Indiana Real Estate Glossary

Real estate has a jargon problem. Most of these words describe simple ideas dressed up in language that makes buyers feel like they're missing something. They usually aren't. Below is every term you're likely to meet in a Central Indiana transaction, defined plainly, with Indiana-specific notes where the state does things its own way.

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1031 exchange Investment

A tax strategy that lets an investor defer capital gains by reinvesting the proceeds from selling one investment property into another like-kind property within set deadlines. The rules are strict, so it is done with a qualified intermediary.

A

Absorption rate Listing & Market

How quickly homes are selling in an area, often expressed as the months of inventory available at the current pace. It helps show whether conditions favor buyers or sellers.

Adjustable-rate mortgage (ARM) Lending & Mortgage

A mortgage whose interest rate changes periodically after an initial fixed period, causing your payment to rise or fall.

After repair value (ARV) Investment

The estimated value of a property once planned renovations are complete. Investors use it to decide how much to pay and how much to spend on a fix-and-flip or refinance.

Amortization Lending & Mortgage

The schedule by which loan payments are applied to interest and principal over time. Early payments are mostly interest; later ones mostly principal.

Annual percentage rate (APR) Lending & Mortgage

A yearly cost figure that combines your interest rate with certain lender fees, so it usually runs slightly higher than the rate itself. It gives you a fairer, apples-to-apples way to compare loan offers.

Appraisal Inspections & Appraisal

An independent professional estimate of a property's market value, ordered by your lender to confirm the home supports the loan amount.

Appraisal contingency Offers & Contracts

A clause allowing the buyer to renegotiate or exit if the home appraises for less than the agreed price. It matters most in fast-rising markets where offers can outpace values.

Appraisal gap Inspections & Appraisal

The difference between the contract price and a lower appraised value, which the buyer generally must cover in cash.

As-is Offers & Contracts

A sale in which the seller will not make repairs. You can still inspect, and in Indiana the seller must still complete a disclosure.

Assessed value Taxes & Ownership

The value a county assessor assigns to your property for tax purposes. It is not the same as what the home would sell for and often differs from market value.

B

Backup offer Offers & Contracts

A formal second-position offer that moves to first if the current contract falls through. Worth submitting on a contingent listing.

Builder allowance New Construction

A dollar budget a builder sets for a category like flooring or lighting that you can spend toward your selections. Going over the allowance adds to your price, while staying under can save.

Builder warranty New Construction

A new-home warranty from the builder covering workmanship and certain systems for set periods, often around a year on general items and longer on structural elements. It is separate from any home warranty service contract.

Buy-and-hold Investment

An investing approach of keeping a property long term to earn rental income and benefit from appreciation, rather than selling quickly. It focuses on steady returns over time.

Buyer's agency agreement Roles & Working With Agents

A written agreement setting out what your agent will do and how they're paid. Buyers now sign one before touring homes.

Buyer's agent Roles & Working With Agents

A licensed agent who represents the buyer's interests, from finding homes to negotiating and guiding them to closing. Their duty is to the buyer, not the seller.

Buyer's market Listing & Market

A market with more homes for sale than active buyers, giving buyers more choice and negotiating power. Prices often soften and homes sit longer.

C

Capital gains exclusion Taxes & Ownership

A federal break letting many homeowners exclude a large share of the profit from selling a primary residence they have owned and lived in for at least two of the past five years. It is why many long-term owners owe little or no tax on a sale.

Capital gains tax Taxes & Ownership

A tax on the profit when you sell an asset like a home for more than you paid. Special rules can reduce or eliminate it on a primary residence.

Capitalization rate (cap rate) Investment

A rental property's yearly net operating income divided by its price, shown as a percentage, used to compare income potential. Higher cap rates suggest more income relative to price, often with more risk.

Cash flow Investment

The money left each month after collecting rent and paying all expenses and the mortgage on an investment property. Positive cash flow means the property puts money in your pocket.

