17 Real Estate Terms That Every Investor Should Know

    real estate terms that investors should know
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    The real estate industry is full of real estate terms in an attempt to make purchase decisions easier and knowledgable.

    And hey, you probably have heard about some of these real estate terms while some might be completely new to you as an investor.

    Don’t worry, it’s just the reason that we came up with this extraordinary copy to ease the process.

    Without further ado, here’s what you need to know.

    Here are the 17 real estate terms every investor should watch out for…

    1. Credit score
    2. Closing cost
    3. Land document
    4. Appraisal
    5. Blind offer
    6. Escrow
    7. Equity
    8. Inspection
    9. Lease land
    10. Probate sale
    11. Purchase and sale agreement
    12. Short sale
    13. Land banking
    14. Unexpired interest rate
    15. Off-plan property
    16. Contract of sale
    17. Distress sale

    Credit score real estate terms

    To understand that.

    First, you probably have to understand that a credit score is a necessity for financial management.

    Or simply put, as financial risks that serve up as a factor to determine the eligibility of a loan from a lender.

    And the average good credit score is 752.

    Here’s an example:

    Let’s say we have two land buyers and they need 30 million loans each.

    If borrower A, with a credit score of 560 and borrower B with a credit score of 760.

    Guess what!

    Borrowers A and B have a credit score difference of 200 points.


    This means, that a few years later, borrower A will pay 10x higher than borrower B.

    This is true.

    That’s why it’s not advisable to go into a mortgage loan with a low credit score.

    Closing cost

    This is a fee charged by real estate agents or lenders.

    And the sweet thing about closing costs is that you can typically pay in full during the complete transaction session.

    Land document

    This real estate term is widely used during a land transaction.

    Before the purchase of land, it’s widely accepted to know the title of the land(document).

    And it may vary, from:

    • Excision document
    • C of 0
    • Gazette
    • Governor’s consent and many more.

    If you want to know more about the land documents, read this article.


    Like I said earlier.

    That reminds me of the credit score…

    It’s so much work with an appraisal.

    In the case of appraisal, the lender undergoes a thorough investigation of this case in terms of property value.

    The mortgage lender seeks out professional justification in terms of appraisal about a property sale.

    This helps the lender to come up with a final decision on whether the value of the property is worth the amount of loan the potential buyer seeks for.

    Blind Offer

    This is when a buyer purchases a property that hasn’t been seen.

    Even when the buyer doesn’t consider inspecting the property. Sometimes, it may be due to desperation on the buyer’s behalf.

    In this case, it’s referred to as a “blind offer”.


    This is when an agent collects written documents, money, or other things valuable to be made an account of until certain precaution is satisfied by both parties.


    Equity is the original investment value owned by a home buyer/owner.

    To calculate that:

    You’ve to take the market value of the home/land and subtract the conventional mortgage from the property.

    The total amount remaining is the amount of equity you have for the home.

    For example:

    If you buy a home worth 150 million for 130 million.

    That means you have your equity score is a difference of 20 million.

    This is between the value and the cost of the home.


    This is when a buyer undergoes a physical inspection on the property to buy.

    This allows the buyer to prepare a report based on the condition of the property.

    It helps create due diligence on the property in order to avoid future risks.

    Lease land

    This happens when you don’t need land to build your home.

    To do this:

    You can build a home on rented land. This means you’ll be paying rent to the land owner but you eventually own the house.

    Probate sale

    This real estate term is basically used when the property owner dies without writing a will that ensures the property mantle is passed to someone else.

    In this case, the probate court would have to authorize a representative or an estate agent to sell the property.

    Purchase and sale agreement

    This is a written agreement between the buyer and seller.

    This means both parties have to come into an agreement to sell and purchase the property.

    Short sale

    In this case, when a property undergoes a short sale it means that the property is sold for less than the total debt that secured the property.

    Trust sale

    This means that a property is being rooted by a trustee it could be children or relatives.

    Most importantly, when the original property owner dies, he/she placed their property assets in the hands of a trusted person.

    Land banking

    Land banking refers to the practice of buying and holding property in an area or specific location for the purpose of turning a profit when the real estate market turns around.

    In other words,

    Land banking is the practice of buying up large amounts of vacant land in a region and using it to earn a profit without developing it.

    The name comes from the banking industry, where banks make loans to landowners who want to develop their land so they can pay back their loans over time.

    Unexpired interest rate

    Unexpired interest is defined as the number of years available or remaining for the property to expire.

    For example:

    Let’s say, “property A” is selling for 30 million and property “B” is selling for 20 million each of them with the same title and both have the same title confirmed as verified.

    But why is the price of property “A” higher?

    It’s because the “property “B” has limited years to expire that’s why it cost a low price.

    In this case, it’s called an unexpired interest rate.


    Off-plan property can be defined as an uncompleted project.

    This means, the property is either under construction or delayed for whatever reasons(finances, recession, and many more).

    The good thing is that buying an off-plan property is way cheaper and comes with higher returns on the market.

    Contract of sale

    According to UpCounsel,

    A contract of sale is an agreement between a seller and a buyer.

    The seller agrees to deliver or sell something to a buyer for a set price that the buyer has agreed to pay.

    With these contracts, the transfer of ownership happens when the buyer pays and the seller delivers.

    This contract changes somewhat in situations where the seller cannot yet deliver the item that is sold.

    It also changes when the buyer cannot yet pay the full price. Both parties can still agree on transferring the ownership to the person buying in these situations—as long as the seller is ready to deliver what is being sold.

    The contract is then subject to the resolutory conditions, meaning if the buyer fails to make the payment, the seller takes the item back.

    Distress Sale

    According to Investopedia,

    A distress sale—also called a distressed sale—occurs when a property, stock, or other asset must be sold quickly.

    Distress sales often result in a financial loss for the seller who, for reasons of economic duress, must accept a lower price.


    Now that you have an understanding of real estate terms because this will not only help you during the purchase decision but it makes you knowledgeable about the whole process.

    In other words, if you are thinking of property investment.

    It’s what we are good at.

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