Real Estate Exam Terms to Know Before Test Day
One reason candidates lose time on the exam is not the concept itself, but the terminology used in the question. Reviewing core exam terms can make practice feel more natural and reduce the friction of decoding what a prompt is really asking.
Glossary
Agency
The relationship in which one party represents another in a real estate transaction and owes duties defined by law and agreement.
Listing
An agreement that authorizes a real estate professional to market a property for sale or lease.
Escrow
A neutral holding arrangement for funds, documents, or other items until transaction conditions are met.
Encumbrance
A claim, right, or liability attached to property that can affect title or use.
Fixture
An item that was once personal property but has become attached to real property in a way that makes it part of the property.
Easement
A nonpossessory right to use another person’s land for a specific purpose.
Amortization
The gradual repayment of a debt over time through scheduled payments of principal and interest.
Liquidity
How easily an asset can be converted into cash without significant loss of value.
Title
The legal concept of ownership rights in property.
Deed
The written instrument used to transfer ownership interests in real property.
Lien
A legal claim against property that serves as security for a debt or obligation.
Appraisal
An opinion of value based on analysis of market data, property characteristics, and valuation methods.
Market value
The most probable price a property would bring in an open, competitive market under typical conditions.
Consideration
Something of value exchanged between parties to support a contract.
Novation
The substitution of a new contract or party for an old one with mutual agreement.
Offer
A proposal made with the intent to create a binding agreement if accepted.
Counteroffer
A response to an offer that changes the terms and effectively rejects the original offer.
Agency disclosure
Notice about the type of agency relationship or representation involved in a transaction.
Fair housing
The body of anti-discrimination rules that apply to housing-related conduct and transactions.
Earnest money
Funds deposited to show good faith at the beginning of a transaction.
Closing
The final stage of a transaction when documents are signed, funds are disbursed, and the transfer is completed.
Settlement statement
A document showing the financial details of a closing, including charges and credits.
Principal
The amount of money borrowed or the party represented in an agency relationship, depending on context.
Brokerage
The business structure or activity through which real estate services are offered and supervised.
Fiduciary duty
The high standard of loyalty, care, and honesty owed when representing another party in certain relationships.