Cash offer Listing & Market

An offer to buy without a mortgage, backed by proof of funds instead of a loan approval. Cash deals skip the financing step and can close faster, which appeals to many sellers.

Cash to close Closing & Costs

The total amount a buyer must bring to closing, combining the down payment, closing costs, and prepaids, minus any credits and earnest money already paid. Your final figure appears on the Closing Disclosure.

Cash-on-cash return Investment

The yearly pre-tax cash flow divided by the actual cash you invested, shown as a percentage. It measures the return on the money you personally put in, not the full property value.

CC&Rs HOA & Community

The covenants, conditions, and restrictions that govern what owners can and cannot do in an HOA community, from paint colors to parking. Review them before buying, since they are binding.

Certificate of occupancy New Construction

A local government document confirming a new or renovated home meets code and is safe to live in. Closing on new construction usually cannot happen until it is issued.

Chain of title Title & Legal

The full history of ownership transfers for a property, from one owner to the next over time. Gaps or errors in the chain can cloud the title and need to be cleared before closing.

Closing Closing & Costs

The final step, where documents are signed, funds are disbursed, and ownership transfers to the buyer.

Closing costs Closing & Costs

Fees and prepaid items due at closing — loan origination, title, recording, taxes and insurance. Commonly 2–5% of price for buyers.

Closing disclosure Closing & Costs

A standardized form itemizing your final loan terms and closing costs, provided at least three business days before closing.

Closing wire fraud Closing & Costs

A scam in which criminals impersonate the title company or agent and send fake wiring instructions to steal your closing funds. Always verify wire details by phone using a known number before sending money.

Common area HOA & Community

The shared parts of a community owned and maintained collectively, such as pools, clubhouses, sidewalks, and green space. HOA dues typically pay for their upkeep.

Comparables (comps) Listing & Market

Recently sold homes similar in size, age, condition and location, used to estimate value.

Comparative market analysis (CMA) Listing & Market

An agent's estimate of a home's value based on recent comparable sales, current competition, and market trends.

Condominium HOA & Community

A home where you own your individual unit and share ownership of common areas like hallways and grounds through an association. Monthly dues fund shared maintenance and amenities.

Contingency Offers & Contracts

A condition that must be met for a sale to proceed. If unmet, the buyer can usually cancel and recover their earnest money.

Contingency period Offers & Contracts

The window of time you have to complete a condition of the contract, like an inspection or loan approval, before that condition becomes binding. Miss the deadline and you may lose the right to back out for that reason.

Contingent Listing & Market

A listing status meaning an offer is accepted but conditions such as inspection or financing are still outstanding.

Conventional loan Lending & Mortgage

A mortgage not insured by a government program. Often as little as 3–5% down, with PMI required under 20%.

Counteroffer Offers & Contracts

A response that changes one or more terms of an offer, such as price or closing date, sending the deal back to the other side to accept, reject, or counter again. Negotiations often run through several rounds of these.

D

Days on market (DOM) Listing & Market

How long a home has been actively listed before going under contract — a signal of demand and of negotiating room.

Debt-to-income ratio (DTI) Lending & Mortgage

The portion of your gross monthly income that goes toward debt payments, which lenders use to gauge how much you can safely borrow. A lower ratio generally makes approval easier.

Deed Title & Legal

The legal document transferring ownership of real property from one party to another.

Deed restriction Title & Legal

A limitation written into a property's deed that controls how the land can be used, such as barring certain buildings or businesses. These run with the land and bind future owners.

Discount points Lending & Mortgage

An optional upfront charge, with each point costing roughly 1% of the loan amount, paid to buy down your interest rate. Paying points tends to pay off only if you keep the loan for many years.

Down payment Lending & Mortgage

The portion of the purchase price you pay upfront. Ranges from 0% on VA and USDA loans to 20%+ on conventional.

Dual agency Roles & Working With Agents

When one agent or brokerage represents both the buyer and the seller in the same transaction. It limits how fully either side can be advised and requires written consent.

E

Earnest money Offers & Contracts

A good-faith deposit submitted with an offer, held in escrow and credited toward your costs at closing.

