The Alphabet Soup of Real Estate – Part I

If you are contemplating a real estate transaction in the near future (or if you’re involved in one right now), it can be difficult to translate all the acronyms and vocabulary used in the industry. Here’s a guide to the terms you need to know.

DRE (Department of Real Estate) – The California Department of Real Estate is the state agency that regulates licensure. Its mission is to safeguard and promote public interests in real estate matters. You can learn more at
Listing Agreement – This is the contract committing the seller to engage the services of a real estate broker to sell their property. In this context, the property is the listing (as it is “listed” for sale).

MLS (Multiple Listing Service) – The MLS is a digital database comprising properties for sale in a specific geographic area. Although individual sellers can opt out, the database typically includes almost all the listings in a given region, serving as a searchable information hub for Realtors who want to know about listings held outside their office.

PSA (Purchase & Sale Agreement) – The PSA is the contract to purchase real estate.

Counteroffer – This is a proposed amendment to a PSA changing some of the terms of the current offer. There can also be a counteroffer to the counteroffer (and so on).

TDS (Transfer Disclosure Agreement) – The seller uses a TDS to tell prospective buyers about all material considerations of the property that are not obvious upon a cursory inspection. The TDS would not include information such as how many bedrooms and bathrooms, but it would note whether the roof was replaced two years ago. This and other disclosures are mandated by state law and add up to more than 100 pages worth of information.

AVID (Agents Visual Inspection Disclosure) – The AVID is basically the same as a TDS, except it is from the Realtor’s perspective. Realtors notice things a homeowner might miss.

Statewide Disclosure – Sellers must complete this form to disclose information affecting the property that the State of California deems relevant.

Mendocino County Disclosure – This is similar to the statewide disclosure, but it pertains to information relevant to our county.

NHD (Natural Hazards Disclosure) – This report lists the estimated risk of specific natural hazards such as wildfires, earthquakes, and floods. It also notes whether a property is near a military ordinance disposal site or toxic waste site.

Home Inspection (also called Whole-Building Inspection) – This inspection is completed by professionals who thoroughly evaluate properties and alert their clients (either the buyer or seller) about any issues that are—or could become—problematic. Problems range from big, like the ceiling may be full of asbestos, to small, like the knob on the front door is loose. Home inspections can flag the need for a deeper investigation by an expert in a specific field such as roofing, electricity, structural engineering, asbestos, pest removal, and more.

Pest and Fungus Inspection – People often refer to the pest and fungus inspection as a termite inspection. The pest and fungus inspection covers a whole host of maladies: mold, dry rot, powder post beetles, carpenter bees and ants, and any number of other invasive critters or fungus.

Asbestos – Asbestos is a naturally occurring silicate material commonly used decades ago because of its flame-retardant qualities. It’s still sometimes found in older homes in popcorn ceilings, sheetrock, insulation, and vinyl flooring. Unfortunately, when humans are exposed to it, it can cause mesothelioma, asbestosis, and lung cancer. So, pay attention if any inspection notes the need for asbestos containment or removal.

Home Warranty – While technically not an insurance policy, a home warranty protects property owners from certain unexpected repairs. It is usually purchased when the property is acquired. Most Realtors recommend either the buyer or seller purchase a home warranty. The warranty protects against unexpected expenses—assuring the buyer doesn’t get saddled with expenses right after escrow closes, and the seller isn’t sued for a problem he could not have foreseen (though the buyer claims he could have).

Preliminary Title Report – This document shows the results of the research done by the title company to confirm a property’s legal description, ownership, and any monetary or non-monetary liens.

Next week, I’ll share a few more terms you should know.

If you have questions about property management or real estate, please contact me at or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I’ll send you a $25 gift certificate to Schat’s Bakery.

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