transfers whatever interest the homeowner (grantor) has in the property to the recipient (grantee). Once this deed is executed and recorded, the recipient (grantee) assumes legal and financial responsibility for the property and any liens.</p><p>For example, it may be appropriate to use a quitclaim deed if a couple is divorcing and the husband needs to transfer their jointly-owned property entirely to his wife. Under these circumstances, the wife is not likely to be concerned about receiving a guarantee from the husband that he actually owns the property. She simply needs him to release his interest. On the other hand, a buyer in a transaction to purchase a home from an unrelated third party usually prefers a warranty deed because it guarantees that the seller has title to the property and is conveying it to the buyer.</p><p>Related links</p><ul><li>Deed</li><li>Deed-in-lieu</li></ul>
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Radon
<p>What is radon?</p><p>Radon is a colorless and odorless gas that is the second leading cause of lung cancer. A 2016 report by the US Environmental Protection Agency noted that approximately one in 15 homes in the US contains elevated levels of radon. Radon is produced by the natural breakdown of uranium, rock soil, and water that seeps into a home through cracks and holes in the foundation. More common in older homes, radon can still be present in new construction if radon-resistant features weren't installed.</p><p>If the level of radon in a home is above a certain amount, there are ways to reduce the level of gas. The EPA recommends that homeowners test their homes before listing them on the market, and that buyers always test homes they want to buy. Visit the EPA's website to learn more about radon, or contact your state radon office to find out if the area where you're searching has high levels of radon in homes.</p><p>Reference: US Environmental Protection Agency, The Guide to Protecting Yourself and Your Family From Radon (Dec. 2016); US Environmental Protection Agency, Home Buyer's Guide to Radon (Sept. 2013).</p>
Real Estate Agent
<p>What is a real estate agent?</p><p>A real estate agent is an individual who helps people buy and sell homes in exchange for a commission. Agents who work with sellers to list homes are called listing agents, and agents who work with buyers to find and purchase homes are called buyer's agents or selling agents. Real estate agents must take a course and pass an examination to be licensed in their state. They must also join a brokerage firm.</p><p>Redfin is a full-service brokerage that employs real estate agents who can help you buy or sell a home. Find a local Redfin Agent.</p>
Real-Estate-Owned Home (REO)
<p>What is a real-estate-owned home (REO)?</p><p>Short for "real estate owned," REOs are foreclosed homes now owned by banks and lenders. Banks either withhold from releasing these properties on the market because they don't want to take a loss, or they list them in the Multiple Listing Service (MLS) with a real estate agent. REOs are often priced below market value to create bidding wars among buyers.</p><p>REO properties can still be a great deal, but buyers should know that REOs may need repairs and banks will rarely cover these costs. When looking at purchasing an REO, buyers should get pre-approved with the bank that owns the property and try to put together the "cleanest" offer possible. Clean means few contingencies, a high earnest money deposit, and no requests to the bank to pay for closing costs. Learn how to buy banked-owned and foreclosed homes.</p>
REALTOR®
<p>A REALTOR® is a real estate agent who is a member of the National Association of REALTORS®. REALTORS® must uphold the organization's professional standard of ethics and conduct themselves in a manner in line with the organization's standards. Learn the differences between a real estate agent, REALTOR®, and broker.</p>
Redfin Agent
<p>A Redfin Agent is a licensed real estate agent employed by Redfin. Our experienced, local agents can guide you through the home-buying or selling process, help you find the right home or the right buyer, and represent you during negotiations and throughout the closing process. You can see as many homes as you like with no sales pressure, and during negotiations, we work hard to get you the best possible price. Learn more about our agents or find one in your area.</p>
Refinancing
<p>What is refinancing?</p><p>Refinancing is the process of paying off one loan to get another with better terms. There are many reasons borrowers may refinance: lower interest rates, improved credit, debt consolidation, or to decrease home equity to free up cash. Loan refinancing includes fees for appraisals and title insurance, so it's important to talk with a lender about the costs and benefits of refinancing. If a borrower plans to stay in a home for a long time, it might make sense to refinance. But if they want to sell in the next couple of years, it might be best to wait until they buy their next home to get a new loan.</p>