Earnest money dispute Offers & Contracts

A disagreement over who keeps the deposit when a deal falls apart. In Indiana the party holding the funds generally cannot release them until both sides sign off or a court decides.

Earnest money receipt Offers & Contracts

Written confirmation that your good-faith deposit has been received and is being held, usually by the title company or listing broker. It documents the amount and who is holding it.

Easement Title & Legal

A right allowing someone else to use part of your property for a specific purpose, such as utility access.

Encroachment Title & Legal

When a structure like a fence, shed, or driveway crosses onto a neighbor's property or a setback line. A survey usually reveals it, and it may need to be resolved before closing.

Encumbrance Title & Legal

Any claim or restriction on a property, such as a lien, easement, or unpaid tax, that can affect its use or transfer. Title work aims to identify and clear these where possible.

Equity Taxes & Ownership

The difference between your home's market value and what you still owe on it.

Escalation clause Offers & Contracts

A provision that automatically raises your offer by a set amount above competing bids, up to a maximum you choose. Buyers use it in multiple-offer situations to stay competitive without overpaying blindly.

Escrow Closing & Costs

A neutral third party holding money or documents until conditions are met. Also the lender account that pays your taxes and insurance.

Exclusive right to sell Listing & Market

The most common listing agreement, under which the brokerage earns its commission if the home sells during the term no matter who finds the buyer. It gives the agent full incentive to market the property.

F

FHA loan Lending & Mortgage

A government-insured mortgage with lower credit thresholds and a low down payment, popular with first-time buyers.

Fiduciary duty Roles & Working With Agents

The legal obligation an agent owes their client to act with loyalty, honesty, and care, always putting the client's interests first. It is the backbone of the agent-client relationship.

Financing contingency Offers & Contracts

A clause letting a buyer cancel and recover earnest money if their mortgage falls through by a set date. It protects buyers who are not paying all cash.

Fix and flip Investment

Buying a property, renovating it, and reselling fairly quickly for a profit. Success depends on accurate repair estimates and a realistic after-repair value.

Fixed-rate mortgage Lending & Mortgage

A mortgage whose interest rate stays the same for the life of the loan.

Forbearance Lending & Mortgage

A temporary pause or reduction in mortgage payments a lender may allow during a hardship. The skipped amount is not forgiven and has to be repaid later.

G

Gross living area (GLA) Inspections & Appraisal

The finished, above-grade square footage an appraiser uses when valuing a home. Finished basements are usually counted separately, which is why listed square footage can differ.

Gross rent multiplier (GRM) Investment

A property's price divided by its yearly gross rent, used as a quick screening tool to compare rentals. A lower number can signal better value, before deeper analysis.

H

HOA (homeowners association) HOA & Community

An organization governing a community, funded by dues, that maintains shared areas and enforces rules. Always review the documents and dues history.

Home equity line of credit (HELOC) Lending & Mortgage

A revolving credit line secured by the equity in your home that you can draw on as needed, much like a credit card. Rates are usually variable, so the payment can move over time.

Home inspection Inspections & Appraisal

A professional evaluation of a home's condition and systems, typically performed during the inspection contingency period.

Home sale contingency Offers & Contracts

A clause making the purchase depend on the buyer first selling their current home by a certain date. Sellers weigh these carefully because they add uncertainty to the timeline.

Home warranty Closing & Costs

A service contract that helps cover repair or replacement of major home systems and appliances when they break down, usually for a year. Sellers sometimes offer one to reassure buyers, and it can be renewed afterward.

Homestead exemption Taxes & Ownership

An Indiana property tax deduction available on your primary residence. File it after closing — it lowers your tax bill.

House hacking Investment

Living in one part of a property, such as one unit of a duplex, while renting out the rest to help cover the mortgage. It is a common way first-time investors get started.

I

iBuyer Listing & Market

A company that uses online pricing models to make quick, largely automated cash offers on homes. The convenience often comes with fees and a below-top-dollar price compared with a traditional sale.

