Essential Home Buying: A Comprehensive Glossary of 100 Must Know Terms (California Edition)

Buying a home is an exciting milestone, but the process can be overwhelming, especially for first-time homebuyers. One of the biggest challenges is navigating the complex terminology and jargon used in the real estate and mortgage industries.

Understanding key financial terms is crucial for making informed decisions and ensuring a smooth home-buying experience. By familiarizing yourself with common concepts, you'll be better equipped to communicate with your real estate agent, lender, and other professionals involved in the transaction.

This glossary serves as a comprehensive guide to the most important terms you'll encounter during your home-buying journey. From mortgages and interest rates to closing costs and escrow accounts, we'll break down each concept into easy-to-understand definitions and explanations.

Buying your first home in California can be overwhelming, but understanding the terminology makes it much easier. Below is a comprehensive glossary of 100 key terms across real estate, mortgage, legal, financial, and property categories. Each term is defined in clear, concise language to help you navigate the homebuying process with confidence.

Real Estate Professionals & Key Players

1. Real Estate Agent – A licensed professional who helps people buy, sell, or rent real estate​. Agents guide you through listings, negotiations, and contracts in exchange for a commission.
2. Realtor – A real estate agent or broker who is an active member of the National Association of Realtors (NAR), adhering to its code of ethics​. “Realtor” is a trademarked term indicating NAR membership.
3. Real Estate Broker – A real estate professional who has completed additional education and licensing beyond the agent level​. Brokers can operate their own brokerage, supervise agents, and have in-depth knowledge of contracts and real estate law.
4. Listing Agent (Seller’s Agent) – The real estate agent who represents the seller of a property. They market the home and advocate for the seller’s interests. The listing agent works with the seller to list the property and negotiates on the seller’s behalf​.
5. Buyer’s Agent (Selling Agent) – The real estate agent who represents the buyer in a transaction. They help the buyer find properties, write offers, and negotiate terms. A buyer’s agent works with the buyer’s interests in mind and cooperates with the listing agent to close the deal​.
6. Commission – The fee paid to real estate agents for their services, usually calculated as a percentage of the home’s sale price​. In most cases (including California), the buyer pays the home seller, who repays some of this money in the form of commission at closing.
7. Mortgage Lender (Loan Officer) – The financial institution or bank (and its representative) that provides the home loan to the buyer​. The lender evaluates your financials and lends you money to purchase the property, which you repay with interest (often over 15–30 years). consumerfinance.gov
8. Mortgage Broker – A mortgage professional who acts as a middleman between borrowers and lenders​. A broker doesn’t lend money directly; instead, they shop around to connect you with a lender and loan program that fits your needs, helping you find the best rate and terms.
9. Home Inspector – A professional who examines the condition and safety of a home (usually after an offer is accepted)​. The inspector provides a detailed report on the home’s structure, systems, and components, alerting the buyer to any issues or needed repairs before purchase. investopedia.com
10. Appraiser – A state-licensed professional who assesses a property’s market value by evaluating its condition and comparing recent sales of similar homes nearby​. Lenders hire appraisers to ensure the home is worth the purchase price before approving a mortgage.
11. Escrow Officer – A neutral third-party agent who manages the escrow process, acting as an impartial stakeholder for both buyer and seller​. The escrow officer holds funds and documents, follows the purchase agreement instructions, and ensures all conditions are met before closing the transaction.
12. Title Company – A company that researches a property’s title (ownership history) and provides title insurance, while often also acting as the escrow agent to facilitate closing​. The title company makes sure the title is clear of liens or claims and handles the legal transfer of title from seller to buyer.
13. Real Estate Attorney – A lawyer specializing in real estate law. In California, attorneys are not required for standard home sales, but buyers or sellers may hire one for advice on contracts, title issues, or complex transactions. A real estate attorney can review documents and ensure the deal complies with all laws.
14. Dual Agency – A situation where one real estate agent (or brokerage) represents both the buyer and the seller in the same transaction​. Dual agency can streamline communication, but since the agent is working for both sides, conflicts of interest can arise. (California allows dual agency with informed consent, but some states prohibit it.)​

