Washington Real Estate Glossary
The terms you'll meet in your Washington real estate courses and on the exam — defined the way Washington license law actually uses them.
A
- Advertising
- Under Washington licensing law, any attempt to induce someone to use a firm's or licensee's services — websites, social posts, email, signs, video included. Every piece must sho…
- Affiliated licensee
- A broker or managing broker who is licensed to represent a real estate firm and works under its supervision. Washington uses this term rather than "salesperson," a license the s…
- Agency
- The legal relationship in which one person, the agent, is authorized to act on behalf of another, the principal, in dealings with third parties.
- Agency relationship
- The professional connection between a real estate firm and a principal — buyer, seller, landlord, or tenant — created in Washington through a written services agreement or by pr…
- Agent
- Before 2010, one of Washington's two real estate license levels. An agent could provide brokerage services to clients but could not manage other licensees inside a firm. The sta…
- Amortization
- The gradual payoff of a loan through regular payments over its term, with each payment covering the interest due and reducing the principal until the balance reaches zero.
- Appraisal
- A professional, supported opinion of a property's value as of a specific date, prepared by a licensed or certified appraiser using recognized valuation methods.
- Appraiser
- A trained professional who estimates the market value of real property. The written opinion of value they produce, called an appraisal, is commonly ordered when property is boug…
- Assessment
- The official valuation a county assessor places on property to calculate property tax. In Washington, property must be valued at 100% of its true and fair market value (RCW 84.4…
B
- Basis
- For tax purposes, the amount invested in a property: its purchase price plus settlement and closing costs. It is the starting figure subtracted from the sale price to measure ta…
- Branch manager
- The person a firm puts in charge of a satellite office and the brokers who work out of it. In Washington that person is a managing broker, a license level authorized to supervis…
- Breach
- The failure to fulfill a promise or obligation in a contract without a legal excuse. It gives the injured party the right to remedies such as damages or specific performance.
- Broker
- A person licensed to help clients buy, sell, rent, exchange, or manage property on behalf of a real estate firm, working under the supervision of the firm's designated or managi…
- Brokerage
- The business of facilitating the sale, purchase, rental, or exchange of real estate for others in return for compensation. The word also names the company that provides these se…
- Brokerage services
- The licensed real estate activities performed for another person for compensation, such as listing, selling, buying, exchanging, leasing, or managing property, and negotiating t…
- Buyer agency
- The relationship in which a broker represents only the buyer in a transaction and owes that buyer a broker's statutory duties. In Washington this broker is called the selling br…
C
- Client
- A buyer or seller who has entered an agency relationship with a broker and is therefore owed the broker's full representation and duties, unlike a customer.
- Closing
- The final step of a real estate sale, when funds and signed documents are exchanged and title passes to the buyer. The neutral third party handling it — the escrow or settlement…
- Closing costs
- The fees and charges a buyer and seller owe at settlement beyond the property's purchase price, such as loan fees, title and escrow charges, prepaid taxes, and insurance.
- Closing Disclosure
- A five-page federal form itemizing the final loan terms, costs, and credits in a mortgage transaction, which the lender must deliver to the borrower at least three business days…
- Collateral
- Property a borrower pledges to secure a loan. If the borrower defaults, the lender can take the pledged asset and sell it to recover what it is owed.
- Comparables
- Recently sold properties similar to the one being valued, in location, size, age, and features, whose sale prices are adjusted to estimate the subject property's value.
- Comparative market analysis
- A broker's estimate of a home's value built by comparing it to similar nearby properties — sold, pending, active, and expired — and adjusting the comparables for differences. Le…
- Condominium
- A form of ownership in which a person holds outright title to an individual unit, defined largely by its airspace, plus a shared interest in the common elements of the larger pr…
- Consummation
- Under federal lending rules, the moment a borrower becomes contractually obligated on the loan, generally when the note is signed. Required disclosures are timed from this point…
- Contingency
- A condition written into a purchase and sale agreement that must be met before the deal is binding — a satisfactory inspection or loan approval, for example. If the condition fa…
- Corporation
- A business owned by shareholders who hold stock in it. The law treats it as a separate 'artificial person,' so it can own property and shields its owners from personal liability…
- Covenant
- A binding promise written into a deed or other agreement, such as a grantor's assurance about the condition of the title being transferred.
