There is a lot of jargon used in the real estate world and it can lead to some confusion during the buying or selling process. I thought it would be a good idea to create a description of some of the most commonly used terms.
Understanding the lingo can help you make an informed decision and ensure a smooth transaction. Here’s a quick guide to some of the most commonly used real estate terms.
As-is
When a seller agrees to sell a property in its current condition without making any repairs or renovations.
Buyer’s agent/Listing agent
A real estate agent representing the buyer or seller in a real estate transaction. You should be aware of who is representing you during the process!
Closing
The final step in a real estate transaction where the buyer and seller sign the necessary paperwork, exchange funds, and transfer the title of the property to the buyer.
Closing costs The fees and expenses associated with buying or selling a home, including title services, taxes, insurance, lender fees, and commissions.
Days on market (DOM)
The number of days a home has been listed for sale.
Due diligence
A process that buyers go through to ensure they’re making an informed purchase decision. It usually includes inspecting the property, obtaining a title search, and researching the neighbourhood.
Multiple listing service (MLS)
A database of real estate listings maintained by a local board that allows brokers to share information about properties and list them for sale.
REALTOR ©
A trademarked term for a real estate professional who is a member of the National Association of REALTORS® and abides by its Code of Ethics.
Conventional sale
A standard real estate transaction that involves a buyer, seller, and real estate agent.
Probate sale
A real estate transaction that involves the sale of a deceased person’s property in order to settle their estate and debts.
Rent back
An agreement between a home seller and buyer in which the seller agrees to rent the home back from the buyer after the sale.
Subject to inspection
A clause in a real estate contract that allows a buyer to inspect a property before closing.
Financial & Documentation
Documents and financial records needed to buy a home, such as bank statements, proof of employment, and tax returns.
Adjustable rate mortgage (ARM)
A mortgage loan with an interest rate that fluctuates over time.
Debt-to-income ratio
A measure of a borrower’s ability to repay a loan, calculated by dividing total monthly debt payments by total monthly income.
Earnest money deposit
A deposit made by a buyer to show that they’re serious about purchasing a home. The money is usually held in trust until closing.
Equity
The difference between what a homeowner owes on a mortgage and the current market value of the home.
Fixed-rate mortgage
A mortgage loan with an interest rate that remains the same for the entire term of the loan.
Mortgage pre-approval letter
A document issued by a lender that states the amount of mortgage a borrower is approved to receive.
Pre-approval
The process of verifying a borrower’s financial information and issuing a pre-approval letter.
Pre-qualification
A preliminary assessment of a borrower’s financial information to determine if they’re eligible for a loan.
Principal
The amount of money borrowed on a loan, not including interest.
Proof of funds
A document that proves a buyer has the financial resources to purchase a home. Examples include bank statements, letters of credit, and cashier’s checks.
If you are thinking of selling, get in touch and we can set up a no-obligation meeting to discuss the best way forward. I will guide you through the details of these steps and more based on your current needs.
Kyla Miranda Realtor ®
Keller Williams Platinum Realty
709-325-5152