Home Search & Purchase Process Terms

15. Multiple Listing Service (MLS) – A regional database of properties listed for sale, used by real estate brokers to share information on homes​. The MLS enables cooperation between listing agents and buyer’s agents, and its listings feed into public real estate websites so buyers can see what’s on the market. investopedia.com
16. Listing – A property that is advertised for sale, usually under a contract between the seller and a listing agent​. A listing includes details like the asking price, description, and photos, and appears on the MLS and other sites. (In short, a listing is a home currently “on the market.”)
17. Days on Market (DOM) – The number of days a property has been listed for sale on the MLS before going under contract​. A high DOM can signal that a home has been on the market for a while (which might indicate a need for a price reduction or issues), whereas a low DOM means the listing is fairly new​.
18. Offer (Purchase Offer) – A buyer’s formal proposal to purchase a home, typically written as a purchase agreement contract that includes the proposed price and terms. If a seller accepts the offer (signs it), it becomes a binding agreement; the seller may also reject or counter the offer.
19. Counteroffer – A response to an offer where the seller (or buyer) proposes changes to the price or terms​. A counteroffer rejects the original offer and puts a new offer on the table​. For example, a seller might counter with a higher price or different closing date. The negotiation continues until both parties accept the terms or walk away.
20. Purchase Agreement (Sales Contract) – The legally binding contract that outlines all terms of the home sale once an offer is accepted​. It includes details like purchase price, closing date, financing terms, contingencies, and any addendums. In California, this is often the standard California Association of Realtors (C.A.R.) purchase agreement form.
21. Earnest Money Deposit (EMD) – A good-faith deposit that the buyer places into escrow after the seller accepts the offer​. The EMD (often around 1–3% of the purchase price in CA) shows the buyer’s serious intent. If the sale closes, the earnest money is applied to the buyer’s down payment or closing costs; if the buyer backs out without a valid contingency, the seller may keep the deposit​.
22. Contingency – A condition or clause in the purchase contract that must be met for the sale to proceed​. Common contingencies include a home inspection contingency, an appraisal contingency, or a loan (financing) contingency. If a contingency is not satisfied (e.g. the inspection finds major issues), the buyer can typically cancel the contract and recover their deposit​. In hot markets in California it is common for buyers to remove all contingencies to make their offer more attractive.
23. Pending (Sale Status) – A status indicating the seller has accepted an offer and the transaction is in escrow, working toward closing. A pending sale usually means all contingencies have been met and the deal is on track to close​. In other words, the home is under contract but not yet sold (no new offers are being considered unless it falls through).
24. Backup Offer – A secondary offer on a home that’s already under contract (pending) with another buyer​. If the first deal falls through, a signed backup offer automatically becomes the primary contract. Backup offers are legally binding agreements, but only go into effect if the initial buyer cancels or defaults​.
25. Home Inspection – A thorough examination of the property’s condition by a professional inspector. In the San Francisco Bay area, this inspection is paid for by the seller prior to listing the home on the market. In other markets it is common for the buyer to pay for during the contingency period​. The inspector checks structural elements, systems (electrical, plumbing, HVAC), and more, then provides a report. The buyer can request repairs or negotiate based on the findings, or cancel the sale if a major problem is uncovered (per the inspection contingency).
26. Appraisal – An assessment of the home’s market value, conducted by a licensed appraiser on behalf of the lender​. The appraiser inspects the property and compares recent comparable sales to determine if the agreed purchase price is reasonable. Lenders require a satisfactory appraisal (at or above purchase price) before approving a mortgage loan.
