Whether you’re selling or buying a home, you’ve probably already noticed one thing: Real estate is confusing. It’s got a language of its own, which can be tricky and even overwhelming to keep up with. This is one of many reasons why you should work with a qualified real estate agent. Of course, though, it never hurts to educate yourself a bit. Let’s talk about 17 common real estate terms to know about during your journey.
17 Common Real Estate Terms to Know About
Getting an appraisal if the first step to take before buying, selling, or refinancing a home. Someone will perform an inspection of the property and also compare it to other homes recently sold in the same area. They do this to estimate the overall value of the home.
The appraisal provides valuable information. It helps the mortgage lender determine how much they’ll allow you to borrow. It prevents the buyer from paying more than what the property is worth. And if you’re refinancing, it’ll prevent the lender from giving you more than the home’s worth.
2. Buyer’s Agent
A buyer’s agent is exactly what they sound like: the agent that represents the person looking to buy a home. They’ll guide you through processes like finding the property that you want, negotiating contracts, and connecting you with other professionals you’ll need, like a mortgage broker.
This is the last step in the transaction of the property. The “closing date” is when ownership is officially transferred. It usually happens a few weeks after the seller accepts an offer.
4. Closing Costs
Closing costs are expenses you pay outside of the purchase of the home. This can include costs like a title search, taxes, and homeowners insurance. When forecasting and budgeting for a home, it’s important that you set aside funds not just for the house itself, but for these additional expenses.
A contingency is a term that must be met for a contract to be binding. For example, a due diligence contingency means that the potential buyer reserves the right to have the home inspected first. A loan contingency means that an offer depends on the buyer being able to get the financing for the house. It’s a way of saying, “Yes, we all agree to these terms, as long as X, Y, and Z happen.”
6. Days on Market (DOM)
Days on market refers to how long a property has been listed. This is important for potential buyers to know because it can show the demand (or lack thereof) for the property. It also helps sellers better understand how quickly homes are selling in their area. If homes are going quickly, buyers know they need to be on top of their game. If they’re on the market for a long time, buyers should ask why.
7. Due Diligence
Due diligence is taking all of the necessary steps to protect yourself before purchasing a home. This includes viewing the property, getting it inspected, and reviewing all documents with the appropriate professional. When you work with a real estate agent, they help take you through all of these things.
8. Earnest Money Deposit (EMD)
Earnest money is a deposit you make to show the seller good faith and that you intend to purchase their home. It also gives you additional time to complete tasks like getting the appraisal, scheduling an inspection, and securing financing.
Equity refers to what your home is currently worth minus what you owe on your mortgage. For example, if your home is worth $300,000 but you owe $200,000 on the mortgage, you have $100,000 in equity.
When money is in escrow, it means that a third party is hanging onto it while a transaction is occurring. The third party is neutral, and they help to protect both the buyer and the seller.
11. Fixed Rate Mortgage
When a mortgage has a fixed rate, that means that the interest rate will remain the same for the entire lifespan of the loan. This offers predictability and stability.
12. Homeowner’s Association (HOA)
The HOA creates and reinforces rules and requirements for the properties and residents of its community. For example, your HOA might require you to maintain your landscaping in a certain way. For services that they provide — like maintaining the community pool or paying for landscapers — they charge residents an HOA fee.
An inspection usually takes place before the sale will happen and looks for things that might affect the value of the property. For instance, an inspector will look for evidence of a termite/bug problem and water/fire damage.
14. Listing Agent
The listing agent works on behalf of the seller of a property, helping with tasks such as setting the right price and attracting potential buyers.
15. Multiple Listing Service (MLS)
The MLS is a private database that brokers and agents can provide to guide their clients in buying or selling their property. Whereas public platforms like Zillow are available to everyone and anyone, MLS listings are secured through a professional and show you properties you might not find online.
16. Pre-Approval Letter
A lender will give you a pre-approval letter stating how much they’re willing to loan you. Note, however, that this is not a guaranteed offer and the number can still fluctuate should the circumstances change.
17. Short Sale
A short sale happens when a homeowner in a financially vulnerable position sells their property for less than what’s owed on the mortgage. Any and all proceeds from the sale go directly to the lender.
While this list isn’t exhaustive, these real estate terms are a good place to start if you want to familiarize yourself with the industry’s language.
We know it’s a lot to take in. That’s why you put your trust in an experienced real estate agent to handle the nitty-gritty for you. At The Brendan King Group, we’re not just real estate experts — we’re Vegas experts. Interested in buying or selling a home? Contact us today and tell us more about it.