Rental Cap
<p>What is a rental cap?</p><p>A rental cap is a limit on the number of renters allowed in a condo building or development (also known as owner-occupancy rates). If you own a property with a rental cap and the rental cap has been met, you must add your name to the HOA waiting list before you can rent out your unit. If you're buying a property with a rental cap, note that some mortgage loans have rental cap requirements, in which purchasing a property with a high percentage of renters may limit the number of mortgage loans available to you. Carefully review all HOA documentation and consult with your lender and real estate agent before purchasing a property with a rental cap. Get tips for purchasing a condo.</p>
Resale Certificate
<p>What is a resale certificate in real estate?</p><p>A Resale Certificate is a set of documents that a condominium seller provides to a prospective buyer, usually after mutual acceptance. The certificate typically includes the homeowners association budget, the Covenants, Conditions, and Restrictions (CC&Rs) for the building, and a copy of the minutes of the association's last meeting. In some states, resale certificates are required by law and buyers have the right to rescind their offer for a limited time period after receiving the certificate.</p>
Rescission Notice
<p>What is a rescission notice in real estate?</p><p>A rescission notice is a legal form that buyers sign if they back out of an offer to buy a home. The buyer's agent submits this form to the listing agent so the sellers know the deal is off. Most often, these forms are used after an offer has been accepted and the Purchase and Sale Agreement is signed by both parties. But buyers may also issue a rescission notice during negotiations if they want to make an offer on another home. Buyers should be able to recover their earnest money if they terminate the deal due to a contingency in the Purchase and Sale Agreement.</p>
Reserves
<p>What are reserves?</p><p>Reserves are the cash accounts kept by a homeowners association (HOA) to cover future operating expenses. These reserves are funded by HOA dues.</p><p>Reserves also refer to cash kept by lenders in order to pay homeowners insurance and property taxes as payments become due.</p>
RESPA
<p>What is RESPA?</p><p>Short for Real Estate Settlement Protection Act, RESPA is a set of laws passed by Congress in 1974 to protect the rights of consumers during the closing of a real estate transaction. It aims to educate consumers about settlement services like escrow and title companies, as well as prohibit extra referral fees related to closing costs. When a home sale is financed, RESPA requires that lenders give borrowers a Loan Estimate that lists estimated closing costs associated with the loan within three business days of a loan application.</p>
Right of Refusal
<p>What is Right of Refusal?</p><p>When you see a listing with the status "Right of Refusal," the seller has made a prior arrangement with a buyer who will be given the chance to match any subsequent offers.</p><p>This is sometimes done when buyers must first sell their current home before they can commit to buying the seller's home. For example, Bob wants to buy Sally's home, but needs to sell his own home first. Bob makes an offer on the home which includes a contingency that allows him to back out of the deal if he cannot sell his home. Meanwhile, Sally is able to solicit offers from other buyers. If another buyer, Pete, makes an offer on Sally's home, she must give Bob the chance to buy the home under the same terms offered by Pete (i.e. a right of first refusal). If Bob can't or won't match the offer, Pete can buy the home from Sally.</p>
S
Sale-to-List Ratio
<p>What is a sale-to-list ratio in real estate?</p><p>The sale-to-list ratio is the final sale price (what a buyer pays for the home) divided by the last list price expressed as a percentage. If it's above 100%, the home sold for more than the list price. If it's less than 100%, the home sold for less than the list price. Looking at sale-to-list percentages can help buyers and sellers get a sense of how to negotiate on pricing. To calculate the average sale-to-list for a group of homes, add up each home's sale-to-list ratio, then take the average of the total.</p><h2>Sale-to-List Ratios on Redfin</h2><p>In the Neighborhood section of the property details page, we show you the sale-to-list ratios for homes that sold in a given month at the neighborhood, zip-code, county, and city levels.</p>
