Real Estate Terms and What They Mean

Let's face it, the world of real estate is full of jargon, terms and acronyms! It can add confusion to an already-stressful process if you don't know what they mean. Whether you're buying or selling your home, it's likely you'll hear some of these terms at one point during your transaction! We've compiled a list of the most common real estate terms and what they mean!

General Real Estate Terms:

1. Buyer's Agent: a buyer's agent is also known as a selling agent, and they're a licensed real estate professional who works to locate their buyer's next property. They represent their interests and negotiate on behalf of their buyers to get the property at the best price with the best purchase scenario possible. 

2. Listing Agent: the listing agent represents the sellers, and is a licensed real estate professional who works to market the seller's property. They negotiate on behalf of the sellers to get the best price and best selling scenario possible. 

3. Closing: a closing is when the sale of a home is considered final. This typically includes having all parties sign all required documents, all monies conveyed, and having a lender's full approval. Once all steps are completed, the buyer is considered the new homeowner. 

4. Closing Costs: these costs are an assortment of fees including those charged by: a lender, the title company, attorneys, insurance, taxing authorities, HOAs, real estate agents, and other various closing settlement companies. These are usually paid at the time of closing. 

5. MLS: a MLS, or multiple listing service, is a database in which real estate agents and brokers have access to properties for sale in your area. When homes are listed for sale, it is logged into the local MLS by their listing agent. Buyer's agents regularly check the MLS to see what's on the market, and what other homes in the area have sold for.

6. Due Diligence: a due diligence time period may be available in the purchase agreement, and it is a time frame given to buyers to fully examine a property. This is often by hiring experts that inspect the property, perform tests, etc., so that a buyer can determine if they want to proceed with purchasing the property. Buyers may be given an opportunity to renegotiate their contract based on the findings of the inspections, or even possibly terminating within a specific time frame. It allows a buyer time to understand what they are buying. 

Financial Real Estate Terms:

1. VA Loan: a VA loan is a loan available to the military, active and retired, and some eligible spouses with competitive rates and fees, at a low-to-no down payment cost. 

2. Pre-Approval: getting a pre-approval means buyers know what they can afford. It is issued by a lender, and it identifies the terms, type of loan, and loan amount in which the buyer qualifies for. This is given after the lender checks the buyer's financial situation, including their debt-to-income ratio, ability to repay and credit history. 

3. Earnest Money Deposit: this deposit is often referred to as a "good faith deposit", and it is the initial funds that a buyer puts down once a seller accepts the buyer's offer. It is proof that the buyer is serious about buying and that they are willing to put money down to prove it. The amount of earnest money can vary, and it is often help by an escrow company. 

4. Equity: equity is the investment that a homeowner has in their home. As a homeowner, it is important to build equity because if you go to sell your home, and you have equity in it, you'll get to keep the equity in the home after closing once the expenses are all paid. 

5. Purchase and Sale Agreement: this agreement is commonly referred to as a written contract between the buyer and seller that outlines the terms that both parties agree to. After the home goes "under contract", it usually signifies that the buyer and seller have formal intentions to sell and purchase the property. 

Offers Real Estate Terms:

1. Appraisal: an appraisal is an estimated value of a piece of real estate. During the home sale, a mortgage lender sends an appraiser out to get their professional opinion of the value of the property. This will help the lender decide if the property is in fact worth the loan amount the buyer is seeking. 

2. Inspection: an inspection is when the buyers pay a licensed professional inspector to tour the home and prepare a report based on the condition of the home and any repairs that are needed. It typically happens are part of the due diligence period, so buyers can assess if they are okay with the repairs needed, or ask the sellers to complete or pay for specific repairs. 

3. Offer: an offer is when the buyers make a formal offer on the home in which they'd like to purchase. The offer can be for list price, or can be what you and your agent think is a fair and reasonable market value. 

4. Counter Offer: if the buyer's agent puts the offer into writing, has you sign it, and then submits it to the seller's agent, the sellers can either immediately accept it, or make a counter offer. It's part of negotiating that is recorded in paperwork. 

The process of buying or selling a piece of property goes a lot smoother when you can fully understand what is happening at each step. By familiarizing yourself with terms such as these, we're sure you'll feel more comfortable about buying or selling, and we hope it helps you become more educated on the process itself. 

Have more questions about real estate vocabulary? We would love to answer any questions you have!