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Even with the help of a professional, informed consumers are in the best position to protect their interests and get the most value for their investments. General knowledge of the basic elements of real estate contracts and terms is a great tool for buyers and sellers of all degrees and experience levels.  Familiarize yourself with some real estate terms before you dive into the quagmire of real estate buying or selling.

  1. Amendments– Any change, addition, or correction to parts of a contract that does not alter the principal of the overall contract.
  2. Appraisal– An estimate of the value of property after an inspection or evaluation.
  3. Assumption– Taking over the title and subsequent financial obligations and outstanding fees of a property.
  4. Beneficiary– Recipient of deed of trust or benefits.
  5. Closing or Close of Escrow– The date of official transfer of title from seller to buyer, where buyer becomes legal owner of the property.
  6. Comparable Sales– Similar in nature to subject real property, for the purpose of analysis in home and property appraisals.
  7. Deed of Trust– Used in some states as a substitute for a mortgage.
  8. Deed Restrictions– Limitations in the deed on potential usage of certain portions of the property.
  9. Earnest Money Deposit– A down payment, deposit, or partial payment on a property.
  10. Easement– When a second party has limited rights for a specific purpose or use on the land or property of another party.
  11. Hazard Insurance– Property insurance against fires, vandalism, floods and other natural disasters and destruction of property.
  12. Impounds– A trust account set up by lenders to collect funds for potential taxes, mortgage and insurance fees on behalf of the borrower.
  13. Legal Description– The description of land boundaries and area as determined by governmental surveys and decree to clearly distinguish one parcel of land from another.
  14. Lien– When property is held as security for outstanding payments due to judgments, taxes, mortgages, or deeds of trust.
  15. Mortgage– Property pledged as the security for repayment of a loan.
  16. PITI– Principal, Interest, Tax, and Insurance lump payments.
  17. Power of Attorney– A written agreement where one party grants legal authority to a representative agent.
  18. Purchase Agreement– The contract for purchase of real estate between buyer and seller.
  19. Quitclaim Deed– A release from title or deed claims of grantor on a property.
  20. Recording– Documents filed with County Recorder as matter of public record.

Keep these words and phrases in mind while you go about your real estate transactions, and you will be much better prepared for the world of real estate.