Inspection contingency Offers & Contracts

A clause giving the buyer a set period to inspect the home and then negotiate repairs, ask for credits, or walk away. It is one of the most common protections in a purchase agreement.

Interest rate Lending & Mortgage

The yearly percentage a lender charges to borrow the loan amount, applied to your outstanding balance. It is the main driver of your monthly principal-and-interest payment.

J

Joint tenancy Title & Legal

A way for two or more people to hold title equally with rights of survivorship, so if one owner dies their share passes automatically to the others. It is a common choice for co-owners who want to avoid probate.

Jumbo loan Lending & Mortgage

A mortgage larger than the conforming limit set for the county, so it cannot be backed by Fannie Mae or Freddie Mac. These loans often carry stricter credit and down-payment standards.

L

Lead-based paint disclosure Inspections & Appraisal

A federally required notice for homes built before 1978, informing buyers of any known lead paint and their right to test for it. Sellers must provide it regardless of the home's condition.

Lien Title & Legal

A legal claim against a property for an unpaid debt. Liens must generally be cleared before ownership transfers.

Limited agency Roles & Working With Agents

Indiana's term for representing both sides of a deal, where the agent stays neutral and cannot advocate fully for either party. It requires disclosure and the informed consent of everyone involved.

List-to-sale ratio Listing & Market

The final sale price compared with the last list price, shown as a percentage. It hints at how much negotiating room a market typically allows.

Listing agent Roles & Working With Agents

The agent who represents the seller, markets the home, and negotiates offers on the seller's behalf. Also called the seller's agent.

Listing agreement Listing & Market

The contract between a seller and a brokerage that authorizes the agent to market and sell the home and sets the commission. It also allows the property to be entered into the MLS.

Loan estimate Lending & Mortgage

A standardized form showing your estimated loan terms and closing costs, provided shortly after you apply.

Loan-to-value ratio (LTV) Lending & Mortgage

The loan amount compared with the home's appraised value, shown as a percentage. A larger down payment lowers your LTV and can help you skip mortgage insurance.

Lot premium New Construction

An extra charge a builder adds for a more desirable homesite, such as a larger, wooded, or waterfront lot. It is added on top of the base home price.

M

Managing broker Roles & Working With Agents

The licensed broker responsible for supervising a brokerage's agents and making sure the office follows real estate law. Every Indiana agent works under a managing broker.

Market value Taxes & Ownership

The price a home would likely bring in an open sale between a willing buyer and seller. It reflects current demand and can differ notably from the assessed value used for taxes.

MIBOR Listing & Market

The Metropolitan Indianapolis Board of Realtors, which operates the MLS covering Central Indiana.

Mill rate Taxes & Ownership

The tax rate used to calculate property taxes, expressed in dollars per thousand of taxable value. Combined with your assessed value and any deductions, it helps determine your bill.

MLS Listing & Market

The Multiple Listing Service — the database where brokers share active listings and sale data.

Model home New Construction

A finished, often upgraded home a builder uses to showcase a floor plan and community. Keep in mind the upgrades on display may not all be included in the base price.

Mortgage broker Lending & Mortgage

A licensed professional who shops your application to several lenders to find a fit, rather than lending the money directly. A broker can help when your situation calls for more than one option.

Mortgage lender Lending & Mortgage

The company that actually underwrites and funds your loan, such as a bank, credit union, or direct mortgage company. Unlike a broker, the lender makes the final decision and provides the money.

N

Net operating income (NOI) Investment

A rental property's income after operating expenses but before the mortgage payment. It is a building block for figuring cap rate and overall performance.

O

Open house Listing & Market

A scheduled window when a listed home is open for any interested buyer to tour without an appointment. It is one marketing tool among many and works better for some homes than others.

Option period Offers & Contracts

A short negotiated window during which a buyer can cancel for any reason, sometimes for a small fee. It is less standard in Indiana than in some states, where inspection contingencies do similar work.

P

Pending Listing & Market

A listing status meaning contingencies are cleared and the sale is moving toward closing.

