Real Estate Terminology Explained

Ever feel like your Realtor is speaking a different language? Regardless if you’re a first time home buyer, or seasoned investor these terms are important to know!

  • Appraisal — A report highlighting the estimated value of the property completed by a qualified 3rd party. This is typically done for the benefit of the buyer to ensure the property is worth what they are paying.
  • Association Fee/HOA Fee — In addition to a mortgage, certain housing communities  have a monthly fee associated with maintaining the commons areas and amenities.
  • Closing —  When the transaction is complete and release/take possession of the property.
  • Closing Costs — The buyer and seller have expenses associated with the transaction other than that of the actual cost of the home. For example, the buyer has a variety of fees due for obtaining a new loan and the seller must pay commission to both agents.
  • Closing Disclosure — A form that provides the final details about the mortgage loan. It includes loan terms, projected monthly payments, and how much the extra fees will be.
  • Commission — A percent of the sale price of the home that is paid to agents. The seller pays commission to both the buyer and listing agent.
  • Comparables (Comps) — Homes in the area of interest that have recently sold of which have similar features.
  • Contingencies — Conditions which must be met in order to close. Contingencies are typically tied to a date, referred to as a deadline. If the contingency is not satisfied the contract may be canceled.
  • Counteroffer — The response from the sellers in regards to an offer
  • Down payment — A percent of the cost of the property that is paid up front as a part of the mortgage.
  • Earnest Money — The deposit made from the buyer to the seller when submitting an offer. This deposit is typically held in trust by a third party. Upon closing the money will generally be applied to the down payment or closing cost.
  • Escrow — This term has multiple meanings; earnest money is typical held by a third party until closing in “escrow”. In can also be referred to as the time period from when the contract is written and accepted by the seller to when the home sale actually closes.
  • Equity — The difference in the market value of a home versus what is owned on the home.
  • Home Inspection — The process in which a professional inspect the seller’s home for issues that are not openly apparent, then creates a report for the buyer to review.
  • Home Protection Plan — An annual service that covers the cost of repairs or replacements to items covered in the plan, usually items like stoves, washer/dryers, ect.
  • Multiple Listing Service (MLS) — The national list of real estate properties that are available for sale. These are the most reliable sources to receive up-to-date listing information
  • Property Taxes — These are the taxes that are enforced by the city, town, county, and state government entities. These taxes are included in the total monthly mortgage payments and are held in escrow by the lender.
  • REO — Real estate owned properties or foreclosed properties currently owned by a financial institution such as the bank that made the loan to the previous owner.
  • Short Sale — A situation when the seller’s lender is willing to accept an offer and allows the sale to be completed for an amount less than the mortgage amount owed by the seller.
  • Title — A legal document proving current and proper ownership of the property. Also referred to as a Title Deed, this document highlights the history of property ownership and transfers.

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