27. Escrow (Escrow Process) – In California, “escrow” refers to the neutral holding process during a real estate transaction, where an impartial third party (the escrow company) holds funds and documents until all conditions are met​. During escrow, the buyer’s deposit and down payment are held safely, the title is researched, and paperwork is prepared. Once everything is ready, the escrow officer distributes funds to the seller and records the deed to close the sale​.
28. Final Walk-Through – The buyer’s final inspection of the property shortly before closing (often the day before) to ensure the home’s condition hasn’t changed and agreed-upon repairs (if any) have been completed​. This is the last chance for the buyer to verify that the property is in the expected condition. A final walk-through is typically a quick check, since by this point the inspection was done earlier​.
29. Close of Escrow (Closing) – The closing is the conclusion of the home purchase process, when all funds are settled and ownership transfers from seller to buyer. In California this is often called “close of escrow” (COE)​. On the closing date, the grant deed is recorded with the county, the buyer’s mortgage funds and down payment are released to the seller, and the buyer receives the keys – officially becoming the new owner​.
30. Closing Costs – The various fees and expenses (aside from the home’s purchase price) that are paid at closing by buyers and/or sellers​. Closing costs can include lender fees, escrow fees, title insurance, appraisal fee, recording fees, transfer taxes, and prepaid items like property taxes or homeowners insurance. They typically range from ~2% to 5% of the purchase price​, and the buyer receives a detailed breakdown in the Closing Disclosure before closing.
31. Seller Concession (Seller Credit) – A contribution by the seller toward the buyer’s closing costs, agreed as part of the offer/contract​. For example, a seller might credit $5,000 to the buyer to help cover closing fees. This seller concession reduces the cash the buyer needs at closing. (Note: In competitive markets, seller credits are less common, as sellers prefer higher net prices​.) A seller concession cannot exceed the closing costs themselves.
32. Cash to Close – The total amount of money the buyer must bring to the closing table to complete the purchase​. Cash to close includes the down payment plus all closing costs (minus any credits or deposits already paid). For instance, if your down payment and fees are $50,000 total and you already paid a $5,000 earnest deposit, your cash to close would be the remaining $45,000 due at closing​.
33. Proration – The division of certain costs between buyer and seller based on the portion of the period each will own the property​. At closing, items like property taxes, HOA dues, or utility bills are often prorated. For example, if the seller prepaid property taxes for the full year, the buyer will reimburse the seller for the period after closing that the buyer will own the home​.
34. Short Sale – A sale of a home in which the seller owes more on the mortgage than the home’s current market value, and the lender agrees to accept a payoff for less than the balance owed​. Short sales require lender approval and can be a lengthy process. For buyers, a short sale can be an opportunity to buy below market price, but there may be uncertainty and delays as the bank must approve the transaction​.
35. Foreclosure – The legal process by which a lender takes ownership of a property after the borrower fails to pay the mortgage​. In foreclosure, the lender will seize and usually sell the home (often at auction) to recover the unpaid loan balance​. Buyers can sometimes purchase foreclosed properties (also known as bank-owned homes), but those sales are typically “as-is” and may involve different procedures than a standard sale.
36. REO (Real Estate Owned) – A term for property owned by a lender (usually a bank) after an unsuccessful foreclosure auction​. If a foreclosed home doesn’t sell at auction, it becomes an REO property on the bank’s books. These bank-owned homes are then listed for sale (often through asset managers or Realtors). Purchasing an REO home means you’re buying directly from the bank, which can involve its own contract addendums and sometimes discounted prices for as-is condition​.

