21 Need-to-Know Real Estate Terms for Homebuyers and Sellers

 

confusion

It’s time to clear the air about real estate terminology.

When it comes to real estate, a lot of terminology can be perplexing and overwhelming, whether you’re looking to buy or sell a home. To dispel some of the confusion, let’s take a look at some of the more common terms and phrases you’ll likely hear during your next real estate endeavor!

 

1. “As-is”

A contract or offer clause stating that the seller will not repair or correct any problems with the property. Also used in listings and marketing materials.

2. Closing

The end of a transaction process where the deed is delivered, documents are signed, and funds are dispersed.

3. Comparative market analysis

A study done by real estate sales agents and brokers using active, pending, and sold comparable properties to estimate a listing price for a property.

4. Counteroffer

The response to an offer or a bid by the seller or buyer after the original offer or bid.

5. Curb appeal

The visual impact a property projects from the street.

6. Dual agent

A state-licensed individual who represents the seller and the buyer in a single transaction.

7. Earnest money deposit

The money given to the seller at the time the offer is made as a sign of the buyer’s good faith.

8. Escrow

An account into which borrowers pay monthly prorations for real estate taxes and property insurance.

9. Gift letter

A letter to a lender stating that a gift of cash has been made to the buyer(s) and that the person gifting the cash to the buyer is not expecting the gift to be repaid. The exact wording of the gift letter should be requested of the lender.

10. Interest rate lock

When the borrower and lender agree to lock a rate on a loan. Terms and conditions may be attached to the lock.

11. Listing agreement

A document that establishes the real estate agent’s agreement with the sellers to represent their property in the market.

12. Mortgage broker

A business that or an individual who unites lenders and borrowers and processes mortgage applications.

13. Mortgage loan servicing company

A company that collects monthly mortgage payments from borrowers.

14. Multiple offers

More than one offer is presented on one property, and the offers are negotiated at the same time.

15. Prepaid interest

Funds paid by the borrower at closing based on the number of days left in the month of closing.

16. Prequalification

The mortgage company tells a buyer in advance of the formal mortgage application, how much money the borrower can afford to borrow.

17. Principal, interest, taxes, and insurance (PITI)

The four parts that make up a borrower’s monthly mortgage payment.

18. Private mortgage insurance (PMI)

A special insurance paid by a borrower in monthly installments, typically on loans of more than 80 percent of the value of the property.

19. Transaction

The real estate process from offer to closing or escrow.

20. Under contract

A property that has an accepted real estate contract between seller and buyer.

21. Walk-through

A showing before closing or escrow that permits the buyers one final tour of the property they are purchasing.

 

Want to know more about the homebuying or selling process? Contact us – our agents are here to guide you every step of the way.

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Definitions courtesy of the National Association of Realtors

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