If you’re a real estate wholesaler or just cutting your teeth on the topic, take a look at these must-know real estate terms. For those of you who know all of them, bravo! But, if there are some terms that you don’t know or are unsure about, review them and make sure you understand them before approaching clients. This list is not complete, and you will notice a lot of banking terms missing from it.
Well, real estate wholesalers mainly work with cash, so they don’t need to know lots of financial terms used with mortgages, loans, and other kinds of financing. Whew! Now enjoy the benefits of working in an area that is nuanced and has almost no entry barriers.
What Is Real Estate Wholesaling?
A real estate wholesaler makes money by matching buyers and sellers and keeping the difference between the buyers’ and sellers’ contracts. As a real estate wholesaler, you find the property seller first, then assign property purchase rights to an end-buyer. If reverse-wholesaling, the wholesaler first finds an end-buyer interested in purchasing specific properties and then organizes wholesale contracts for those properties. No matter your approach, it will be immensely helpful for you to know the vocabulary listed below.
Let get started!
Real Estate Wholesale Terms and Definitions
For Sale By Owner (FSBO) – A term used to describe property that is being sold by the titleholder without the assistance of a real estate agent.
Home Inspection – An inspection of a property done by a licensed professional to evaluate the structural and mechanical condition of the property.
Homeowner’s Insurance – Insurance that protects a property owner from damages to the property and provides liability protection if there are any accidents on the property.
Home/Homeowner Warranty – Warranty protection to the property seller/buyer that if the property has defects, requires repair services, or items in it must be replaced, the costs will be covered by a third party.
Inspection – An inspection of a property done by a licensed inspector that is used to determine what repairs, if any, need to be done and an assessment of the property’s overall condition before the property is purchased by the buyer.
Joint Tenancy – When two or more people are transferred a property’s title; when more than one person holds the fee simple title and has rights to the entirety of the property.
Legal Description – An official description that allows for the location and identification of a property without oral testimony.
Liabilities – Financial obligations or debts that are owed to other people and/or organizations.
Liability Insurance – Insurance that protects a property owner from claims of negligence and/or inappropriate conduct on the owner’s property that may be made by visitors/guests on the property.
Lien – A legally recognized debt that is held against a property’s title and must be paid before the property can be sold to another party.
Liquid Asset – An asset that can quickly or easily be exchanged for cash.
Listing – A public announcement that land or property is being sold.
Listing Agent – A real estate agent who creates a listing for land or property.
Multi-Family – A residential structure that houses two or more families (e.g., apartment building, duplex).
Net Income – The amount of money received after operating costs have been subtracted from gross income.
Notice of Default – A legal document sent to a borrower by a lender to document that a payment or other requirement has not been made by the set deadline and that legal action may be taken to address the matter.
Offer – The suggested amount of money to be exchanged for the purchase of a property and the purchasing requirements/conditions that a purchaser submits to a seller when trying to purchase the seller’s property.
Personal Property – A person’s assets and belongings.
Power of Attorney – A legal document that confers to someone the right to act on behalf of another in all matters or specific matters for a period of time.
Property Tax – A tax based on a property’s value that is paid by property owners to government offices.
Public Auction – An open public meeting where properties that are in default are sold to the public in order to pay back the properties’ mortgages.
Purchase Agreement – A contract between a buyer and a seller that defines the terms and conditions that accompany the sale of the property.
Purchase Money Transaction – A property that is bought with cash or a cash equivalent.
Quitclaim Deed – A deed with no warranty and that only transfers the seller’s interest or title in the property to the buyer.
Real Estate Agent – A licensed professional who assists people in selling and buying real estate (e.g., negotiations, transactions, contracts).
Real Estate Broker – A licensed real estate agent who represents buyers and sellers and receives a commission when sales transactions are completed. A real estate agent and a real estate broker are not the same; they have different kinds of licenses and professional responsibilities.
Real Estate Owned (REO) Properties – An unsold foreclosed property that is owned by the bank.
Real Estate Purchase/Sale Agreement – A contract that legally requires a buyer and seller to complete a real estate transaction and lists the terms and conditions of the sale.
Recorder – Also known as the registrar of deeds and the county clerk; a government official who keeps a record of all the real property transactions in an area.
Recording – Notes made about a legal document relating to real property (e.g., a mortgage note, deed) that is made available to the public and part of the public record.
Residential – An area, zone, and/or housing that has been categorized as a place where people can live.
Seller’s Agent – A real estate agent who works with a property owner to list a property and sell it; also referred to as a listing agent.
Single Family – A property that is intended to be occupied and used by one family.
Title – A legal document that lists the owner of the property or a person’s right to use/access a property.
Title Company – A company that researches and guarantees titles.
Title Insurance – Insurance that protects the buyer or lender from financial loss as a result of an argument over the property’s title.
Title Search – Examination of a property’s title to make sure that the seller is the legal owner of the property and to determine if there are any liens against the property.
Transfer of Ownership – When the title of the property is legally conveyed to another party.
Transfer Tax – A tax that must be paid when a property is sold, and there is a title transfer.
Trustee – A trusted third party with legal obligations to hold and/or control something for someone else.
Zoning – Laws that govern the use of land (e.g., commercial, industrial, residential).
Be sure to check out part one of this wholesale real estate must-know terminology guide.