Seasoning
<p>What does "seasoning" mean in real estate?</p><p>Title seasoning refers to the length of time a homeowner has owned his or her home. Buyers looking to get an FHA loan and putting less than 20% down will be denied financing if the seller of the home they want to buy hasn't owned it for more than 90 days. This is a result of a HUD law enacted to prevent home flipping, where folks buy homes and try to resell them at a higher price within a few weeks to make a quick profit.</p>
Secondary Mortgage Market
<p>What is the secondary mortgage market?</p><p>The Secondary Mortgage Market is a market for lenders and investors to purchase and sell existing mortgages. Mortgage lenders often originate a loan to a borrower but then sell the loan to large aggregators, such as Fannie Mae and Freddie Mac. These organizations package the loans into mortgage-backed securities based on their risk level and then sell the loans to investors, who receive payments from the borrowers of the loan. This circle of funding makes more money available to lenders so they can provide more credit to borrowers.</p>
Self-Represented Buyer
<p>What is a self-represented buyer?</p><p>In certain markets, a buyer can choose to waive representation by a buyer's agent. Essentially, the buyer represents himself, sometimes with the assistance of an attorney. In this case, the listing agent is the only real estate agent involved in the purchase.</p>
Seller Disclosure
<p>What is a seller disclosure in real estate?</p><p>A Seller Disclosure is a set of documents completed by the seller of a home, listing any known issues with the property and any remodel projects completed during the time they owned the home. In most states, the seller is required to provide this disclosure within a few days of mutual acceptance. In turn, the buyer has a certain number of days to review the disclosures. This information is useful but is no substitute for an inspection by a licensed inspector.</p><p>In most cases, prospective buyers can ask their agent for access to the Seller Disclosure for the home before making an offer. However, when buying bank-owned homes, buyers won't receive these documents since the bank isn't required to provide details about the condition of the home. Every transaction is different, and the Purchase and Sale Agreement dictates the specifics.</p><p>Examples of Seller Disclosure issues include:</p><ul><li>Structural, electrical, or plumbing issues</li><li>Lead paint, radon, asbestos, or toxic mold</li><li>Pests or wood-destroying insects</li><li>Flood or wildfire danger</li><li>Toxins in the local soil or water</li><li>Water rights (in dry or desert climates)</li></ul>
Seller's Market
<p>What is a seller's market?</p><p>A seller's market is one in which there are more buyers than homes for sale. Since supply is less than demand, homes are higher priced and more attractive to sellers in the market. In contrast, a buyer's market is one in which there are lots of sellers and relatively few buyers, which leads to lower prices.</p><p>A market's absorption rate is the best way to figure out whether a certain area is behaving as a seller's market or buyer's market. The absorption rate is calculated by looking at how many homes sold in a certain month and dividing it by the total number of homes for sale at the end of the month. An absorption rate of 20% or higher is usually deemed a seller's market, since homes are selling relatively quickly and the supply of homes is low. Learn more about buyer's markets and seller's markets.</p>
Selling Office Commission (SOC)
<p>What is the Selling Office Commission (SOC)?</p><p>The selling office commission is what the seller and listing agent agree to pay to the real estate agent that represents the buyer. The amount of the selling office commission is determined by the seller in the listing agreement.</p>
Senior Exemption
<p>What is a Senior Exemption in real estate?</p><p>A Senior Exemption is a property tax reduction for eligible senior citizens. The guidelines vary according to county. Note that many listings will say "No Senior Exemption," which means that you can't file for the property tax reduction even if you're eligible. Learn about the tax implications of buying a home.</p>
Setback
<p>What is a setback?</p>Setbacks are determined by local municipalities and describe the minimum distance between a building, house, or structure’s front, rear, and sides to its property lines. The purpose of setbacks is to ensure that buildings are far enough away from neighboring property lines, sidewalks, streets, underground utilities, and bodies of water - to name a few examples.
