Real Estate Vocabulary (Guide to
Passing the PSI Real Estate Exam)-
Trending//100% Verified
What is the term for the legal right to use and occupy real property? ✔️✔️ Possession, which
grants physical control without necessarily owning the title.
What describes an interest in real estate that is limited by a condition that could terminate
ownership? ✔️✔️ Fee simple determinable, where ownership ends automatically upon a specified
event.
What is the difference between real property and personal property? ✔️✔️ Real property is land
and permanently attached items, while personal property is movable and not attached.
What term describes ownership of real estate by two or more people with equal shares and
rights? ✔️✔️ Joint tenancy, which includes the right of survivorship.
What is the meaning of “bundle of rights” in real estate? ✔️✔️ The collection of legal rights
including possession, control, exclusion, enjoyment, and disposition.
What is an encumbrance on a property? ✔️✔️ A claim, lien, or liability attached to the property
that may affect its transfer.
What is the purpose of a deed? ✔️✔️ To transfer ownership of real property from one party to
another.
What type of ownership allows survivorship rights among co-owners? ✔️✔️ Joint tenancy, where
a deceased owner’s interest passes to surviving owners.
What does “tenancy in common” mean? ✔️✔️ A form of ownership where co-owners have
undivided interest but no right of survivorship.
What is adverse possession? ✔️✔️ A legal principle allowing someone to gain ownership of
property by continuous, open, and hostile use over time.
What is a lien? ✔️✔️ A legal claim against property as security for a debt or obligation.
What is the difference between a voluntary and involuntary lien? ✔️✔️ Voluntary liens are agreed
to (like mortgages), while involuntary liens are imposed by law (like tax liens).
What is a mortgage? ✔️✔️ A loan secured by real property, where the property acts as collateral.
1
,What does “equity” represent in real estate? ✔️✔️ The difference between the market value of a
property and the amount owed on it.
What is market value? ✔️✔️ The most probable price a property would sell for in a competitive
market.
What is assessed value? ✔️✔️ The value assigned to property for taxation purposes.
What is depreciation in real estate? ✔️✔️ The loss of property value due to wear, age, or market
conditions.
What is appreciation? ✔️✔️ The increase in property value over time.
What is a title? ✔️✔️ Legal ownership of a property and the rights associated with it.
What is a title defect? ✔️✔️ Any issue that affects the validity of ownership, such as unpaid liens
or clerical errors.
What is a chain of title? ✔️✔️ The historical record of ownership transfers of a property.
What is a deed restriction? ✔️✔️ A limitation placed on how a property can be used.
What is zoning? ✔️✔️ Government regulation that controls land use and development.
What is a land survey? ✔️✔️ A measurement of property boundaries and physical features.
What is an easement? ✔️✔️ The right to use another person’s land for a specific purpose.
What is a fixture? ✔️✔️ An item that was personal property but is now attached to and considered
part of real property.
What determines whether an item is a fixture? ✔️✔️ The method of attachment, adaptation, and
intention of the parties.
What is escrow? ✔️✔️ A neutral third-party holding funds or documents until conditions of a
transaction are met.
What is a listing agreement? ✔️✔️ A contract between a property owner and a real estate agent to
sell or lease the property.
What is MLS? ✔️✔️ A Multiple Listing Service used by agents to share property listings.
What is a buyer’s agent? ✔️✔️ An agent who represents the interests of the buyer in a transaction.
2
,What is a seller’s agent? ✔️✔️ An agent who represents the interests of the seller.
What is dual agency? ✔️✔️ When one agent represents both buyer and seller in the same
transaction.
What is fiduciary duty? ✔️✔️ A legal obligation to act in the best interest of a client.
What is a contract? ✔️✔️ A legally binding agreement between two or more parties.
What makes a contract valid? ✔️✔️ Offer, acceptance, consideration, competent parties, and legal
purpose.
What is consideration in a contract? ✔️✔️ Something of value exchanged between parties.
What is breach of contract? ✔️✔️ Failure to fulfill the terms of an agreement.
What is earnest money? ✔️✔️ A deposit made to demonstrate a buyer’s serious intent to purchase.
What is foreclosure? ✔️✔️ A legal process where a lender repossesses property due to loan
default.
What is amortization? ✔️✔️ The gradual repayment of a loan through scheduled payments.
What is a down payment? ✔️✔️ The initial cash payment made when purchasing a property.
What is an appraisal? ✔️✔️ An estimate of a property’s value by a licensed professional.
What is market comparison approach? ✔️✔️ Valuing a property based on similar recently sold
properties.