Mortgage & Financing Terms

38. Mortgage – A loan used to purchase real estate, where the property itself serves as collateral for the debt​. The borrower agrees to repay the mortgage (usually in monthly installments over 15 or 30 years) and if they fail to do so, the lender can foreclose on the property. (In California, a Deed of Trust is typically used to secure the mortgage loan – see term 60.)​
39. Principal (Loan Principal) – The amount of money borrowed that remains unpaid on the loan, not including interest​. Initially, it’s the original loan amount. As you make payments, the principal portion reduces the outstanding balance. (Each mortgage payment typically includes some money toward principal and some toward interest.)​ investopedia.com
40. Interest – The cost of borrowing money, paid to the lender as a percentage of the principal. Mortgage interest is typically expressed as an annual rate (e.g. 6% per year) but is paid monthly as part of your payment​. In the early years of a mortgage, most of each payment goes toward interest rather than principal​.
41. Annual Percentage Rate (APR) – A standardized measure of the total cost of a loan, expressed as an annual rate​. The APR includes the interest rate plus certain fees and closing costs, giving a broader view of the loan’s cost over time​. It’s useful for comparing loans – a higher APR than interest rate indicates significant fees or points.
42. Fixed-Rate Mortgage – A home loan with an interest rate that is locked in and remains the same for the entire term of the loan​. This means your monthly principal & interest payment is stable and predictable over 15, 20, or 30 years. Fixed-rate loans provide stability – you won’t face sudden payment increases regardless of market rate changes​.
43. Adjustable-Rate Mortgage (ARM) – A home loan with an interest rate that can change periodically based on an index, after an initial fixed period​. For example, a “5/1 ARM” has a fixed rate for five years, then adjusts every year. ARMs usually start with a lower initial rate than fixed mortgages​. After the fixed period, the rate can increase or decrease at set intervals, subject to caps (limits on changes).
44. ARM Caps – Limits on how much an adjustable-rate mortgage’s interest rate can change. Caps may apply to each adjustment period and over the life of the loan. For instance, an ARM might have a 2% annual cap (rate can’t rise more than 2% at each adjustment) and a 5% lifetime cap. Caps protect borrowers from extreme rate jumps​.
45. Points (Discount Points) – Optional upfront fees paid to the lender at closing in exchange for a lower interest rate on the loan​. One point equals 1% of the loan amount​. Buying points is essentially prepaying some interest to “buy down” the rate. For example, paying 1 point on a $400,000 loan costs $4,000 and might reduce the rate by ~0.25%, which lowers monthly payments.
46. Origination Fee – A fee charged by the lender for processing and underwriting the loan​. It’s essentially the lender’s administrative charge for originating the mortgage. An origination fee is often around 0.5%–1% of the loan amount​ (though it can be a flat amount) and is typically part of your closing costs.
47. Amortization – The gradual repayment of a loan through regular, equal payments over time. With a fully amortized mortgage, each payment includes interest due and a portion that reduces the principal​. Over the loan term, the balance is paid down to zero. (In the beginning, payments are mostly interest; toward the end, they are mostly principal.)​
48. Amortization Schedule – A table that shows every loan payment over the life of the mortgage and breaks down how much of each payment goes to interest and how much to principal​. It also shows the remaining balance after each payment. The schedule helps borrowers see how the debt will be paid off and how fast equity will build over time​.
49. Closing Disclosure (CD) – A standardized five-page form that itemizes the final loan terms and closing costs for the buyer​. By law, the lender must provide the Closing Disclosure at least 3 business days before closing. The CD shows your loan’s interest rate, monthly payment, and a detailed list of every charge (lender fees, escrow, taxes, etc.), allowing you to review and compare it to the initial Loan Estimate for any changes​.
50. Loan-to-Value Ratio (LTV) – The ratio of the loan amount to the appraised value (or purchase price) of the home, expressed as a percentage​. For example, if you buy a $500,000 house with a $400,000 loan, the LTV is 80%. Lenders use LTV to gauge risk – higher LTV (above 80%) means less equity and typically requires mortgage insurance​.
51. Debt-to-Income Ratio (DTI) – A measure of a borrower’s monthly debt obligations compared to their gross monthly income​. It’s calculated by dividing total monthly debt payments (mortgage, car, credit cards, etc.) by monthly income. Lenders use DTI to evaluate how comfortably you can take on a new mortgage​. For example, a 40% DTI means 40% of your income goes to debt payments. Lower DTI is better for loan approval.
52. Credit Score – A numerical representation of a person’s creditworthiness based on their credit history. Mortgage lenders heavily consider credit scores (like the FICO score) when approving loans and setting interest rates. A higher score (e.g. 750+) signals a strong credit history and typically earns better loan terms, while a lower score may require a higher rate or special program​.
53. Prequalification – An initial evaluation of a buyer’s ability to get a loan, based on self-reported income, assets, and debts (not verified)​. Prequalification gives a rough idea of what you might afford, but it’s informal. It’s essentially a lender’s estimate that you appear to be a viable borrower up to a certain amount, assuming your information checks out​.
54. Preapproval – A written commitment from a lender to lend a specified amount, given after a thorough review and verification of your finances​. Getting preapproved involves submitting a mortgage application with documents (pay stubs, bank statements, etc.) and credit check. A preapproval letter carries weight with sellers, showing you can likely obtain the financing – it’s often considered essential in California’s competitive markets​.
