Your Real Estate Terminology Cheat Sheet
Like most people, you may be unfamiliar with real estate lingo. Are you looking to buy, sell, or learn about real estate in general? If you want to know the basics of real estate, look no further.
Let’s start with what real estate is.
Real estate is land, property, and anything attached to it (resources) including the trees.
Some of the most basic real estate terms that you are bound to hear thrown around by professionals in this sector include:
And so on. But what do these terms mean?
In this article I will be telling you about the most used real estate vocabulary and help you to navigate the scene smoothly.
The first person you will most likely interact with in this field is a real estate agent. An agent works for you, the buyer or seller.
An agent is meant to represent their client and advocate in the best interest during any real estate transactions.
In the contract an addendum is typically drawn up. This is documentation that illustrates any additional requests that the buyer would like to specify but that they did not put in the original purchase and sale agreement.
For example, the buyer could request for specific pieces of furniture to be included in their purchase.
Simply put this is the detailed section of buyer contingencies.
3. Contract & Contract Clauses
To ensure that clients get the best experience it is important to formulate real estate contract terms. Contracts typically detail key aspects of the transaction like:
- Closing costs
- Sellers assist
- Date of settlement
Additionally contract clauses specify what personal property exactly is or isn’t included in the transaction. So, it’s safe to say that what isn’t excluded may be up for grabs by the other party.
The comparable is used to determine a fair value of a house being sold. It’s based on recent sales of properties of similar value within the neighborhood or vicinity.
Imagine a house is up for sale, the agent selling the home would reference the most recently sold houses in the area. So, if a house sold for $485,800 within the last 6 months, the real estate agent would then price the home they’re selling within that ballpark
5. Closing Costs
Both buyers and sellers pay additional fees outside of the agent’s commission at the closing of the deal. The costs range between 1% and 7%. The variance is due to the differences of fees and legality from state to state.
Closing costs sometimes include seller’s assists, where the seller covers the closing costs buyers typically owe, in order to help sell their home.
In real estate, a disclosure contains any less desirable information about the property, which could in turn deplete the value. Buyers typically want to know if there are any structural issues, the source of their water supply, or even about the condition of the air conditioning units.
Issues like these are expensive to fix and often too risky for a buyer to want to take them on.
7. For Sale by Owner
For sale by owner (FSBO) is when a homeowner sells their property without the help of a real estate agent.
8. Home Inspection
The home inspection happens before the closing. The buyer has an inspector inspect the property and determine if the condition is in good enough standing to proceed to closing.
During inspection it’s common to check for roof damage, electrical issues, water damage, pest infestations. Additionally, it’s important to pay attention to the structural integrity of the home, as well as, the quality of the HVAC system.
The pre approval is how a client knows they are deemed credible enough to borrow money from a lender. A lender determines this from doing a thorough check on the client’s credit and financial background.
Pre-approval rates vary person to person because it is based on an individual’s finances. To take out a mortgage of any kind, lenders will typically assess buyers credit score, income, and debt to income ratio.
The amount a buyer gets pre-approved for is based on these factors. Lenders want to be secure in the idea that you can make payments responsibly and on time.
The walkthrough is the buyer’s opportunity to view the property and confirm that there are no damages and that they don’t have concerns. A client may have concerns regarding repairs that were promised or maybe they’ll have a security concern where one of the door locks needs to be replaced.
Their real estate agent also participates and will ensure that any final requests that their client has gets taken care of.
Real Estate Slang
There are a few terms that are commonly used, however, they aren’t official terms per se. You won’t find these in any official real estate dictionary, but you’re bound to hear these terms when chatting with your real estate agent. Both have to do with how valuable a home listed on the market.
11. Curb Appeal
Curb appeal is what it sounds like. The goal is for the property to be appealing just from the view of the street. Does the house you’re looking at have the “it” factor? Is the garden trimmed, exterior painted, and driveway pressure cleaned?
You might be wondering why curb appeal even matters. The appeal a house has contributes to how fast it can sell and how much it can sell for.
A turnkey property is a space that is move-in ready in most cases. This makes the house seem more desirable, as there is not much money a potential buyer has to put into it to make repairs or do remodeling.
Escrow is definitely one of the real estate terms that are lost on people. During this type of transaction, a neutral third party (escrow) is in possession of all the funds and paperwork until everything is complete.
Hiring an escrow company like New Venture Escrow makes the whole process safe and organized for the buyer and seller. To learn more real-estate terms and for a transparent escrow service, reach out to our team of escrow experts at New Venture Escrow.