Settlement
<p>What does "settlement" mean in real estate?</p><p>Settlement is another term for the closing of a real estate transaction. Settlement occurs when the buyers, sellers, and their agents sign the closing documents of a transaction, and the closing agent or attorney facilitates payment of all closing costs. Settlement or closing procedures vary by location. Learn how the closing process works.</p>
Short Sale
<p>What is a short sale?</p><p>A short sale is the sale of a home for less than the homeowner owes on the mortgage. A homeowner who is unable to keep up with the mortgage payments may try to sell a home in a short sale to avoid going into foreclosure. Short sales can be challenging for both buyers and sellers because there's often more than one mortgage on the home, and all lenders must approve the sale. This is why it can take months for a short sale offer to be approved. If the short sale fails, then the bank forecloses on the home.</p><h2>How are short sales different from foreclosures?</h2><p>Short sale homes are still owned by the individual homeowner, while foreclosures are owned by banks. If the homeowner cannot sell the home through a short sale, the bank initiates foreclosure to try to sell the home directly, often in an auction. If the auction fails to turn up a buyer willing to pay a price satisfactory to the lender, the home becomes Real Estate Owned (REO), where the owner is the bank. The bank then typically sells the property through a real estate agent.</p><h2>The bottom line</h2><p>If you plan to make an offer on a short sale, be prepared for a long haul. And keep in mind that even if your offer is accepted, the bank will usually ask you to buy the home as-is and won't pay for any repairs. Learn more about the pros and cons of short sales.</p>
Single Family Residence (SFR)
<p>What is a single family residence (SFR)?</p><p>A single family residence (SFR) is the most common type of home listed in the MLS. Also known as single family detached, this means the home is a stand-alone structure with its own lot intended for one family. Single family residences differ from condominiums, townhomes, cooperatives, and multi-family homes, which are all attached residences. Learn more about residential building types.</p>
Sold
<p>What does "sold" mean in real estate?</p><p>During a home search, it's important to look at the number of recently sold homes, as well as their price per square foot, to get a sense of the type of inventory that have recently sold in the area where you're looking. Doing a comparative market analysis of comparable homes that recently sold helps you determine fair market value.</p><h2>Redfin Shows Sold Homes</h2><p>Redfin shows all the available data on sold homes from the Multiple Listing Services (MLS) in the markets we serve. The information is updated shortly after the listing agent changes the status in the MLS. This means you have the most current data about what's selling in your local market. We also get the public record data that includes the assessed value of the home for property tax purposes. Knowing what's selling is the first step to becoming an informed buyer or seller and gives you a sense of how to price an offer or a listing to sell.</p>
Special Assessments
<p>What are special assessments in real estate?</p><p>There are two definitions for special assessments. The first definition refers to fees that homeowners associations charge homeowners to cover the costs of building repair that exceed the amount in the current budget. Special assessments are required to be included in the resale certificate for a condominium unit, so read it carefully to make sure you understand what you could pay if you decide to buy a unit. The authority to impose special assessments will also be included in the Covenants, Conditions & Restrictions (CC&Rs). Buyers typically receive the CC&Rs within a week after submitting an offer on a unit in the building. Learn about the pros and cons of condos.</p><p>A second definition for special assessments refers to dues that the local city government charges homeowners for utilities, road maintenance, and other services like fire protection and street lighting.</p>
State Department of Education
<p>What is the State Department of Education?</p><p>Though charter schools and other nontraditional school models may be geographically located within specific school districts, the district for such schools is sometimes listed as that state's "Department of Education." This is because some charter schools are authorized, established, funded and/or governed by a state's department of education, rather than the local school district.</p>
Student-Teacher Ratio