PITI Lending & Mortgage

Shorthand for the four parts of a typical mortgage payment: principal, interest, taxes, and insurance. Lenders weigh your full PITI, not just the loan payment, when deciding what you qualify for.

Planned unit development (PUD) HOA & Community

A community designed with a mix of homes and shared amenities governed by an association, where owners hold their own lot and home. Many newer Central Indiana subdivisions are set up this way.

PMI (private mortgage insurance) Lending & Mortgage

Insurance protecting the lender when a conventional borrower puts less than 20% down. Removable once you build enough equity.

Possession date Closing & Costs

The day the buyer actually gets the keys and can move in, usually closing day but sometimes negotiated separately. A short post-closing possession by the seller is occasionally arranged.

Pre-approval Lending & Mortgage

A lender's conditional commitment based on verified income, assets and credit. Stronger than a pre-qualification.

Pre-qualification Lending & Mortgage

An informal estimate of what you might borrow, based on unverified information.

Prepayment penalty Lending & Mortgage

A fee that a few loans charge if you pay the balance off early by selling or refinancing. Most standard mortgages today do not include one, but it is worth confirming.

Price per square foot Listing & Market

A home's price divided by its finished square footage, used as a rough way to compare properties. It is a starting point only, since condition, lot, and features vary widely.

Principal Lending & Mortgage

The amount you borrowed, separate from interest.

Proof of funds Offers & Contracts

A bank statement or lender letter showing you have the cash needed for the down payment and closing, or the full price on a cash deal. Sellers often ask for it before accepting an offer.

Property tax caps Taxes & Ownership

Indiana constitutional limits on property tax as a share of assessed value, which vary by property type.

Prorations Closing & Costs

The splitting of ongoing costs like property taxes between buyer and seller based on the closing date. Because Indiana bills property taxes in arrears, tax prorations here take extra care to get right.

Punch list New Construction

The list of small fixes and unfinished items a buyer and builder note before or at closing on a new home. The builder is expected to complete these, often shortly after move-in.

Purchase agreement Offers & Contracts

The written contract that spells out the price, terms, contingencies, and closing date once a buyer and seller agree. In Indiana this is usually a MIBOR-standard form prepared by your agent.

Q

Quitclaim deed Title & Legal

A deed that transfers whatever interest the signer has in a property without promising the title is clear. It is often used between family members or to correct a name on title, not for typical arm's-length sales.

R

Radon testing Inspections & Appraisal

A test that measures radon, a naturally occurring radioactive gas that can seep into homes from the soil. It is common across Indiana, and buyers often add a radon test to their inspection.

Rate cap Lending & Mortgage

On an adjustable-rate mortgage, a limit on how far the rate can climb at each adjustment and over the loan's life. Caps keep your payment from rising without any ceiling.

Rate lock Lending & Mortgage

A lender's commitment to hold your quoted interest rate for a set window, often 30 to 60 days, while your loan is processed. It shields you from rate increases before closing.

Realtor Roles & Working With Agents

A real estate agent who belongs to the National Association of Realtors and agrees to its code of ethics. Not every licensed agent is a Realtor, though many in the MIBOR area are.

Reconsideration of value Inspections & Appraisal

A formal request asking the appraiser to revisit a low appraisal, usually backed by additional comparable sales the appraiser may have missed. It is one option when an appraisal comes in under the contract price.

Recording fees Closing & Costs

Charges paid to the county recorder to enter the new deed and mortgage into public record. They are a standard, relatively small line item at closing.

Resale certificate HOA & Community

A packet an HOA provides when a home sells, disclosing dues, rules, finances, and any pending assessments. Buyers should review it to understand what they are joining.

Reserve fund HOA & Community

The savings an HOA sets aside for future major repairs and replacements. A healthy reserve reduces the odds of a surprise special assessment down the road.

S

Sales disclosure form Taxes & Ownership

An Indiana form filed with the county when property is sold, reporting the sale price and details used for tax assessment. It is required for most transfers and is handled as part of closing.

