Guide to Passing the PSI Real Estate
Exam Vocabulary | Latest Version |
2025/2026 | Correct & Verified
What does the term "easement" refer to in real estate?
✔✔A right to use someone else's land for a specific purpose, such as a driveway or utility line.
What is meant by the term "encumbrance" in real estate?
✔✔A claim, lien, charge, or liability attached to and binding real property.
What does the term "appraisal" refer to in a real estate transaction?
✔✔An expert opinion or estimate of the value of a property.
What is meant by the term "market value" in real estate?
✔✔The price a property would likely sell for in a competitive and open market.
What does the term "deed" refer to in real estate?
✔✔A legal document that transfers ownership of property from one person to another.
1
,What does "title" refer to in real estate?
✔✔The legal right to ownership and possession of a property.
What is a "lien" in real estate?
✔✔A legal claim or right against a property, typically as security for a debt or obligation.
What does "zoning" refer to in real estate?
✔✔The regulation by local authorities of the use of land and buildings within certain areas.
What is meant by the term "closing costs" in a real estate transaction?
✔✔The fees and expenses, other than the property’s purchase price, that are due at the time of
closing.
What is the "deed of trust" used for in real estate?
✔✔A document that secures a loan on real property, involving a third-party trustee.
What does the term "exclusive agency" mean in real estate?
2
,✔✔A listing agreement where the agent gets a commission if the property is sold by anyone
other than the seller.
What is meant by the term "easement by prescription"?
✔✔An easement that is acquired through continuous and overt use of another person’s property
for a certain period of time.
What does "escrow" mean in real estate transactions?
✔✔A neutral third-party account used to hold funds or documents until certain conditions of the
agreement are fulfilled.
What is a "mortgage" in real estate?
✔✔A loan used to finance the purchase of real property, with the property itself serving as
collateral.
What does the term "closing disclosure" refer to?
✔✔A document provided to the buyer and seller detailing the final costs and terms of the
transaction before closing.
3
, What is "amortization" in terms of a mortgage?
✔✔The gradual repayment of a loan, where the principal balance decreases over time through
scheduled payments.
What is the "capital gains tax" related to real estate?
✔✔A tax on the profit made from selling a property, typically calculated based on the difference
between the purchase price and selling price.
What is meant by "title insurance"?
✔✔A policy that protects the buyer and lender from financial loss due to title defects or disputes.
What does "forbearance" refer to in real estate financing?
✔✔An agreement between a lender and borrower to temporarily delay foreclosure or allow
lower payments for a period of time.
What is "earnest money" in real estate transactions?
✔✔A deposit made by a buyer to demonstrate commitment to purchasing a property, which is
applied to the down payment.
4
Exam Vocabulary | Latest Version |
2025/2026 | Correct & Verified
What does the term "easement" refer to in real estate?
✔✔A right to use someone else's land for a specific purpose, such as a driveway or utility line.
What is meant by the term "encumbrance" in real estate?
✔✔A claim, lien, charge, or liability attached to and binding real property.
What does the term "appraisal" refer to in a real estate transaction?
✔✔An expert opinion or estimate of the value of a property.
What is meant by the term "market value" in real estate?
✔✔The price a property would likely sell for in a competitive and open market.
What does the term "deed" refer to in real estate?
✔✔A legal document that transfers ownership of property from one person to another.
1
,What does "title" refer to in real estate?
✔✔The legal right to ownership and possession of a property.
What is a "lien" in real estate?
✔✔A legal claim or right against a property, typically as security for a debt or obligation.
What does "zoning" refer to in real estate?
✔✔The regulation by local authorities of the use of land and buildings within certain areas.
What is meant by the term "closing costs" in a real estate transaction?
✔✔The fees and expenses, other than the property’s purchase price, that are due at the time of
closing.
What is the "deed of trust" used for in real estate?
✔✔A document that secures a loan on real property, involving a third-party trustee.
What does the term "exclusive agency" mean in real estate?
2
,✔✔A listing agreement where the agent gets a commission if the property is sold by anyone
other than the seller.
What is meant by the term "easement by prescription"?
✔✔An easement that is acquired through continuous and overt use of another person’s property
for a certain period of time.
What does "escrow" mean in real estate transactions?
✔✔A neutral third-party account used to hold funds or documents until certain conditions of the
agreement are fulfilled.
What is a "mortgage" in real estate?
✔✔A loan used to finance the purchase of real property, with the property itself serving as
collateral.
What does the term "closing disclosure" refer to?
✔✔A document provided to the buyer and seller detailing the final costs and terms of the
transaction before closing.
3
, What is "amortization" in terms of a mortgage?
✔✔The gradual repayment of a loan, where the principal balance decreases over time through
scheduled payments.
What is the "capital gains tax" related to real estate?
✔✔A tax on the profit made from selling a property, typically calculated based on the difference
between the purchase price and selling price.
What is meant by "title insurance"?
✔✔A policy that protects the buyer and lender from financial loss due to title defects or disputes.
What does "forbearance" refer to in real estate financing?
✔✔An agreement between a lender and borrower to temporarily delay foreclosure or allow
lower payments for a period of time.
What is "earnest money" in real estate transactions?
✔✔A deposit made by a buyer to demonstrate commitment to purchasing a property, which is
applied to the down payment.
4