- Customer
- A buyer or seller a broker assists without representing them; the broker owes honesty and fair dealing but not the full duties owed to a client.
D
- Deed
- A signed written document that transfers ownership of real estate from one party to another.
- Deed of trust
- A security instrument for a loan in which the borrower conveys legal title to a neutral third-party trustee, who holds it until the debt is repaid. Washington uses deeds of trus…
- Default
- Failure to keep the promises made in a contract — also called a breach. When a buyer or seller does not perform, the other party may pursue remedies such as keeping the earnest …
- Delivery
- The grantor's act of handing over a signed deed to the grantee with intent to transfer ownership; it must happen during the grantor's lifetime to be valid.
- Department of Licensing
- The Washington state agency (DOL) that regulates real estate licensees, sets and enforces licensing standards, issues and renews licenses, and investigates complaints. Its direc…
- Designated broker
- The person the state holds ultimately accountable for a real estate firm, typically its owner or someone with a controlling interest in the business. In Washington this must be …
- Down payment
- Money the borrower puts toward the purchase price from their own funds rather than borrowing it. A larger one lowers the loan-to-value ratio, shifting risk away from the lender …
- Dual agency
- One broker or firm representing both buyer and seller in the same sale. Washington calls it limited dual agency and permits it only with both parties' written, separately initia…
E
- Earnest money
- A deposit a buyer puts down to show a serious commitment to purchasing a property. It is usually held in a trust account and applied toward the purchase price at closing.
- Easement
- A legal right to use part of another person's land for a specific purpose, such as a driveway or utility line, without owning it. The owner keeps title but gives up that limited…
- Encumbrance
- A claim, right, or liability that another party holds against a property, such as a lien, easement, or deed restriction. It limits the owner's use or lowers value but does not b…
- Equity
- The share of a property's value the owner actually holds, found by subtracting the loan balance from the current market value. It grows as the loan is paid down or the property …
- Escrow
- A process in which a neutral third party holds money and documents and releases them only when both sides of a contract have met the agreed terms.
- Estate
- The nature and extent of a person's ownership or possessory interest in land, deciding who may control or occupy it, now or in the future.
F
- Fair Housing Act
- The 1968 federal law that bans discrimination in the sale, rental, financing, and advertising of housing based on race, color, religion, national origin, sex, disability, or fam…
- Foreclosure
- The legal process a lender uses to take and sell a property when the borrower defaults on the loan, applying the sale proceeds to the unpaid debt.
H
- HUD
- The U.S. Department of Housing and Urban Development, the federal agency that administers housing programs and enforces the Fair Housing Act, investigating complaints of housing…
J
- Judgment
- A court's final decision that resolves a lawsuit and fixes the rights and obligations of the parties, including any money one party must pay another.
L
- Legal description
- A precise written identification of a parcel's boundaries, using a recognized survey method, exact enough to transfer the land in a deed. It is not the same as a street address.
- License
- Permission to use another person's land for a specific purpose while the owner keeps control. It can be given orally, is revocable at any time, and is not an interest in the land.
- Lien
- A monetary claim recorded against property to secure payment of a debt, letting the creditor force a sale if the debt goes unpaid. It is a type of financial encumbrance.
- Limited dual agency
- One broker representing both the buyer and the seller in the same transaction, allowed in Washington only with both parties' written consent. The broker stays neutral and may no…
- Listing agreement
- A contract between a seller and a real estate firm authorizing the firm to market a property and find a buyer. It works much like an employment contract for the firm's services.
- Loan Estimate
- A three-page federal form a lender must give a mortgage applicant within three business days of application, laying out the loan's key terms, projected costs, and risks.
