Use this quick glossary to understand basic real estate terms. This will help you understand some basic concepts and navigate the real estate world.

  1. Amortization: The number of years a borrower is scheduled to repay the entire amount of a mortgage.
  2. Appraisal: An estimate of a property’s market value, used by lenders in determining the amount of a mortgage. The increase of a property’s value over time.
  3. Balanced Market A market in which the sales to active listings ratio is in a range of 14 to 20 per cent. In general, a balanced market results in home prices remaining relatively stable.
  4. Brokerage A real estate company under which an individual is licensed.
  5. Buyer’s Market When there is a higher number of homes to choose from than buyers in comparison. Prices of homes tend to be lower and they remain available for sale longer. Buyers usually have more leverage in negotiating a purchase.
  6. Carrying Cost Financial and operational expense associated with an investment.
  7. Closing Costs Expenses in addition to the purchase price for buying and selling a property.
  8. Conventional Mortgage A mortgage loan that does not exceed 80 per cent of the lending value of the property.
  9. Down Payment The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.
  10. Equity The difference between the price for which a property can be sold and the mortgage(s) on the property. Equity is the owner’s stake in the property.
  11. Grow Op A marijuana-growing operation, usually located in a house
  12. High-Ratio Mortgage A mortgage that exceeds 80 per cent of the loan-to-value ratio; must be insured by either the Canada Mortgage and Housing Corporation or a private insurer to protect the lender against default by the borrower who has less equity invested in the property.
  13. Inflation A rise in the general level of prices of goods and services in an economy over a period of time.
  14. Interest The cost of borrowing money.
  15. Listing Agreement The contract between the listing broker and an owner, authorizing the REALTOR® to facilitate the sale or lease of a property.
  16. Listing Broker The REALTOR® who signs a contract with an owner to sell the property.
  17. Median or Average Home Price The average price of a home calculated by adding all sold prices and dividing by the number of homes sold.
  18. Mortgage A contract between a borrower and a lender. The borrower pledges a property as security to guarantee repayment of the mortgage debt. Lenders consider both the property (security) and the financial worth of the borrower (covenant) in deciding on a mortgage loan.
  19. Mortgage Broker A person or company having contacts with financial institutions or individuals wishing to invest in mortgages.
  20. Mortgage Insurance Government-backed or privately-backed insurance protecting the lender against the borrower’s default on high-ratio (and other types of) mortgages.
  21. Mortgage Insurer In Canada, high-ratio mortgages (those representing greater than 80 per cent of the property value) must be insured against default by either Canada Mortgage and Housing Corporation (CMHC) or private insurers. The borrower must arrange and pay for the insurance, which protects the lender against default.
  22. Mortgage Payment The regular installments made towards paying back the principal and interest on a mortgage.
  23. Mortgage Prepayment Penalty A fee paid by a borrower to the lender in exchange for being permitted to break a contract (a mortgage agreement); usually three months’ interest, but it can be a higher or it can be the equivalent of the loss of interest to the lender.
  24. Property Transfer Tax (PTT) A land registration tax that must be paid when an application for a taxable transaction is made at any Land Title Office in BC to register changes to a certificate of title.
  25. Rate (Interest) The return the lender receives for advancing the mortgage funds required by the borrower to purchase a property.
  26. Seller’s Market  A housing market is generally characterized as a “sellers’ market” when there is an excess of demand for homes over current supply as measured by active or new listings. A sellers’ market typically occurs when the ratio of home sales to active listings is above 20 per cent.
  27. Term The length of time a lender will loan mortgage funds to a borrower. Most mortgage terms run from six months to five years, after which the borrower can either repay the balance (remaining principal) of the mortgage, or renegotiate the mortgage for another term.
  28. Term Mortgage A non-amortizing mortgage under which the principal is paid in its entirety upon the maturity date. Sometimes called a straight loan.
  29. Title The legal evidence of ownership of a property.
  30. Title Search A detailed examination of the ownership documents to ensure there are no liens or other encumbrances on the property, and no questions regarding the seller’s ownership claim.
  31. Variable-Rate Mortgage A mortgage for which payments are fixed, but whose interest rate changes in relationship to fluctuating market interest rates. If market rates go up, a larger portion of the payment goes to interest. If rates go down, a large portion of the payment is applied to the principal.
  32. Working With a REALTOR® Brochure A standard tool used by all REALTORS® in BC that explains agency relationships and describes which personal information is collected.
  33. Form B – is the name for a Mortgage and is the only form BC will allow to be used at the Land Title Office to mortgage a Property.
  34. FSR:  Floor Space Ratio. A city zoning term that defines the maximum allowable square footage to be built or occupied in a building in relation to its lot size.
  35. Market Value: The highest price paid for a piece of property which has been exposed “for sale” in the open market allowing a reasonable time to find a Buyer.
  36. MLS: Multiple Listing Service. A listing service handled by the Real Estate Board that issues print and online listing information comprising details of properties for sale on MLS in our market areas