Real Estate Investment Terms Defined

Coming into contact with a real estate agent for the first time, some of the terminology that they use may baffle potential sellers and buyers, and in this guide I have tried to explain the terminology used in real estate in the process of buying and selling homes.

Mortgage rate.

The mortgage rate is something that real estate agents may talk about. What this means is the amount of interest annually that you will pay on a loan from a lending source. This varies considerably from lending source to lending source, and you may need to ask many in order to establish the most economical means to borrow money.

First time buyer incentives.

These are incentives put forward to people who have never bought a home before. Often these are advantageous and government sponsored, in order to encourage non owners to buy their first home. Often, also, mortgage companies see first time buyers as a good bet for a mortgage since they are relatively debt free, offering worthwhile incentives to new owners to have mortgages at advantageous rates.

Vendor/Joint vendors.

The vendor is the person selling their house. It is important to establish if there are more than one vendors involved in the selling process. In many cases, a home may be owned by more than one owner and all owners will be involved in the signing process of the home that you are buying.

If buying international property, do be wary of property vendor numbers, as inheritance laws in different countries mean that a property can have up to 150 owners. Sounds illogical but it really is true, as the estate of a relative may be split between existing family members, and even distant relatives. In a case where there are so many vendors, do establish at the outset that there is some kind of agreement in place, giving one vendor power of attorney to sign for all the others.

Power of Attorney.

This is when a vendor has someone else that is able to sign legal documents on their behalf. In the case of inheritance matters, there may be a power of attorney in place. It is not a legal complication and is easy to understand. It just means someone else signing.


Surveys take different forms. A financial institution lending money will do a cursory survey just to see if the house is worth at least the money you are asking to borrow. They need to know this because if you fail to pay for your house, this survey/valuation gives them the security that they can take the house from you and get their money.

Structural surveys are something different. When buying a house, paying the extra for a structural survey is a great idea, because it covers all areas of the house, tells you what essential repairs you are likely to need to do, the state of roof space, the walls, the fabric of the building, the electrical installation, the plumbing and all those areas that you may have no idea about. Having a full structural survey helps you to decide if the house really is a good investment.


Details are those papers handed out to prospective buyers that describe homes. These will have all the information on your home, plus a photograph or several photographs. These usually give you measurements of rooms, and sufficient details for you to decide if the house is an option which is viable for you. Comparing these from different real estates gives you a good overview of what is available in the area you are looking at.


When real estate agents talk about equity, the equity of a house is the difference between the value of the house on present day prices balanced against the amount you pay. The difference between debts and the house market price is equity or profit.

Single Agent fees.

These are fees negotiated with the real estate agent and be careful here. What you sign says that you will only sell your home through that one agent, and there are penalties if you decide to use another agency as well.

Shared agent fees.

These fees are higher and if you use multiple agencies to sell your home, you will pay the agency more. They figure that if they do all the work and then another agency sells the home, at least they cover themselves by getting the people on multiple agency fees to pay extra.


If a house is described as a foreclosure house, this may be worth taking a look at. What it means is that the owners of the house have not met their mortgage commitments, and that the home is being sold to pay off the financial institution that loaned them the money. In cases like this, property tends to go cheaper than the normal market value, since the Bank is only interested in getting their money back and shows little care towards those people that do not pay their mortgages on time.

These are the general terms used by real estate agents. Of course, this is not a full list because there are many aspects of home buying and selling, though they are items that every home purchaser or seller will experience at some time during their dealings with real estate agents. Knowing the terms helps you to overcome misunderstanding, to take you into the purchase of a home with your eyes open, and sufficient knowledge to get it right.