Real estate Terms

Here are some common terms you'll run into in real estate. Click on any term to see  associated questions and answers.

Real estate words and phrases

A 100% commission brokerage does not charge agents a percentage of each commission. Instead, 100% of each sales commission goes to the agent. 100% brokerages make money by charging monthly or annual fees and per-transaction fees.
An agent search portal helps buyers and sellers search for real estate agents. These sites offer data on each agent, including their prior performance, reviews, and specialties. Most agent search portals are paid by buyer’s and seller’s agents for referrals that turn into sales.
An agent team is a partnership between multiple agents at the same brokerage. While the agents are employed by the brokerage, agent teams partner on a number of tasks to provide service to their combined clients.
An automated valuation model estimates the price of a property based on data. AVM is the commonly used acronym for automated valuation model.
Most agents work with both buyers and sellers. Agents representing buyers typically help with searching, scheduling tours, negotiating offers, closing the transaction and supporting their client after closings. Agents representing sellers often focus more on preparing listings for sale, marketing listings, coordinating open houses and tours, and supporting negotiations and closings.
A cloud brokerage does not have physical offices for real estate agents. Cloud brokerages provide cloud-based software and services for their agents. Cloud brokerage splits are often more favorable to agents than those of traditional brokerages.
A commission disbursement authorization is a form that must be completed to receive a commission. Commission disbursement authorization forms typically include information on the property, the sales price, the commission amounts, and the relevant contacts in a deal. CDA is the commonly used acronym for commission disbursement authorization.
A commission split is the fee a brokerage collects from an agent on each real estate transaction.
Company dollar is money a brokerage makes after collecting fees and paying commissions. Company dollar is calculated in two steps. Agent commissions are subtracted from total gross commission income. Then agent fees collected are added to that figure.
A comparative market analysis (CMA) is an assessment of properties similar to a home. An agent presents this information to a prospective or current client. This helps a seller set the listing price for a home, called the valuation estimate.
Days on market is the way to measure the age of a real estate listing. It is the number of days from when a listing becomes active to when an offer is accepted. DOM is the acronym for days on market. Low days on market often indicates a new and competitive home on the market.
A discount real estate brokerage provides brokerage services at commissions below market. Often, discount brokerages focus on reduced rates for listing services.
An agent search portal helps buyers and sellers search for real estate agents. These sites offer data on each agent, including their prior performance, reviews, and specialties. Most agent search portals are paid by buyer’s and seller’s agents for referrals that turn into sales.
A For Sale By Owner is a home that sold without an agent by the owner. A For Sale By Owner transaction might still involve an agent representing the buyer. FSBO is an acronym for For Sale By Owner. This is often pronounced as “Fizz-bo” and refers to most homes sold without an agent involved.
Fractional home ownership companies buy a minority percentage of a home alongside homebuyers. This equity investment increases in value with the price of the home. Fractional home ownership helps create more buyers in a market. Many buyers may not have the cash available for a downpayment without this support.
A franchise brokerage, or franchisor, provides a business system with marketing, technology, and other support that is executed at the local level by regional operators, or franchisees. The franchisor provides a national brand with credibility and a proven system. And franchisees pay a fee to the franchisor. Over 40% of real estate agents are associated with a franchise.
Gross commission income (GCI) is the total dollars of commission that a brokerage or agent receives. Most brokerages define their revenue as their gross commission income.
A home flip is when an investor buys a house, renovates it, and then quickly sells it for a profit. Fix-and-flip is simply another word for a home flip. The total sales value of annual home flips is $500-650 billion. The average home flip generates around $60,000 in profit and close to a 40% return on investment.
The total value of homes sold in the United States each year is ~$1.6 trillion. There is roughly $70 billion in real estate commissions paid to brokerages each year. Roughly 5.3 million existing homes are sold each year. About 700,000 new homes are sold each year.
License requirements vary by state. Most states require 60-120 hours of coursework, an in-person exam, and an application that includes the brokerage where the agent will work.
iBuyers are companies that offer sellers cash for their homes. These companies make small repairs and improvements to purchased homes. They then list them for sale, and then attempt to sell the home for a profit. The largest iBuyers are RedfinNow, Zillow Offers, Opendoor, and Offerpad.
