Do You Know These Commonly Used Real Estate Terms?
“How long has your home been in escrow?”
“Did you put an offer on the house yet?”
“Have you scheduled your home inspection?”
It doesn’t take long to notice there are many terms specific to the real estate industry, when buying or selling your home. While you can ask your real estate agent what these words mean, it’s important to take time to learn real estate terminologies on your own so that you fully understand what’s going on during the buying or selling process– which can be an overwhelming if you don’t know. Here’s a list of 10 frequently used real estate terms that you should try to get familiar with:
Appraisal
Before determining the amount of a loan, a lender will require the appraisal of a home to determine its worth. This protects the lender from giving more money to the borrower than is necessary. Home appraisals also take place if you’re planning on refinancing your home, want a tax reassessment, or are trying to get a home equity loan.
Closing
Closing is the period of time in which the transaction is made, and the title is transferred from the seller to the buyer on a new home. When going through the closing process, expect an array of closing costs that include attorney’s fees, title fees, taxes and more.
Contingencies
Upon putting an offer on a home, you may have conditions that must be met before moving forward– these are called contingencies. Contingencies can consist of necessary walk-throughs before purchasing a home, or that a major repair be made before moving forward with the transaction.
Earnest Money
As a buyer, you’ll pay a “good faith deposit” to the seller just after an offer has been accepted, proving you’re serious about purchasing the home. Once the transaction is complete, this money goes towards your closing costs or down payment.
Escrow
If the home you are selling is in escrow, it means any down payments or fees are in the hands of a neutral third party to ensure a smooth transaction. In many cases, a lender will set up an escrow account on behalf of the borrower where a portion of their monthly house payments are kept for property taxes and insurance. Escrow fees vary depending the uniqueness of the situation.
Home Equity
Home equity is the difference of your home’s fair market value and the outstanding balance of your mortgage. Equity is built up over time, and is effected by the amount of your mortgage, frequency of payments, and appreciation of your property over time.
Inspection
Before buying a house, you may require an inspection to be done on the home to ensure there is no serious damage and that everything is as expected. If a home doesn’t pass an inspection, buyers and sellers may re-negotiate the terms of the original offer.
MLS
The Multiple Listing Service (MLS) is a database real estate agents use to find listings of homes for sale, along with detailed information about them.
Offer
When you find a home you’d like to buy, you make an offer to the seller explaining what you’d like to pay and under what terms. The seller can either accept the offer, make a counter-offer, or turn it down.
Realtor®
While the terms “Realtor®” and “real estate agent” are oftentimes used interchangeably, they’re not exactly the same thing. A Realtor® is a real estate agent that is a registered member of the National Association of Realtors. NAR members follow a strict code of conduct insuring they’re working in your best interest at all times.
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Can you think of any other real estate terminologies that aren’t listed here? Comment below.