<p>Student-teacher ratio is the number of students divided by the number of teachers in a school. For example, a student-teacher ratio of 10:1 indicates that there are 10 students for every one teacher. The term can also be reversed to create a teacher-student ratio.</p><p>A low student-teacher ratio is often used as a selling point to help parents choose the right school for their children. On the other hand, a high student-teacher ratio may suggest that the school is underfunded or in need of better government support.</p><p>Related links</p><ul><li>GreatSchools Rating</li></ul>
Subject to Inspection (STI)
<p>What does Subject to Inspection (STI) mean?</p><p>A home may be identified as Subject to Inspection if the seller has entered into a contract with a buyer but a successful closing is contingent on a home inspection and negotiation over any related repairs or concessions.</p>
Survey
<p>What is a survey?</p><p>A survey refers to the process of locating and measuring a property's boundary lines to determine the exact amount of land that a homeowner owns. A survey will also locate and measure any easements or encroachments on a property, which will be noted on a home's chain of title. Buyers have a property surveyed after making an offer to make sure any issues with easements or encroachments are documented and resolved before closing.</p>
Surveyor
<p>What is a surveyor?</p><p>A surveyor is a private professional or county employee who conducts surveys. Surveys locate and measure a property's boundary lines to determine the exact amount of land that a homeowner owns. A survey will also locate and measure any easements or encroachments on a property, which will be noted on a home's chain of title. Buyers have a property surveyed after making an offer to make sure any issues with easements or encroachments are documented and resolved before closing.</p>
Sweat Equity
<p>What is sweat equity?</p><p>Sweat equity refers to home improvements made by homeowners that increase a property's value. Learn how to increase your home's appraisal value.</p>
T
Temporarily Off Market
<p>What does "Temporarily off Market" mean in real estate?</p><p>A listing may be taken temporarily off market for a variety of reasons. For instance, the seller may be taking a vacation and unable to consider new offers while away. Or the seller may be renovating or making repairs to the property. The seller is still under contract with her real estate agent while the listing is temporarily off market.</p>
Tenancy in Common
<p>What is tenancy in common?</p><p>A tenancy in common is a form of property ownership where two or more people, related or not, hold joint ownership of a home. Each owner's name is on the title, and, unless there is a written agreement to the contrary, each owner is presumed to hold an equal, undivided interest in the entire property.</p><p> The full details about TICs, such as what kinds of loans are available and how taxes are calculated, tend to vary depending on location. Talk to your attorney or real estate agent to find out more. </p>
Time on Redfin
<p>What does "Time on Redfin" mean?</p><p>"Time on Redfin" measures the total number of days the property has been advertised as on market under this MLS number on Redfin.</p><p>Related links</p><ul><li>Cumulative Days on Market</li></ul>
Title
<p>What is title in real estate?</p><p>Title is the right to, or ownership of, a specific real estate property. Buyers get a preliminary title report from an escrow agent or attorney within a week after they reach mutual acceptance on an offer. The report identifies all parties with a legal claim to the property, what items need to be cleared from title before the new buyer can take possession, and if there are any recorded easements or encroachments on the property. Once the transaction closes, the buyers will receive a final title policy recording their names as the new legal owners, along with the amount of title insurance. This information is part of a county's public records.</p>
Title Insurance
<p>What is title insurance?</p><p>Title insurance compensates the insured buyer or lender if title defects, liens, or competing claims of ownership on a property arise after closing. If you have title insurance and you lose your home due to a title dispute, an owner's policy could compensate you for that loss and help cover legal fees related to the dispute.</p>
Title Search
<p>What is a title search in real estate?</p><p>A title search is an examination of public records by a title company, lawyer, or escrow agent to determine the history of ownership of a particular piece of property and identify any liens, encroachments, easements, restrictions, or other factors that might affect the title. This step must be completed before a buyer can purchase title insurance.</p>
Townhouse
<p>What is a townhouse?</p><p>A townhouse is a type of home that's usually constructed as a two- or three-story unit with a common wall or walls bordering the adjacent unit. The common form of ownership is similar to a condominium project, in that the property owner not only owns his or her respective unit, but also owns an undivided interest in any common area. Townhouse ownership sometimes differs from condominium ownership in that the townhouse owner owns the physical structure rather than just the airspace between the walls, floor and ceiling. However, in some areas "townhouse" can refer to the physical style of the structure rather than the form of ownership. Learn more about the pros and cons of townhomes.</p>