An independent brokerage is owned and operated by one entity. This means that all marketing, technology, and support are handled by one company. eXp Realty, Howard Hanna, Compass, and Redfin are some of the largest independent brokerages in the country.
The independent contractor agreement (ICA) in real estate is the document that establishes the working relationship between the brokerage and an agent. Typically, it clarifies commission splits and broader business practices.
There are roughly 1.35 million active real estate agents in the United States. The average active real estate agent supports 7 home sales transactions across buyers and sellers each year. The average agent generates roughly $51,200 in annual commissions.
There are around 105,000 real estate brokerages in the United States. The average brokerage employs just under 20 licensed agents. But when adjusting for active full-time agents, the number is closer to 13.
A listing manager or coordinator helps a real estate agent list a home for sale. They often help prepare listing materials, disclosures, and comparative market analyses.They may help coordinate showings, open houses, and listing on the MLS and consumer portals.
A listing presentation is a meeting where a seller’s agent pitches their services to a home seller. A seller’s agent will present their own credentials, a marketing plan, and how they would price the home.
Listing syndication is the automatic posting of a property on real estate portals and marketing platforms. Agents will often make an initial posting on the MLS. That listing can be syndicated to major real estate portals and marketing platforms. An IDX feed refers to a data connection between the MLS and an agent’s property site. RETS is a raw data feed that provides more granularity than IDX.
The managing broker ensures that a brokerage is compliant with real estate license law. Managing brokers are also called designated brokers and brokers of records. Each brokerage is required to have one managing broker.
Mortgage rates refer to the annual interest fee charged to a homeowner for the loan they take out to buy a home. This fee is expressed as a percentage of the total loan amount. When mortgage rates are low, the cost to borrow for home owners is lower. This means that buyers are often more willing to purchase homes when interest rates are low.
The multiple listings service is a local organization of real estate brokerages that agree to provide real estate commissions for properties they list for sale or rent. Usually the multiple listing service refers to the technology that agents use to access this database of homes.
An open house is a scheduled time for potential buyers to view a home. Over two-thirds of sellers host open houses.
Private showings and broker tours are scheduling viewings of homes for sale not open to the public. Private showings are coordinated between the seller or seller’s agent and buyer or buyer’s agent. Broker tours are scheduled times to view properties that are only open to licensed real estate agents.
A property management fee is a payment for services involving the operations of rentals. These fees often cover maintenance, marketing/tenant placement, evictions, and payments. A typical property management fee ranges from 5-15% of the monthly rental price.
An inside sales agent is a dedicated professional that helps find new leads, follow-up with existing leads, and pre-qualify incoming leads. ISA is the commonly used acronym for inside sales agents. ISAs can be full-time, part-time, or contract employees. They are usually paid on a combination of salary and commission.
The Real Estate Settlement Procedures Act is a law that requires key disclosures in real estate settlements. It also precludes brokerages from forcing clients to use a brokerage's preferred mortgage and title services. RESPA is the commonly used acronym for the Real Estate Settlement Procedures Act.
A real estate agent is a professional licensed by the state to help with the purchase, sale, or rental of property.
Ancillary services are brokerage business lines that make money separate from commissions. The most common ancillary services are mortgage, title, and escrow. Attach rate is the percentage of clients of a brokerage that use ancillary services.
A real estate brokerage is a company that employs a real estate agent. They collect payments for real estate transactions. An agent must work for a licensed brokerage.
The real estate commission is the money paid to a brokerage for assisting with a home sale. It is often expressed as a percentage of the final sales price.
Real estate customer relationship management software helps agents handle communications with potential and current clients. CRM is the commonly used acronym for a customer relationship management software. Most real estate customer relationship management software includes some form of categorizing leads and setting reminders and actions to follow up with those contacts.
A real estate disclosure is information the seller shares with the buyer on the condition of a home. In many markets, such as California, there are extensive disclosure laws. Failing to disclose information can expose the seller and their agent to legal risk. Disclosures software helps agents distribute disclosure documents and collect required signatures.