55. Down Payment – The portion of the home’s purchase price that the buyer pays in cash upfront, not financed by the mortgage. Traditionally 20% of the price​, but many loans allow less (e.g. 3-5% for first-time buyers on conventional or FHA loans). A higher down payment means a smaller loan and no PMI if at least 20%​. In hot markets, larger down payments can strengthen your offer.
56. Private Mortgage Insurance (PMI) – Insurance that a conventional or FHA loan borrower must pay when the down payment is less than 20% of the home’s value​. PMI protects the lender in case the borrower defaults (it does not protect the buyer). It’s an extra monthly fee (or upfront fee) on top of the mortgage payment. PMI can typically be canceled once the loan balance falls below 80% of the home’s value​. PMI for FHA loans cannot be removed without refinancing the entire loan balance.
57. Escrow Account (Impound Account) – An account held by the lender to collect and pay certain ongoing property expenses on the borrower’s behalf​. With an escrow account, a portion of your monthly mortgage payment goes toward property taxes and homeowners insurance. The lender then uses those funds to pay your tax and insurance bills when due. This ensures those important bills are paid on time​. (In California, lenders often require an escrow account if your down payment is under 10% or so.)
58. Principal, Interest, Taxes, Insurance (PITI) – The four main components of a typical monthly mortgage payment​. Principal and Interest go to repaying your loan (see terms 39 and 40). Taxes refer to property taxes, and Insurance means homeowner’s insurance – these are often collected via an escrow account. Lenders consider PITI when qualifying you, and PITI must be affordable relative to your income.​ consumerfinance.gov
59. Loan Estimate – A standardized three-page form that a lender must provide within 3 business days of a borrower applying for a mortgage. The Loan Estimate (LE) outlines the initial interest rate, monthly payment, and a breakdown of closing costs for the loan​. It’s not an approval, but it allows you to compare offers from different lenders easily. The final Closing Disclosure should closely match the Loan Estimate if there are no major changes​.
60. Rate Lock – An agreement from the lender to “lock in” a specified interest rate for a set time period, usually while your loan application is processed​. A typical rate lock might last 30, 45, or 60 days. This protects you from rate fluctuations – even if market rates rise before you close, your locked rate stays the same. (Failing to close before the lock expires may require an extension, sometimes at a cost.)​
61. Underwriting – The lender’s process of evaluating your loan application and financial information to assess the risk of lending to you​. During underwriting, the lender (through an underwriter) verifies your income, assets, debts, and credit history, and ensures the property meets guidelines (via appraisal and title review). The underwriter’s job is to decide if you meet the loan requirements and will repay the loan​. Final loan approval comes once underwriting is satisfied and any conditions are met.
62. Prepayment Penalty – A fee charged by some lenders if you pay off a mortgage loan early, whether through refinancing or lump-sum payments beyond a set limit​. While uncommon on most new home loans (and not allowed on many loan types), some mortgages – especially certain jumbo or investment property loans – might have a prepayment penalty clause. It’s essentially a charge for the lender’s lost interest if you repay ahead of schedule​. (California law limits prepayment penalties on many residential loans.) consumerfinance.gov
63. Assumable Mortgage – A home loan that can be transferred to a new buyer who “assumes” the remaining debt, keeping the same terms (interest rate, balance, etc.)​. In other words, instead of getting a new loan, the buyer takes over the seller’s mortgage. FHA and VA loans are generally assumable, which can be attractive if the existing loan has a low rate. The buyer still must qualify with the lender to assume the loan, and typically will need to pay the difference between the purchase price and the loan balance (often via a down payment).
64. Conventional Loan – A mortgage loan that is not insured or guaranteed by a government agency (such as FHA or VA)​. Conventional loans typically conform to guidelines set by Fannie Mae and Freddie Mac (including loan limits). They usually require higher credit scores and down payments than government-backed loans, but can offer competitive rates and no upfront insurance fees. If the loan amount is within conforming limits and the borrower meets standards, it’s a conforming conventional loan; amounts above those limits are jumbo loans.
65. FHA Loan – A mortgage insured by the Federal Housing Administration, designed to help borrowers with modest means or credit buy a home​. FHA loans feature more lenient credit requirements and allow down payments as low as 3.5%. Because the government insures the loan, the borrower pays Mortgage Insurance Premiums (MIP) (both upfront and annually) to protect the lender. FHA loans are popular with first-time buyers and have limits on loan size that vary by county.​
    investopedia.com
66. VA Loan – A mortgage guaranteed by the U.S. Department of Veterans Affairs for qualified veterans, active-duty service members, and some surviving spouses​. VA loans often require no down payment and no monthly mortgage insurance, making them very affordable. The VA guarantees a portion of the loan, allowing lenders to offer favorable terms to veterans. (Eligibility and certificate of eligibility from VA are required.)​ veteransunited.com
67. Jumbo Loan – A mortgage loan that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA) for Fannie Mae and Freddie Mac​. In high-cost California counties, the 2025 conforming limit is $1,089,300 for a single-family home – loans above that are jumbo. Jumbo loans are offered by private lenders and usually have stricter qualification requirements (higher credit scores, lower DTIs) and sometimes slightly higher interest rates, since they can’t be sold to Fannie/Freddie​.
    investopedia.com