Transaction Broker
<p>What is a transaction broker?</p><p>A transaction broker does not represent the buyer or seller, but instead acts as a neutral resource to help both parties complete a home sale. For example, in Colorado, a transaction broker is the default role of an agent when there is no signed agency agreement between the agent and the buyer. If a buyer desires a traditional agent that has a duty to act in the best interest of the buyer, he or she must sign a written agency agreement with the agent.</p><p>A transaction broker is not considered a dual agent; dual agency involves an agent or broker who represents both parties simultaneously. A transaction broker does not represent either party.</p><p>Note: When you work with Redfin, we will usually advise you to work with our agent as a buyer's agent, instead of as a transaction broker. We believe you get better service when you have an agent working exclusively on your behalf, since your agent is empowered to negotiate with the seller to get you a better deal.</p>
Transaction Coordinator
<p>What is a transaction coordinator?</p><p>At Redfin, transaction coordinators handle all the details once your offer on a home is accepted. They coordinate property access for inspectors, appraisers, and insurers; work with escrow; and help ensure an on-time closing.</p><p>Related links</p><ul><li>Redfin Agent</li><li>Associate Agent</li></ul>
Truth-in-Lending Act
<p>What is the Truth-in-Lending Act?</p><p>The Truth-in-Lending Act is a set of U.S. government guidelines for lending practices to ensure that borrowers receive information about their loans. As part of the Consumer Credit Protection Act, it requires lenders to disclose information regarding loan origination fees, payment schedules, and APR, along with borrowers' limited rights to rescind their application within a certain timeframe without being charged. The Truth-in-Lending Act requires lenders to give borrowers a Loan Estimate within three business days of a loan application.</p>
Turn-Key
<p>What does turn-key mean?</p><p>Turn-key is a term used by real estate agents to indicate that a home is move-in ready. This means that all appliances are in working condition and there are no obvious structural or electrical issues with the home. However, this doesn't mean that an inspection is unnecessary if you decide to make an offer on a home marketed in turn-key condition. Homes that aren't in turn-key condition may include new construction that isn't completed at the time an offer is made, or a home that requires extensive repairs.</p>
U
Under Contract
<p>What does "under contract" mean?</p><p>A home is under contract when a buyer has made an offer on a home and the seller has accepted, but the sale has not closed. In order for a home to close and no longer be "under contract," all contingencies must be satisfied or waived (inspection, financing). When the home successfully closes, the home is listed as "sold" rather than under contract.</p><p>Related links</p><ul><li>Contingent</li><li>Pending</li></ul>
Underwriter
<p>What is an underwriter?</p><p>An underwriter is an individual working for mortgage lenders who determines whether or not a borrower's loan is approved. If a borrower gets a loan from a mortgage broker, the broker sends the loan documents to the lender's underwriter. The underwriter evaluates the entire loan application, including the appraisal of the home, and decides whether to approve or decline the application based on the risk presented by the loan.</p><p>Underwriters often request additional information while evaluating the loan application. For example, underwriters may ask for more pay stubs and documentation of the origins of funds used for the down payment. Some lenders use underwriters who work within their firms, but also may outsource to underwriters working for other banks or mortgage lending institutions outside the state. Sometimes loans can take longer to get approved when a lender works with an out-of-state underwriter with less local knowledge.</p><h2>How to get underwriter approval</h2><p>Typically an underwriter reviews a loan application after a buyer and seller have reached mutual acceptance. However, gaining underwriter approval before submitting an offer is a strategy that can increase the strength of a buyer's offer, which can be helpful when going up against multiple offers. To get full underwriter approval, a buyer can request that a lender send their pre-approval documents to an underwriter who will review them as if the buyer were already under contract to buy a home. The buyer's pre-approval letter will then be annotated with "full underwriter approval" that can be highlighted when presenting the offer.</p>
