Learning real estate lingo is an important part of buying/selling a home. Here are a few common words you may hear if you’re buying or selling a home.
An appraisal is an assessment done by a certified appraiser justifying the purchase price for a property. The appraisal is usually based on an analysis of comparable sales of similar homes nearby.
Commission refers to the money that is paid to real estate agents after the closing of the transaction.
3. CMA (Comparative Market Analysis)
A CMA is a professional report that real estate agents give to their clients. The report is an analysis done on the values of similar homes in the neighborhood or area that have sold or that are for sale at the same time. This report helps give a realistic listing and selling price.
4. Earnest Money
Earnest money is a deposit made by the potential home buyer to show that they are serious about buying the home. When the transaction is finalized, the funds are put towards the buyer’s down payment.
To place something in escrow means to place it in the hands of a third party until certain conditions are met. For example, earnest money deposits are often put into escrow until they are delivered to the seller when the transaction is closed.
6. Home Equity
Home equity refers to a homeowner’s financial interest in a property. Equity is the difference between the fair market value of the home or property and the amount still owed on its mortgage.
A lien is a legal claim against a property that must be paid off when the property is sold. A mortgage or deeds of trust are considered liens. There can also be mechanics liens and judgment liens. Obtaining an “Ownership and Encumbrances” report can help one ascertain how many liens have been filed against a property.
8. Contract to Buy and Sell Real Estate (Real Estate Purchase Contract)
The Real Estate Purchase Contract is a contract between parties for the purchase and sale of real estate. They are legally binding and are written down and signed by both parties.
9. Short Sale vs. Bank-Owned Home
When a homeowner defaults on their mortgage, the lender may allow the home to be sold in a short sale. This means that the bank has agreed to allow a home to be sold for less than what the current owner owes on the property. A bank-owned home is simply a home that has been foreclosed and is now owned by the lender.
10. Under Contract
If a property is “under contract”, it means that the seller has accepted the buyer’s offer to purchase the property. Generally, the buyer is given a time period in which the sale can be finalized.