50 Real Estate Wholesaling Terms You NEED to Know!

“Are you ready to dive into the thrilling world of wholesale real estate? Buckle up, because we’ve got 50 terms that will have you speaking like a pro in no time! From “appreciation” to “novation,” this list has got you covered. Just don’t get too carried away with your newfound lingo and start dropping terms like “balloon payment” in casual conversation at parties. Trust us, it’s not as exciting as it sounds.”

• Wholesale: The sale of goods or products in large quantities at a discounted price, typically to retailers or distributors. In real estate, it refers to the practice of buying a property at a discounted price, typically from an motivated seller, and then reselling it to a buyer at a higher price.
• Real estate: Property, buildings, and land.
• Flip: The process of buying a property, making repairs or renovations, and reselling it for a profit.
• Rehab: The process of repairing and renovating a property to improve its condition and value.
• ARV (After Repair Value): The estimated value of a property after repairs and renovations have been completed.
• MAO (Maximum Allowable Offer): The maximum amount that a real estate investor is willing to pay for a property, based on their calculations of the property’s potential value after repairs and renovations.
• ROI (Return on Investment): The gain or loss generated on an investment, typically expressed as a percentage of the initial investment.
• Fix and flip: The process of buying a property, making repairs or renovations, and reselling it for a profit.
• Hard money: A type of loan that is typically used for short-term real estate investments, such as flipping houses. Hard money loans are typically more expensive than traditional loans and are secured by the property being purchased.
• Rehab cost: The cost of repairs and renovations needed to improve a property’s condition and value.
• Equity: The difference between the value of a property and the outstanding balance on any mortgages or liens against it.
• Cash flow: The amount of money generated by a property after all expenses, including mortgage payments and property management fees, have been paid.
• Market analysis: The process of researching and analyzing local real estate market trends and conditions.
• Property analysis: The process of evaluating a specific property to determine its potential value, condition, and potential repairs or renovations needed.
• Appraisal: An estimate of a property’s value, typically performed by a licensed professional appraiser.
• Closing costs: The various expenses associated with the purchase of a property, including title insurance, appraisal fees, and attorney fees.
• Title insurance: A type of insurance that protects the lender and/or buyer from any financial loss due to disputes over ownership of a property.
• Escrow: The process of holding funds or documents in a neutral third-party account during a real estate transaction.
• Earnest money: A deposit made by a buyer to show their commitment to purchase a property.
• Closing: The final step in a real estate transaction, during which the sale of the property is completed and the title is transferred to the buyer.
• Purchase agreement: A legally binding document outlining the terms and conditions of a real estate sale.
• Due diligence: The process of researching and evaluating a property and its potential value before making an offer to purchase.
• Lease option: A type of purchase agreement in which a tenant rents a property with the option to purchase it at a later date.
• Rent-to-own: A type of purchase agreement in which a tenant rents a property with the option to purchase it at a later date, typically with a portion of the rent going towards the purchase price.
• Owner financing: A type of purchase agreement in which the seller of a property provides financing for the buyer, rather than the buyer obtaining a traditional mortgage.
• Subject-to: A type of purchase agreement where the buyer takes over the existing mortgage on a property, rather than obtaining a new mortgage.
• Bridging loan: A short-term loan used to “bridge” the gap between the purchase of one property and the sale of another.
• Foreclosure: The process of taking possession of a property by a lender when the borrower is unable to make mortgage payments.
• Short sale: A sale of a property for less than the outstanding balance on the mortgage, typically done in order to avoid foreclosure.
• REO (Real Estate Owned): Property that has been foreclosed on and is now owned by the lender.
• Tenant-in-common: A type of joint ownership of a property where multiple individuals hold an undivided interest in the property.
• LLC (Limited Liability Company): A type of business entity that provides personal liability protection for its owners.
• Lien: A legal claim against a property that must be satisfied before the property can be sold.
• Deed: A legal document that transfers ownership of a property.
• Mortgage: A loan used to purchase a property, typically secured by the property itself.
• Note: A legal document outlining the terms and conditions of a loan, such as the interest rate and repayment schedule.
• Secured loan: A loan that is backed by collateral, such as a property.
• Unsecured loan: A loan that is not backed by collateral.
• Principal: The original amount of a loan, not including interest.
• Interest: The cost of borrowing money, typically expressed as a percentage of the loan amount.
• Amortization: The process of paying off a loan over time through regular payments, with a portion of each payment going towards the principal and interest.
• Refinancing: The process of obtaining a new loan to pay off an existing loan, typically done to obtain a lower interest rate or monthly payment.
• Balloon payment: A large payment that is due at the end of a loan term, typically used to reduce the monthly payment but increase the overall cost of the loan.
• Appreciation: An increase in the value of a property.
• Depreciation: A decrease in the value of a property.
• Cap rate: A measure of the potential return on an investment property, calculated as the net operating income divided by the purchase price or current market value.
• Cash-on-cash return: A measure of the cash flow generated by a rental property, calculated as the annual cash flow divided by the initial cash investment.
• Leverage: The use of borrowed money to increase the potential return on an investment.
• Default: Failure to make loan payments or fulfill the terms of a loan agreement.
• Foreclosure auction: The sale of a foreclosed property to the highest bidder, typically done by the lender or the government to recover the outstanding balance of the mortgage.
• Novation: In real estate wholesale, novation is the process of substituting a new party into a contract in place of an existing party, with the consent of all parties involved. It effectively releases the original party from their obligations under the contract and replaces them with the new party. Novation is often used in wholesale real estate transactions to bring in a new investor or buyer to take over an existing contract or purchase agreement. This allows the original buyer or investor to exit the deal, while the new party takes over their rights and responsibilities under the contract.