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Real Estate Terminology for First-Time Home Buyers

Author: Scott Shpak

Formerly an operations manager with Kodak, Scott is 15 years into a second career as a freelance content creator – writing, photographing, and recording music for television.

Every industry develops its own jargon, shorthand, or specialty terms and real estate is no different. Whether you’re a first-time home buyer, or entering the market again after years on the sidelines, it can be like learning a new language. 

While we have you covered with our comprehensive glossary of terms, we want to go over 11 common, yet sometimes confusing, real estate terms that might trip you up during a home transaction.  

So build your real estate savvy—knowing your REALTOR® can back you up—and bring confidence to your home buying or selling experience.


Both a noun and a verb, amortization refers to the act of calculating and paying off a debt—in this case, a mortgage—both principal (see below) and interest, over time. A feature of an amortized loan is the payments remain equal, though the amounts of principal and interest vary over the life of the loan.


Home sales live and breathe around the Agreement of Purchase and Sale (APS), a form that covers many, but not all, aspects of a home purchase transaction. An addendum modifies the APS to cover things not listed elsewhere. You might, for example, buy items from the seller other than appliances or other things normally in standard paperwork (see fixtures and chattels below). This would be an addendum added to your APS.

Contingent offer

Also called a conditional offer, a contingent offer is one made with any of a wide range of conditions that must be satisfied before the offer becomes binding. Perhaps the most common contingent offer is one that depends on the buyer selling their current home before purchasing the home on which they made the offer. Other conditions include home inspections, income confirmations, and title searches.


A deed is a legal document that transfers real estate holdings between a seller and a buyer, including a description of the property and the names of those involved in the transaction. It’s signed by the seller, notarized, and publicly filed. The buyer isn’t required to sign the deed.


Any structure or obstacle belonging to one property that extends into another property means it is encroaching on the second property. Legally, the owners of the property being encroached upon have rights of recourse, such as when a neighbour’s fence crosses the property line. However, long-standing use of encroached land may activate a legal concept called the doctrine of adverse possession, commonly called “squatter’s rights.” Encroachment can be a complex area of law in some cases, which is why it’s important to work with a real estate lawyer


In practice, a homeowner’s equity is the value of house and property, minus the amount of loans and mortgages secured against that value. If you’ve paid off half the value of a $500,000 house, your equity would be $250,000. You can tap into your home’s equity to secure a home equity loan or a home equity line of credit (HELOC) for things like home renovations.


An account held by a third party that holds assets pending the completion of conditions of a home sale is called an escrow account. When a buyer makes a deposit with their offer, this amount may be held by a lawyer or agent for the buyer.

Fixtures and chattel

In legal terms, the washer and dryer sold with the house are chattel—assets that could be moved if necessary. Fixtures are attached to the house in some way, like a water heater, furnace, or ceiling fans. 

Sometimes, the line between fixtures and chattel is fine. A common way of thinking about it is, if you were to turn the house upside down and shake it, anything that stays in place is a fixture. Anything that falls is chattel. Chattel usually appears within Schedule A of the APS. Buyers typically list the chattels that are important to them, while sellers list fixtures that they intend to remove. When in doubt, spell it out. 

Letter of intent

Usually used in sales of businesses or between tenants and landlords, letters of intent outline the conditions and terms of a potential transaction, setting the groundwork for a future contract or, in real estate terms, an APS.


When referring to mortgage payments, the principal refers to the amount applied to repayment of the initial loan amount, apart from interest on the loan. Principal payments tend to increase over time while interest amounts get smaller, even though your total monthly payment stays the same. “Principal” is also used in tax terms, referring to the main house in which you reside as your principal residence. 

Right of first refusal

Typically written into a lease or other real estate contract, a right of first refusal gives the buyer the first option to purchase a property when the seller offers it for sale. For example, if you’re renting your ideal home and you’d like to purchase it, but the landlord isn’t yet ready to sell, you may enter into a right of first refusal contract together so that you have the chance to make an offer before the property is listed for other buyers.

Your home is likely the largest and most important purchase you’ll make. The real estate lexicon, as novel and complex as it may seem, is there to keep everyone on the same page. Use this article, and the help of your REALTOR®, as a starting point for your successful navigation of the home buying and selling world. 

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