Glossary
Real estate investing glossary
The vocabulary of off-market and wholesale real estate, defined with worked examples. Each entry explains what the term means in the industry — how the numbers are computed, who the parties are, and how the pieces fit together.
Wholesaling
- What is an assignment contract?An assignment contract transfers a buyer's rights under an existing purchase agreement to a new buyer, who steps into the original deal and closes in the assignor's place.
- What is an assignment fee?An assignment fee is what an end buyer pays a wholesaler for taking over their purchase contract — the price of the contractual position, usually paid at closing.
- What is disposition (dispo)?Disposition — dispo for short — is the selling half of a wholesale operation: finding the end buyer for a property already under contract and getting the deal to closing.
- What is wholesale real estate?Wholesaling is putting a property under contract and then selling that contractual position to an end buyer, rather than buying and reselling the property itself.
Pricing & underwriting
- What is ARV?ARV, or after repair value, is the price a property is expected to sell for once a planned renovation is complete. It is an estimate of a future condition, not the property's price today.
- What is MAO (maximum allowable offer)?MAO — maximum allowable offer — is the ceiling an investor computes before negotiating: the most they can pay for a property and still make their own numbers work. It is a buyer's calculation, not a valuation.
- What is the 70% rule?The 70% rule is a screening formula flippers use to cap what they will offer: ARV times 0.70, minus estimated repairs. It is a first-pass filter practitioners compute, not a valuation of anything.
Sourcing
- What is a cash buyer?A cash buyer purchases real estate without a mortgage contingency, paying from funds already under their control — which in investor usage can include hard money and private lending.
- What is driving for dollars?Driving for dollars is a deal-sourcing method: driving target neighborhoods to spot visibly neglected properties, recording the addresses, then finding and contacting the owners directly.
- What is off market vs. the MLS?Off market means a property is for sale without being listed on the MLS, the shared databases where listed inventory lives. The difference is the channel a sale travels through, not the property.
Closing
- What is a double closing?A double closing is two complete real estate closings back to back: an investor buys a property from the original seller and resells it to an end buyer, often on the same day.
- What is earnest money?Earnest money is a deposit a buyer puts down after signing a purchase contract, held by a neutral third party, to show the commitment is real. Its fate is governed by the contract's own terms.
Strategy
- What is BRRRR?BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat — a rental strategy in which an investor renovates a property, places a tenant, then refinances to recover capital for the next purchase.
- What is a buy box?A buy box is an investor's written purchase criteria — areas, property types, price range, condition — stated in advance so deals can be screened against it and sellers know what to bring.
- What is flipping?Flipping is buying a property, renovating it, and reselling it. The investor takes title, carries the cost of the work, and bears the outcome of the resale.
- What is subject-to?Subject-to is a purchase in which the deed transfers to the buyer while the seller's existing mortgage stays in place, in the seller's name — the buyer takes title subject to that loan and makes its payments.
These pages explain what terms mean in the industry. They are not legal or investment advice, and rules vary by state.