- Loan-to-value ratio
- How big a mortgage is compared with the price or worth of the property securing it, shown as a percentage (LTV). A $180,000 loan on a $200,000 home is 90%; a higher figure means…
M
- Managing broker
- A senior real estate license level in Washington that permits both serving clients directly and supervising other licensees within a firm. A managing broker answers to the firm'…
- Market value
- The most probable price a property should bring in a competitive, open sale when both a willing buyer and a willing seller act knowledgeably and free of undue pressure.
- Material fact
- Information important enough that it could affect a reasonable buyer's decision or the property's value, such as a structural problem or a lien; brokers must disclose known mate…
- Mutual acceptance
- The point at which a buyer and seller have agreed to all terms of an offer, forming a binding contract. Many purchase timelines are counted from this date.
N
- NAR Settlement
- A 2024 legal agreement resolving antitrust claims against the National Association of Realtors. Effective August 17, 2024, it barred offers of buyer-broker pay in the MLS and re…
- Net listing
- An arrangement where the seller sets a minimum amount to pocket and the broker keeps the rest as commission. Washington doesn't expressly ban it, but the broker's statutory duti…
P
- Personal property
- Movable belongings that are not permanently attached to land, which the owner may take along when the real estate is sold. Also called chattels or personalty.
- Point
- A fee equal to one percent of the loan amount, paid to the lender at closing. On a $700,000 loan, one point costs $7,000; borrowers may pay points to lower the interest rate.
- Possession
- Physical occupancy and control of a property. The date the buyer actually takes it can differ from the closing date, so a purchase agreement states when the seller must move out…
- Principal
- The person who authorizes an agent to act on their behalf; in real estate, the buyer or seller who has engaged a broker to represent them.
- Promissory note
- A signed written pledge by which one person (the maker) agrees to pay a set sum to another, at a future date or in installments, often with interest. It can even serve as a form…
- Purchase and sale agreement
- The written contract in which a buyer and seller set the price, closing date, contingencies, and other terms for transferring a piece of real estate.
Q
- Quitclaim deed
- A conveyance that transfers only whatever interest the grantor happens to hold, with no promise that the title is good or even that the grantor owns anything. Common between spo…
R
- Real property
- Land plus everything permanently attached to it, buildings, fixtures, and growing things, along with the legal rights and privileges that come with owning the land.
- Recording
- The act of entering a deed, mortgage, or other document into the county's public land records. In Washington, recording gives public notice and, under the state's recording act,…
- Regulation Z
- The federal rule that carries out the Truth in Lending Act, requiring lenders to disclose credit terms and costs. It also grants the right of rescission on certain loans secured…
- Rescission
- The canceling of a contract that returns both parties to the positions they held before it was made, as if the agreement never existed.
S
- Section
- In the government survey system, a block of land one mile square and containing 640 acres. Thirty-six of them make up a township.
- Statute of Frauds
- A rule requiring certain contracts, including those for the sale of real estate, to be in a signed writing to be enforceable. An oral real estate contract generally cannot be en…
- Subject to
- A transfer in which the buyer takes over the seller's existing loan payments but does not assume personal liability for the debt. The original borrower stays legally responsible…
T
- Title
- The bundle of legal rights that establishes who owns a piece of property and may sell or use it. It shows the extent of a person's ownership or other interest in the real estate.
- Title company
- An insurance company that examines whether the ownership rights being transferred are actually transferable and then protects the buyer against later claims or defects in those …
- Title insurance
- A one-time-premium policy that reimburses the holder for losses caused by defects in a property's ownership history — forged signatures, unknown heirs, recording errors, or lien…
- Trust account
- A separate, DOL-regulated fund a firm keeps to hold money belonging to others — earnest money and deposits — apart from its own operating cash. Washington requires deposit by th…
W
- Will
- A written, witnessed document that directs how a person's property and assets are to be distributed after death and names who should carry out those instructions.
Z
- Zoning
- Local government rules that divide land into districts and control what may be built and how each parcel may be used, such as for residential, commercial, or industrial purposes.