Real Estate Terminology

A lender’s conditional estimate of how much a buyer may qualify to borrow after reviewing financial information. It is stronger than a basic pre-qualification, but it is not a final loan commitment.

The portion of the purchase price a buyer pays from available funds rather than financing through the mortgage.

Money delivered after a contract is signed to show the buyer’s good-faith intention to complete the purchase. The contract states how it will be handled and whether it may be refundable.

A negotiated fee that may give a Texas buyer the unrestricted right to terminate the contract during a specified option period, subject to the contract’s terms.

Expenses associated with completing a purchase or loan, which may include lender charges, title-related costs, prepaid items, taxes, insurance, and other transaction fees.

A percentage lenders use to compare a borrower’s recurring monthly debt obligations with gross monthly income.

A licensed appraiser’s independent opinion of a property’s market value, commonly required by a lender before final loan approval.

The percentage charged by a lender for borrowing money. The rate affects the monthly principal-and-interest payment and the total cost of financing.

A contract that has been signed and accepted by all required parties. Deadlines and obligations typically begin according to the contract’s effective date.

The date used to begin calculating many contractual deadlines after final acceptance has been communicated and entered into the contract.

A condition that must be satisfied for the transaction to proceed as written, such as financing, appraisal, or the sale of another property.

A negotiated number of days during which a Texas buyer may have the unrestricted right to terminate, provided the contract requirements are met.

A written agreement signed by the parties that changes one or more terms of an existing contract.

An additional form attached to a contract to address a particular circumstance, disclosure, contingency, or property feature.

A situation in which a seller receives more than one offer. The seller may accept, reject, or negotiate offers according to the seller’s instructions and applicable law.

A visual evaluation of accessible property components by an inspector. It helps a buyer better understand condition, maintenance items, and potential concerns.

A document prepared by a surveyor showing property boundaries, improvements, easements, encroachments, and other recorded or observed features.

A legal right that allows another person or entity to use a portion of a property for a stated purpose, such as utilities or access.

Recorded rules that may limit how a property can be used, improved, or maintained within a subdivision or community.

An organization that manages certain community rules, common areas, services, assessments, and governing documents.

A Texas disclosure form through which many residential sellers provide information about known property conditions, subject to legal exemptions.

A newly built home purchased from a builder or developer. Builder contracts, timelines, inspections, warranties, incentives, and change orders may differ from resale transactions.

A real estate professional’s analysis of relevant recent sales, active listings, property characteristics, and market conditions to help estimate a likely pricing range.

The price a knowledgeable buyer and seller may agree upon in an open and competitive market under typical conditions.

The difference between a property’s current value and the total amount owed against it.

The legal ownership rights associated with real property. A title company researches records and helps address requirements before ownership transfers.

Insurance that may protect an owner or lender against certain covered title defects, liens, or ownership claims that existed before the policy date.

An arrangement in which a neutral party holds funds or documents and distributes them according to the contract and closing instructions.

The final stage of a transaction when required documents are signed, funds are delivered, lender and title requirements are satisfied, and ownership is transferred.

The buyer’s right to occupy the property. Possession may occur at closing and funding or at another time established by the contract or a temporary lease.