What is cost approach? ✔️✔️ Valuing property based on land value plus replacement cost minus
depreciation.
What is income approach? ✔️✔️ Valuing property based on the income it generates.
What is capitalization rate? ✔️✔️ A rate used to estimate return on investment properties.
What is gross rent multiplier? ✔️✔️ A ratio comparing property price to rental income.
What is a lease? ✔️✔️ A contract granting use of property for a specific time in exchange for rent.
What is a fixed lease? ✔️✔️ A lease with a set duration and terms.
3
, What is a periodic tenancy? ✔️✔️ A lease that continues automatically until notice is given.
What is eviction? ✔️✔️ Legal removal of a tenant for violating lease terms.
What is subletting? ✔️✔️ When a tenant rents out the property to another party.
What is a security deposit? ✔️✔️ Funds held to cover potential damages or unpaid rent.
What is property management? ✔️✔️ The operation, control, and oversight of real estate.
What is a real estate investment? ✔️✔️ Purchasing property to generate income or profit.
What is leverage in real estate? ✔️✔️ Using borrowed funds to increase investment potential.
What is a cap rate used for? ✔️✔️ Measuring investment return on income-producing properties.
What is a foreclosure auction? ✔️✔️ A public sale of foreclosed property to recover lender losses.
What is a short sale? ✔️✔️ Selling a property for less than the outstanding mortgage balance.
What is an ARM? ✔️✔️ An adjustable-rate mortgage with fluctuating interest rates.
What is a fixed-rate mortgage? ✔️✔️ A mortgage with a constant interest rate throughout the loan.
What is PMI? ✔️✔️ Private Mortgage Insurance required when down payment is low.
What is the primary mortgage market? ✔️✔️ Where loans are originated directly by lenders.
What is the secondary mortgage market? ✔️✔️ Where existing loans are bought and sold.
What is a deed of trust? ✔️✔️ A document used to secure a loan involving a third-party trustee.
What is a trust? ✔️✔️ A legal arrangement where one party holds property for another.
What is eminent domain? ✔️✔️ Government’s power to take private property for public use with
compensation.
What is police power? ✔️✔️ Government’s authority to regulate property use for public welfare.
What is escheat? ✔️✔️ When property reverts to the state due to lack of heirs.
What is encroachment? ✔️✔️ When a structure extends onto neighboring property.
4
Passing the PSI Real Estate Exam)-
Trending//100% Verified
What is the term for the legal right to use and occupy real property? ✔️✔️ Possession, which
grants physical control without necessarily owning the title.
What describes an interest in real estate that is limited by a condition that could terminate
ownership? ✔️✔️ Fee simple determinable, where ownership ends automatically upon a specified
event.
What is the difference between real property and personal property? ✔️✔️ Real property is land
and permanently attached items, while personal property is movable and not attached.
What term describes ownership of real estate by two or more people with equal shares and
rights? ✔️✔️ Joint tenancy, which includes the right of survivorship.
What is the meaning of “bundle of rights” in real estate? ✔️✔️ The collection of legal rights
including possession, control, exclusion, enjoyment, and disposition.
What is an encumbrance on a property? ✔️✔️ A claim, lien, or liability attached to the property
that may affect its transfer.
What is the purpose of a deed? ✔️✔️ To transfer ownership of real property from one party to
another.
What type of ownership allows survivorship rights among co-owners? ✔️✔️ Joint tenancy, where
a deceased owner’s interest passes to surviving owners.
What does “tenancy in common” mean? ✔️✔️ A form of ownership where co-owners have
undivided interest but no right of survivorship.
What is adverse possession? ✔️✔️ A legal principle allowing someone to gain ownership of
property by continuous, open, and hostile use over time.
What is a lien? ✔️✔️ A legal claim against property as security for a debt or obligation.
What is the difference between a voluntary and involuntary lien? ✔️✔️ Voluntary liens are agreed
to (like mortgages), while involuntary liens are imposed by law (like tax liens).
What is a mortgage? ✔️✔️ A loan secured by real property, where the property acts as collateral.
1
,What does “equity” represent in real estate? ✔️✔️ The difference between the market value of a
property and the amount owed on it.
What is market value? ✔️✔️ The most probable price a property would sell for in a competitive
market.
What is assessed value? ✔️✔️ The value assigned to property for taxation purposes.
What is depreciation in real estate? ✔️✔️ The loss of property value due to wear, age, or market
conditions.
What is appreciation? ✔️✔️ The increase in property value over time.
What is a title? ✔️✔️ Legal ownership of a property and the rights associated with it.