Real estate leads refer to contacts who can become a buyer, seller, or referral source. Real estate agents will often refer to a prospective client as a lead.
Real estate lead aggregators sell buyer and seller leads to agents. Lead aggregators work with various partners to generate unique lead sources.
Real estate leads refer to contacts who can become a buyer, seller, or referral source. Real estate agents will often refer to a prospective client as a lead.
The total value of residential real estate agent marketing in the United States is between $4.2 billion and $16.2 billion.The average real estate agent spends around $12,000 in marketing each year. But the median spend is likely closer to $3,000-6,000.
A real estate office manager or office administrator supports the front office operations of a real estate brokerage or team. They help with assorted office work, answering phones, and answering client questions. Because agents are independent contractors, they rarely help with office operations. As a result, a brokerage typically needs to hire an office manager to help.
A real estate portal is a website or app that allows a user to search homes for sale or rent. Typically, real estate portals refer to platforms that help consumers search home listings. Most real estate portals make money by charging real estate agents for marketing. The two most popular real estate portals are Zilow (including subsidiary Trulia) and
A real estate sales manager helps a brokerage manage agents, recruit new agents, hire and train staff, and coach existing agents.
Sales volume is the total dollar value of the homes and other real estate contracts that a real estate brokerage or agent support.
Real estate search and collaboration software help agents search and share property listings. This software accesses data from multiple sources. Most platforms allow clients to share feedback directly with agents or request tours.
A real estate side is a party, entity, or client involved in a real estate transaction. Usually, there are two sides to each transaction. One side is for the buyer and one side is for the seller. Side quantity is used to rank and assess agent and brokerage productivity.
A real estate transaction coordinator helps a real estate agent close home sales. They support agents with paperwork and processes starting when an offer is accepted. Typical responsibilities include reviewing contracts, ordering title services, scheduling inspections and other key events, updating clients, and collecting signatures.
The referral fee is a payment that a real estate agent receives for providing a client to another agent. Referral fees are typically a percentage of the final commission for one side of the transaction. The industry standard for referral fees is 25%.
Rent-to-own involves a renter both paying rent and contributing to the down payment. Often in a rent-to-own scenario, a company buys the home for the renter and then rents it back to the renter.
The rental commission is the payment made to a brokerage for bringing a client who signs a lease. Rental commissions are often expressed as months of rent or the percentage of the annual rent. The average rental commission is 5-15%.
Almost 60% of real estate sales occur in the second and third quarters of the year. Sales prices in the second and third quarters of the year are 7-8% higher than they are in the first quarter of the year. Spring selling season refers to the increase in home sales from April through August.
Single-family rentals are rental units in single-family homes. They are usually detached structures in suburban neighborhoods with a yard and garage. Single-family rental companies make most of their money from rental income. But they also will sell their rental properties for a profit.
A sphere of influence is the network of people that a real estate agent has influence on in some way. Typically, it is used to describe people that a real estate agent can position themselves as an expert to. SOI is the commonly used acronym for sphere of influence.
A tech-enabled brokerage uses technology as a primary investment to make agents more efficient and/or provide a better experience to clients. Typically, a tech-enabled brokerage has a sizable engineering team. Often, tech-enabled brokerages raise venture capital to support their tech investments.
A trade up brokerage or service allows a buyer to make a cash offer on a new home before selling their existing one. A trade up service helps a buyer make a stronger cash offer without contingencies. Trade up services often charge a flat fee for this feature. Trade up brokerages do not charge a fee if the buyer also sells with that brokerage.
An unlicensed assistant is a support staff member for a real estate agent or team. They do not have a real estate license and have restrictions on what they can do. Unlicensed assistants are usually able to access information, support open houses, and distribute pre-screened materials. Unlicensed assistance are typically unable to provide real estate advice, write advertisements, or support private showings.
Most agents do not earn enough to support themselves by selling real estate alone. As a result, under 20% of agents stay in the industry for longer than five years.