Upfront Costs
<p>What are upfront costs?</p><p>Upfront costs are the costs you pay out of pocket once your offer on a home has been accepted. Upfront costs include earnest money, the inspection fee, and the appraisal fee.</p><ul><li>Earnest money: 1%–3% of home sale price, typically paid once you reach mutual acceptance with the seller</li><li>Inspection fee: typically $300–$500, paid during inspection</li><li>Appraisal fee: typically $300–$500, paid after inspection and on or before closing.</li></ul><p>Related links</p><ul><li>How much are closing costs?</li></ul>
V
VA Loan
<p>What is a VA loan?</p><p>A Veterans Affairs loan, commonly known as a VA loan, is a special type of loan guaranteed by the US Department of Veterans Affairs and only available to eligible veterans, their spouses, and other beneficiaries. As with FHA loans, the risk is lower for the lender because the loan is guaranteed by the government, so this mortgage type offers a competitive interest rate without requiring a down payment or private mortgage insurance.</p><p>Qualifications</p><ul><li>Eligibility: Certificate of Eligibility (COE) required</li><li>Down payment: Not required, as long as the home's sale price does not exceed appraised value</li><li>Funding fee: Required, varies by veteran type</li><li>Mortgage insurance: Not required</li></ul><p>Advantages</p><ul><li>Available to eligible veterans</li><li>No down payment or mortgage insurance required</li><li>No pre-payment penalty for paying off a loan early</li><li>VA rules require closing costs stay below specified limits</li><li>VA assistance to veteran borrowers who encounter difficulty making payments</li></ul>
Vacancy Rate
<p>What is a vacancy rate?</p><p>The vacancy rate is the percentage of vacant units in a rental property, like an apartment building. A low vacancy rate indicates strong rental interest, while a high vacancy rate can mean that units are not renting well.</p><p>Related links</p><ul><li>Rental cap</li></ul>
W
Walkthrough
<p>What is a walkthrough in real estate?</p><p>A walkthrough is the final inspection of a home by the buyer before closing. Buyers complete a final walkthrough to make sure any agreement to make repairs or do other things with regard to the property have been fulfilled before the closing papers are signed. A walkthrough can happen anywhere from a few days to a few hours before closing. If something isn't right, the buyer should ask the seller to fix the problem before the sale is closed. In some regions, a final walkthrough is not a guaranteed step, and it must be written into the Purchase and Sale Agreement.</p>
Withdrawn or Cancelled
<p>What does "Withdrawn or Cancelled" mean in real estate?</p><p>When a homeowner contracts with an agent to sell a home, the listing agreement must include a set expiration date. A listing is marked as "withdrawn" or "cancelled" when the homeowners cancels the listing contract with her agent before the contract's agreed-upon expiration date.</p><p>Withdrawn can also refer to a buyer withdrawing his or her offer to buy property, which the buyer is free to do until the seller accepts the offer.</p>
Y
Yield Spread Premium (YSP)
<p>A Yield Spread Premium (YSP) is the compensation a lender pays a mortgage broker to sell a loan with a higher interest rate. Unless a borrower pays an origination fee for a mortgage loan, they most likely will pay a YSP (an interest rate above the market rate). The YSP is listed on the Loan Estimate and Closing Disclosure. A YSP isn't always a bad thing for the borrower because it reduces the upfront costs of a loan. But the buyer should be sure to review all documentation before signing any contracts.</p>
Z
Zero Lot Line
<p>What is a zero lot line?</p><p>A zero-lot-line property is a building that comes to the very edge of the property line on at least one side. In a zero-lot-line housing development, units may be attached to one another, leaving no room for a yard. Many townhouse developments are built on zero-lot lines. In some cases, there may be a yard between the units, but the exterior wall of one home sits on the lot line of the neighbor's property or yard. Learn more about townhouses and other building types.</p>
Zoning
<p>What is zoning?</p>Zoning refers to municipal or local laws and regulations that govern how the land can be developed and what purposes the zoned land can serve. For example, one zoning district may be designated for single-family homes, while another may be designated for businesses. There, of course, can also be zoning districts that allow for both commercial and residential use. The most common land zoning classifications include residential, commercial, industrial, agricultural, mixed-use, institutional, open space, planned-unit development, and historic.
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