What is a title defect? ✔️✔️ Any issue that affects the validity of ownership, such as unpaid liens
or clerical errors.
What is a chain of title? ✔️✔️ The historical record of ownership transfers of a property.
What is a deed restriction? ✔️✔️ A limitation placed on how a property can be used.
What is zoning? ✔️✔️ Government regulation that controls land use and development.
What is a land survey? ✔️✔️ A measurement of property boundaries and physical features.
What is an easement? ✔️✔️ The right to use another person’s land for a specific purpose.
What is a fixture? ✔️✔️ An item that was personal property but is now attached to and considered
part of real property.
What determines whether an item is a fixture? ✔️✔️ The method of attachment, adaptation, and
intention of the parties.
What is escrow? ✔️✔️ A neutral third-party holding funds or documents until conditions of a
transaction are met.
What is a listing agreement? ✔️✔️ A contract between a property owner and a real estate agent to
sell or lease the property.
What is MLS? ✔️✔️ A Multiple Listing Service used by agents to share property listings.
What is a buyer’s agent? ✔️✔️ An agent who represents the interests of the buyer in a transaction.
2
,What is a seller’s agent? ✔️✔️ An agent who represents the interests of the seller.
What is dual agency? ✔️✔️ When one agent represents both buyer and seller in the same
transaction.
What is fiduciary duty? ✔️✔️ A legal obligation to act in the best interest of a client.
What is a contract? ✔️✔️ A legally binding agreement between two or more parties.
What makes a contract valid? ✔️✔️ Offer, acceptance, consideration, competent parties, and legal
purpose.
What is consideration in a contract? ✔️✔️ Something of value exchanged between parties.
What is breach of contract? ✔️✔️ Failure to fulfill the terms of an agreement.
What is earnest money? ✔️✔️ A deposit made to demonstrate a buyer’s serious intent to purchase.
What is foreclosure? ✔️✔️ A legal process where a lender repossesses property due to loan
default.
What is amortization? ✔️✔️ The gradual repayment of a loan through scheduled payments.
What is a down payment? ✔️✔️ The initial cash payment made when purchasing a property.
What is an appraisal? ✔️✔️ An estimate of a property’s value by a licensed professional.
What is market comparison approach? ✔️✔️ Valuing a property based on similar recently sold
properties.
What is cost approach? ✔️✔️ Valuing property based on land value plus replacement cost minus
depreciation.
What is income approach? ✔️✔️ Valuing property based on the income it generates.
What is capitalization rate? ✔️✔️ A rate used to estimate return on investment properties.
What is gross rent multiplier? ✔️✔️ A ratio comparing property price to rental income.
What is a lease? ✔️✔️ A contract granting use of property for a specific time in exchange for rent.
What is a fixed lease? ✔️✔️ A lease with a set duration and terms.
3
, What is a periodic tenancy? ✔️✔️ A lease that continues automatically until notice is given.
What is eviction? ✔️✔️ Legal removal of a tenant for violating lease terms.
What is subletting? ✔️✔️ When a tenant rents out the property to another party.
What is a security deposit? ✔️✔️ Funds held to cover potential damages or unpaid rent.
What is property management? ✔️✔️ The operation, control, and oversight of real estate.
What is a real estate investment? ✔️✔️ Purchasing property to generate income or profit.
What is leverage in real estate? ✔️✔️ Using borrowed funds to increase investment potential.
What is a cap rate used for? ✔️✔️ Measuring investment return on income-producing properties.
What is a foreclosure auction? ✔️✔️ A public sale of foreclosed property to recover lender losses.
What is a short sale? ✔️✔️ Selling a property for less than the outstanding mortgage balance.
What is an ARM? ✔️✔️ An adjustable-rate mortgage with fluctuating interest rates.
What is a fixed-rate mortgage? ✔️✔️ A mortgage with a constant interest rate throughout the loan.
What is PMI? ✔️✔️ Private Mortgage Insurance required when down payment is low.
What is the primary mortgage market? ✔️✔️ Where loans are originated directly by lenders.
What is the secondary mortgage market? ✔️✔️ Where existing loans are bought and sold.
What is a deed of trust? ✔️✔️ A document used to secure a loan involving a third-party trustee.
What is a trust? ✔️✔️ A legal arrangement where one party holds property for another.
What is eminent domain? ✔️✔️ Government’s power to take private property for public use with
compensation.
What is police power? ✔️✔️ Government’s authority to regulate property use for public welfare.
What is escheat? ✔️✔️ When property reverts to the state due to lack of heirs.
What is encroachment? ✔️✔️ When a structure extends onto neighboring property.
4
