Property Management Blog

15 Terms All Real Estate Investors Should Know

System - Wednesday, December 27, 2023
Property Management Blog

Are you thinking of investing in the real estate industry? Learning about real estate terms is vital to help you communicate easily with other property specialists. Your conversations will be smoother while discussing, negotiating, and completing transactions with property investors.

Our team of experts at Foothills Properties have written this article to help you with common terms you will likely encounter in the field of real estate as a new landlord or investor.

1. Refinancing

Refinancing is an alternative you can take as a borrower who seeks to restructure your existing loan. You can take another loan to take advantage of better rates and terms, making it more beneficial for you.

As a borrower, refinancing can offer better payment structures that can lower the monthly payments of your property loan. Most borrowers refinance to pay off their debt quickly or maximize the better terms offered in the current market. 

2. Seller’s Market

A seller’s market is a market condition that is beneficial if you are selling properties. It means that the property demand is high and there are fewer properties available. In this scenario, sellers can price their properties higher, given the high demand and scarcity of real estate.

3. Buyer’s Market

Meanwhile, a buyer’s market offers more advantages if you plan to purchase properties. This situation appears when the property demand is low and there are plenty of properties available for sale. In this case, buyers have more power to negotiate for a lower price.


4. Appreciation

When you hold onto a property for a certain period, its value tends to increase. Properties appreciate more as compared to other items since real estate can be scarce. Furthermore, property demand can grow strong and inflation can increase the market price. 

5. Credit Score

Your credit score is a key measure for lenders and landlords to evaluate your finances and creditworthiness. A high credit score indicates that your loan and tenancy applications are likely to be approved, whereas a low credit score can mean that the application can be rejected.

Since credit scores inform lenders and borrowers about your management of liabilities, they can gauge whether you can be trusted to pay loans or monthly rental fees on time.

6. Realtor

As a realtor, you officially represent property buyers and sellers. Although the job is comparable to a real estate agent, a realtor is registered as a member of the National Association of Realtors. They are tasked to adhere to the professional standards and ethical code outlined by the organization. 

7. Real Estate Agent

As a real estate agent, you can represent property buyers and sellers in real estate negotiations. Often, this is the first step you take when joining the real estate industry. Typically, real estate agents work under real estate brokers.


8. Real Estate Broker

As a real estate broker, it is assumed that you have real estate expertise. You will have received multiple higher training, hold licensed certificates, and understand complex technical real estate terms and processes. Real estate brokers hire real estate agents and operate a brokerage.

9. Addendum

Lease agreements can change over time since buyers and sellers may want to make a few additions or remove certain clauses. To accommodate these alterations, an addendum can be made to include the details of the new terms and conditions to the existing lease agreement.

10. Appraisal

When you want your property’s value to be evaluated, you undergo a property appraisal. Before lenders approve a loan, they ask for an appraisal to ensure that the loan amount matches the property valuation. Should the property’s value be lower than what the buyer is offering, then it is up to the buyer to cover the difference.

11. Closing

At the end of the real estate negotiation, the last stage is termed closing. This means that both the property buyer and seller had reached an agreement to complete the transaction at a specific date.

When you reach the closing date, the property transfer is now legal and binding.

12. Fair Market Value 

Fair market value means that the assessed property value is accurate. This is the price that both parties to the property deal willingly agree on without pressure to finalize the transaction.


13. Fixed-Rate Mortgage

Fixed-rate mortgages means that you will pay the same interest rate throughout the loan period. A fixed-rate mortgage means you are reassured that the rate is stable and there are no sudden rate increases to stress over, as a borrower.

Otherwise, you will be constantly checking the movement of the interest rates. Most borrowers prefer this arrangement since it helps them set aside a regular amount for their monthly mortgage payments.

14. Foreclosure

When you fail to pay your mortgage payments in 90 days, foreclosure can occur. This process is legal and your rights as a property owner can be stripped off since you were not able to meet the terms of payment within the agreed timeframe.

When you are unable to pay off the outstanding debt or cannot find a property buyer readily, a foreclosure auction can take place. If the auction fails to sell off the property, then the ownership rights can be transferred to the lender.

15. Home Inspection

Home inspection is a process completed by external service providers to evaluate the state of a property before the real estate deal is finished. The home inspector specialist submits a report to the prospective property buyer that details the property’s condition in terms of its HVAC, interiors, and exteriors.


This process is a great way for potential buyers to learn about existing property issues before the property sale is finalized. They will also learn about the real value of the property so they can analyze the returns from the investment.

Bottom line

Knowing these real estate terms simplifies interaction with other industry professionals and streamlines the negotiation process. If you’re a property investor, you are also better equipped to make good decisions if you understand the meaning behind these common terms.

If you’re looking for a trusted property specialist with solid industry experience to guide you in property investment and management, contact Foothills Properties today!