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Glossary of Real Estate Terms

Closing Costs

Definition: Expenses beyond the purchase price that buyers and sellers must pay at closing, including lender fees, title insurance, and taxes. Explanation: Closing costs typically range from 2% to 5% of the home’s purchase price and cover ...

Comparative Market Analysis (CMA)

Definition A Comparative Market Analysis (CMA) is a detailed report prepared by a real estate agent that estimates a property’s market value based on recently sold, similar properties in the same area. A CMA helps sellers set a competi...

Contingency Clause

Definition A contingency clause is a condition written into a real estate contract that must be met for the transaction to move forward. If the contingency is not fulfilled, the buyer or seller may have the right to cancel the contract wit...

Debt Service Coverage Ratio (DSCR)

Definition The Debt Service Coverage Ratio (DSCR) is a financial metric used by lenders to determine whether an investment property generates enough income to cover its debt obligations. It measures the relationship between Net Operating I...

Debt-to-Income Ratio (DTI)

Definition The Debt-to-Income Ratio (DTI) is a financial metric used by mortgage lenders to assess a borrower’s ability to repay a loan. It measures the percentage of a borrower's gross monthly income that goes toward monthly debt obli...

Deed-in-Lieu of Foreclosure

Definition A deed-in-lieu of foreclosure is a legal agreement in which a homeowner voluntarily transfers ownership of their property to the lender to avoid going through the foreclosure process. This option is typically used when a borrowe...

Depreciation

Definition Depreciation is the gradual decrease in the value of a property over time due to factors such as wear and tear, aging, or market conditions. In real estate, depreciation is primarily used as a tax deduction for investment prope...

Earnest Money Deposit (EMD)

Definition: A good faith deposit made by the buyer to show commitment to purchasing the home. Explanation: Earnest money is typically 1% to 3% of the purchase price and is placed into an escrow account until closing. If the buyer backs out d...

Easement

Definition An easement is a legal right allowing one party to use another party’s property for a specific purpose, such as access, utility lines, or pathways. Easements typically do not grant ownership of the land but provide certain usage r...

Eminent Domain

Definition Eminent domain is the legal power of the government to take private property for public use, provided that the owner is compensated at fair market value. This authority is often exercised for projects such as road expansions, ut...

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