Seller concessions Offers & Contracts

Money a seller agrees to put toward the buyer's closing costs or prepaids, negotiated into the contract. They can help a buyer bring less cash to the table.

Seller's disclosure Title & Legal

An Indiana-required form on which sellers report known defects. It reflects knowledge, not condition — never a substitute for inspection.

Seller's market Listing & Market

A market with more buyers than available homes, which tends to push prices up and shorten time on market. Sellers usually have more leverage in these conditions.

Settlement statement Closing & Costs

An itemized accounting of every credit and charge for both buyer and seller at closing, often the ALTA statement that accompanies the Closing Disclosure. It shows exactly where the money goes.

Short sale Listing & Market

A sale for less than the mortgage balance, requiring lender approval.

Single-family home HOA & Community

A standalone house on its own lot, not attached to any neighbor and usually with its own yard. It is the most common home type across Central Indiana.

Spec home New Construction

A home a builder constructs on speculation without a buyer lined up, often with finishes already chosen. These can close faster since most design decisions are already made.

Special assessment HOA & Community

A one-time charge an HOA levies on owners to cover a large expense that regular dues cannot, such as a new roof or road repair. It is separate from and on top of normal dues.

Staging Listing & Market

Arranging furniture and decor and clearing clutter to show a home at its best for photos and showings. Even light staging can help buyers picture themselves living there.

Survey Title & Legal

A drawing showing a property's legal boundaries, structures and easements.

T

Tenancy by the entirety Title & Legal

A form of joint ownership available only to married couples that treats them as a single legal owner with survivorship rights. Indiana offers it, and it can shield the home from some individual creditors.

Title Title & Legal

Legal ownership of a property, and the history of that ownership.

Title commitment Title & Legal

A document from the title company outlining the terms under which it will insure the title, along with any issues that must be resolved first. It is issued after the title search and before closing.

Title company Closing & Costs

The neutral third party that handles the title search, issues title insurance, and conducts the closing. In Indiana, title companies typically run closings rather than attorneys.

Title insurance Title & Legal

A one-time policy protecting against ownership problems that predate your purchase, such as liens or recording errors.

Title search Title & Legal

A review of public records to trace ownership and uncover any liens, judgments, or claims against a property. It confirms the seller can legally transfer clear title before closing.

Townhouse HOA & Community

An attached home that shares one or two walls with neighbors but where you typically own the structure and the land beneath it. Many, though not all, come with an HOA for shared areas.

Transaction coordinator Roles & Working With Agents

A behind-the-scenes person who manages paperwork, deadlines, and communication to keep a deal on track through closing. They handle logistics so the agent can focus on you.

Transfer tax Closing & Costs

A tax some states charge when property changes hands, based on the sale price. Indiana does not levy a state or county real estate transfer tax, which keeps closing costs a bit lower here.

U

Underwriting Lending & Mortgage

The lender's final review of your finances and the property before issuing loan approval.

Upgrades and options New Construction

Choices beyond the standard finishes, such as better cabinets, added rooms, or premium flooring, that raise the price of a new build. They are usually selected at the builder's design center.

USDA loan Lending & Mortgage

A zero-down loan for eligible rural areas — which covers more of Central Indiana than most buyers expect.

V

VA loan Lending & Mortgage

A loan for eligible veterans and service members, typically with no down payment and no mortgage insurance.

W

Walk-through Closing & Costs

A final inspection shortly before closing to confirm the home's condition and that agreed repairs were made.

Warranty deed Title & Legal

A deed in which the seller guarantees they hold clear title and will defend it against claims. It gives the buyer the strongest ownership protection and is standard in most Indiana sales.

Well and septic inspection Inspections & Appraisal

Testing of a private well's water quality and a septic system's condition, common for rural homes outside city utilities. Many properties on Central Indiana's county edges rely on these systems.

Wood-destroying insect inspection Inspections & Appraisal

An inspection, often called a termite report, that checks for termites and other pests that damage wood. Some loans, especially VA, require this report before closing.