Legal, Title & Ownership Terms

67. Title (Property Title) – The legal ownership of a property, which includes the rights to use and control it​. Taking title refers to becoming the owner. In a home sale, a clear title (free of liens or disputes) is transferred from seller to buyer. Title is evidenced by a deed recorded in public records. Title companies research the title’s history to ensure there are no competing claims so the buyer can take title as the sole legal owner​.
68. Deed – A legal document that transfers ownership (title) of real estate from one party to another​. In a sale, the seller signs a deed to convey the property to the buyer. Common types in California include the Grant Deed (which implies certain warranties of clear title) and Quitclaim Deed (which transfers whatever interest the grantor has with no warranties). The deed is recorded with the county to document the new ownership.
69. Deed of Trust – In California, the security instrument for a home loan, serving a similar purpose to a mortgage in other states​. It’s an agreement among three parties: the borrower (trustor), the lender (beneficiary), and a neutral trustee (often a title company). The Deed of Trust grants the trustee title to the property to hold as security for the debt. If the borrower pays off the loan, the trust deed is removed; if the borrower defaults, the trustee can sell the property (non-judicial foreclosure) for the lender’s benefit​.
70. Recording – The act of filing real estate documents (such as deeds or deeds of trust) with the county recorder’s office, making them part of the public record. Recording a deed is what makes the transfer of title official and gives public notice of the new ownership​. The “recording date” of the deed typically marks the closing of escrow – at that moment, the buyer becomes the legal owner and the sale is on record with the county.
71. Lien – A legal claim or encumbrance on a property as security for a debt or obligation​. If the property owner doesn’t pay the debt, the lienholder may have rights to force a sale of the property to satisfy the debt. Examples include a mortgage lien, tax lien, or mechanic’s lien. When buying a home, any existing liens (other than the new mortgage) generally must be paid off or resolved, so the buyer receives clear title​.
72. Easement – A legal right for someone other than the owner to use a portion of the property for a specific purpose​. Common easements include utility easements (allowing power or water lines to cross property) and ingress/egress easements (allowing access via a driveway or path). Easements remain with the land (they typically transfer with title) and are listed in the title report. They do not transfer ownership, just usage rights for that aspect​.
73. Title Insurance – An insurance policy that protects against financial loss from defects in a property’s title (such as unknown liens, claims, or errors in the public record)​. There are two types: Owner’s Title Insurance, which protects the buyer’s ownership interest, and Lender’s Title Insurance, which protects the lender (this is required if you have a mortgage). The title company issues these policies after a title search. If a covered issue arises (e.g. an old ownership claim), title insurance covers legal fees or losses so the owner (or lender) isn’t on the hook​.
74. Preliminary Title Report – A document provided by the title company early in escrow (before issuing title insurance) that outlines the current status of the property’s title​. The prelim will show the vesting (who the owner is), any recorded liens, easements, CC&Rs, or other encumbrances, and any conditions to be met for title insurance. It’s essentially a preview of the title that the buyer and lender will receive. Reviewing the preliminary title report allows issues to be addressed before closing (for example, the seller must pay off a lien)​.
75. Transfer Tax – A tax imposed by state, county, or city government on the transfer of real property, calculated based on the sale price​. In California, counties charge a transfer tax (e.g. $1.10 per $1,000 in many counties), and some cities (like Los Angeles, Oakland, or San Francisco) have their own additional transfer taxes. The tax is paid at closing – commonly split or negotiable in CA, but often the seller covers the county tax. It’s essentially a sales tax on real estate transactions​
    investopedia.com.
76. Seller Disclosure (Transfer Disclosure Statement) – In California, sellers of residential 1–4 unit properties are required by law to provide buyers with a written disclosure form detailing any known material facts or defects about the property​. This form, called the Transfer Disclosure Statement (TDS), covers things like the condition of appliances, any leaks or structural issues, history of repairs, presence of hazards, etc. The goal is to inform buyers of any problems that could affect the property’s value or desirability​
    investopedia.com
    . Failing to fully disclose can lead to legal liability for the seller.
77. Natural Hazard Disclosure (NHD) – A California-specific disclosure report that informs the buyer if the property is located in certain designated hazard zones​. Sellers (or their escrow/title company) must provide an NHD Statement disclosing if the home is in areas such as a 100-year flood zone, high wildfire severity zone, earthquake fault zone, seismic hazard zone, or dam inundation area. These reports are typically prepared by third-party companies and ensure buyers are aware of natural risks associated with the property’s location​. nhdreport.com
78. Community Property – A form of ownership in states like California for married couples, where any property acquired during marriage is owned equally by both spouses​. Each spouse has a 50% interest in community property, regardless of whose name is on title. At sale or divorce, community property is typically divided equally. (Property owned before marriage or received as a gift/inheritance can be separate property if not commingled.)​ selfhelp.courts.ca.gov
79. Joint Tenancy – A way for two or more individuals to hold title jointly with equal shares and a special feature called the right of survivorship​. Right of survivorship means if one co-owner dies, their share automatically passes to the surviving co-owner(s) without going through probate. Joint tenancy requires all owners to take title at the same time and on the same deed, with equal interests. It’s common for couples or family members, but note that any joint tenant can sever the joint tenancy (converting it to a tenancy in common) if needed​.
80. Tenancy in Common – A form of co-ownership where two or more people hold title to a property together, without right of survivorship​. Each tenant in common (TIC) can own a potentially unequal percentage of the property and can sell or will their share independently. If one TIC owner dies, their interest goes to their heirs (not automatically to the other owners)​. Tenancy in common is the default form of vesting for unmarried co-owners in California unless another method (like joint tenancy) is indicated.

Property, Taxes & Insurance Terms

81. Prop 13 (Proposition 13) – A California constitutional amendment (passed in 1978) that limits property tax increases. Under Prop 13, the property tax base value is set when the property changes ownership (or is newly built), and annual tax increases are capped at about 2% per year​​. In practical terms, this means California homeowners benefit from relatively stable property taxes over time, and a new buyer’s property tax will be roughly 1% of the purchase price (plus local assessments). Prop 13 also requires a supermajority for new local taxes. dre.ca.gov
82. Mello-Roos – Refers to special taxes levied on properties within certain Community Facilities Districts in California, often to finance infrastructure and public facilities in new developments. If a home is in a Mello-Roos district, the owner pays an annual special tax (usually added to the property tax bill) that goes toward things like schools, roads, or parks in that community. It’s important for buyers to know if a property has a Mello-Roos assessment, as it can be a significant extra cost for a set term of years (or indefinitely until bonds are paid). (The NHD or title report will disclose this.)
83. Assessed Value – The value placed on a property by the county tax assessor for purposes of calculating property taxes​. In California, the assessed value is typically the purchase price (thanks to Prop 13), and it can increase only modestly each year. Property taxes are a percentage of this assessed value. For example, if you buy a house for $600,000, your initial assessed value is $600,000 and your annual taxes will be roughly 1.25% of that (including county and any local levies). The assessed value may differ greatly from market value, especially if a homeowner has owned for many years.
84. Property Tax – A tax levied by local government (county, and sometimes city or special districts) on real estate. In California, the general property tax rate is around 1% of assessed value, plus any voter-approved bonds or assessments (often totaling roughly 1.1% – 1.25% in many areas) per year. Property taxes fund local services like schools, fire, police, and infrastructure. They are usually paid in two installments (semi-annually) or collected monthly via the mortgage escrow account. Remember that because of Prop 13, your property tax increases are limited and reset when the property changes ownership.
85. Homeowners Association (HOA) – An organization governing a planned community, condominium, or townhouse complex. When you buy a property in an HOA, you automatically become a member and must follow the HOA’s rules (laid out in CC&Rs) and pay regular HOA dues. The HOA is responsible for maintaining common areas and sometimes exterior upkeep. For example, a condo HOA maintains the building exterior and amenities, funded by monthly fees. HOAs can enforce rules on property use/appearance and can place a lien or foreclose if dues are not paid. Always review the HOA financials and rules when buying into a community.
86. Covenants, Conditions & Restrictions (CC&Rs) – The rules and limitations governing a property or community, often recorded as part of a subdivision or HOA​. CC&Rs might dictate architectural standards, pet policies, rental restrictions, etc. If you buy a home in an HOA or certain subdivisions, you agree to abide by these recorded restrictions. CC&Rs are disclosed to buyers during escrow. They “run with the land,” meaning they bind future owners as well​. Always read the CC&Rs so you know what is or isn’t allowed (for instance, they may prohibit parking an RV in your driveway or making certain exterior changes without approval). dre.ca.gov
87. Zoning – Local land use regulations that designate what can be built on a property and how it can be used. Zoning laws (set by city or county) separate areas into residential, commercial, industrial, etc., and dictate specifics like density, building heights, setbacks, and so on. For example, a property might be zoned R-1 (single-family residential) or R-3 (multi-family), which determines if you can build a duplex or only a single house. Zoning is important if you plan to remodel, add units, or run a home-based business. Buyers typically don’t get a separate “zoning disclosure,” but it’s public information you can verify if needed (especially for vacant land or multi-unit plans).
88. Homeowners Insurance (Hazard Insurance) – A property insurance policy that protects the homeowner (and the lender) against losses from fire, theft, liability, and other hazards. Mortgage lenders require you to have homeowners insurance in place at closing. The policy typically covers the structure and your belongings (to an extent), as well as liability if someone is injured on your property. In California, standard homeowners insurance does not cover earthquakes (separate policy needed) and may exclude certain perils in high-risk areas (like wildfire coverage in wildfire zones may be costly or require state FAIR plan). The annual premium is usually paid through your escrow account with the mortgage.
89. Flood Insurance – A specialized insurance policy that covers damage to a property caused by flooding. It’s required for properties located in FEMA-designated Special Flood Hazard Areas (high-risk flood zones) if the owner has a mortgage. Standard homeowner policies do not cover flood damage​. Flood insurance can be obtained through the National Flood Insurance Program (NFIP) or private insurers. Even outside high-risk zones, some owners get flood coverage for peace of mind. When buying, your lender and NHD report will indicate if the home lies in a 100-year floodplain requiring insurance. nhdreport.com
90. Earthquake Insurance – An optional insurance policy in California that covers damage from earthquakes (which are not covered by regular homeowners insurance). Offered by specialty insurers or the California Earthquake Authority, these policies come with high deductibles but can be crucial for protecting your investment in the event of a major quake. Buyers should consider the home’s seismic risk (proximity to fault lines, age of construction) when deciding on earthquake insurance. In certain areas of California, this insurance is more commonly carried, but it is not mandatory.
91. Fixture – An item that was once personal property (movable) but is attached to the property in a relatively permanent way, making it part of the real estate. Common examples: built-in appliances, light fixtures, plumbing fixtures, cabinets, etc. When you buy a house, fixtures are generally included in the sale by default (as they are considered part of the property). Items that are not permanently attached (like a freestanding fridge or furniture) are personal property and typically not included unless specified. The purchase contract will clarify what is included or excluded – but a good rule is if removing it would cause damage, it’s probably a fixture that stays.

Home Value & Market Terms

92. Comparables (Comps) – Recently sold properties similar to the home in question, used as benchmarks to determine market value​. Real estate agents and appraisers look at nearby homes of similar size, condition, and features that have sold in the past few months to gauge what a property is worth. For example, if three similar homes on the block sold for around $800,000, that’s strong evidence for your home’s value. Comps are the foundation of pricing a listing and for appraisal adjustments.
    
    
93. Fair Market Value – The price that a willing buyer and willing seller (both with reasonable knowledge of the property and under no pressure) would agree upon for the property. It’s essentially the market value. Fair market value is often estimated by looking at comparable sales and current market conditions. It can differ from list price or appraised value, but ideally, in an efficient market, the sale price of an arm’s-length transaction represents the fair market value.
94. Comparative Market Analysis (CMA) – A report prepared by a real estate agent to estimate a property’s value by comparing it to similar properties that are currently on the market, recently sold, or expired. A CMA helps sellers decide on a listing price and helps buyers formulate competitive offers. It considers factors like comps’ sale prices, price per square foot, and adjustments for differences (bedrooms, upgrades, lot size). While not as detailed as an appraisal, a well-done CMA is a crucial tool for pricing in line with the market.
95. Appreciation – An increase in the value of a property over time. Appreciation can occur due to market conditions (high demand, inflation, etc.), improvements made to the home, or development in the surrounding area. For instance, if you bought a home for $500,000 and five years later it’s worth $600,000, it has appreciated by $100,000 (20%). Real estate in many California markets has historically shown strong long-term appreciation, though it can fluctuate in the short term. (The opposite is depreciation, a decrease in value, which can happen in a market downturn or if a property deteriorates.)
96. Seller’s Market – A market condition in which demand from buyers exceeds the supply of homes for sale, giving sellers the advantage. In a seller’s market, listings tend to sell quickly and often for higher prices, sometimes with multiple offers. Buyers may face competition and need to bid aggressively (often above asking price) to secure a home​. Low inventory, low interest rates, or a strong economy can contribute to a seller’s market. (Recent years in many California cities have seen prolonged seller’s markets.)
97. Buyer’s Market – A market condition where the supply of homes for sale exceeds the demand from buyers, favoring buyers over sellers. In a buyer’s market, properties may stay on the market longer, and buyers have more choices and negotiating power. This can lead sellers to reduce prices or offer concessions. High inventory, higher interest rates, or economic slowdowns can result in a buyer’s market. Buyers in this environment might purchase at or below asking price with favorable terms, as sellers compete for fewer buyers.
98. Market Value – (See Fair Market Value above). This is essentially what a home is worth in the open market. It’s determined by the interaction of buyers and sellers and is typically evidenced by the agreed-upon purchase price in an arm’s-length sale. Both appraisers and agents aim to estimate market value – appraisers for lending purposes and agents for pricing strategy. Market value can change over time with market conditions.
99. Equity – The owner’s financial interest in the property, calculated as the property’s current market value minus any liens or outstanding mortgage balance​. For example, if your home is worth $700,000 and you owe $500,000 on your mortgage, you have $200,000 in equity. As you pay down the principal (or as the home appreciates), your equity increases​. Equity is an asset that you can tap into by selling, refinancing, or getting a home equity loan. Building equity is one of the key benefits of homeownership.
100. Clear Title – Title to a property that is free of liens, disputes, or other encumbrances that could challenge ownership. A clear (or clean) title means no one else has a legal claim to the property and there are no outstanding debts secured by it (aside from any loan the buyer is taking). Obtaining clear title is a condition of closing – the title company and escrow ensure that any issues are resolved so that the buyer receives the property without surprise claims. This is essentially what title insurance guarantees: that the title is clear and if not, you’re protected.

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