Understanding Real Estate Terminology
The world of real estate is confusing for a number of reasons. While real estate agents deal with the process of buying and selling a home every day, the average person can get lost in all of the words and terminology that’s being tossed around. Stay in the loop with this simple guide on real estate slang phrases and terminology.
Real Estate Lingo
Buyer’s Market: A Buyer’s Market is going to be ideal for someone who is looking to buy a house. This means there are plenty of homes for sale in the region in which they are looking. Therefore, there is a better chance of getting an amazing home for a low or fair price.
Broker: A real estate broker is someone who has acquired their broker license and represents the seller or buyer of a real estate property.
Closing: Closing is good news! Closing means ownership of a property has officially changed hands.
Real estate agent: A real estate agent will be a state-licensed professional like Shawn Manderscheid who can help you throughout the home buying and selling process.
Realtor: A true realtor should be a member of the National Association of Realtors (NAR).
Seller’s Market: A Seller’s Market describes a period in time where it is better to be someone selling one’s home rather than attempting to buy one. This usually is because there is a shortage of desirable homes to live in and there are too many potential buyers on the hunt for the right one. In turn, this can raise the prices of homes on the market.
Subagent: A subagent is usually someone who assists another agent with whatever is needed at the time.
Real Estate Listing Terms
Appreciation: This is how much the home or property increases over time based on a few things such as home improvements, location, market fluctuation, and so on.
Open House: This one might be an obvious one but it is also a fun one! An open house is a perfect time for potential buyers to take a good look around a house that is available and on the market. Instead of scrolling online, you can visit the home in person and take a good look at what you like and don’t like about it. This would also be a good time to ask questions, view the surrounding neighborhood, and several other key aspects.
Turnkey: This term describes a home that is move-in ready, which includes furniture and appliances. This term also ensures that the overall structure of the home is in functioning order.
Mortgage Lingo
Adjustable-Rate Mortgage (ARM): Also known as a Variable Rate Mortgage, this program is a type of mortgage that has an interest rate that varies for however long the loan lasts depending on loan and rate index.
Amortization: This is the amount of loan debt that decreases over time. This is achieved through the repayment of the principal.
Annual Percentage Rate (APR): This is going to be the total cost of acquiring a loan including the yearly cost of a mortgage plus interest and other expenses.
Appraisal: An appraisal will come in the form of a written estimate of the property’s current value.
Assessment: An assessment is made to figure out the amount of property taxes that will be due.
Automated Underwriting System (AU/AUS): A mortgage lender may use this computerized system to approve your home loan.
Contract of Sale: A Contract of Sale will house all of your legal documents of the transaction including payment, settlement date, inspection requirements, and other important documents.
Debt-to-Income Ratio (DTI): This is the dollar amount of your monthly payments divided by your gross monthly income.
Earnest Money: This is a form of security made to a seller that can potentially buy their time to obtain financing, inspections, and other things before closing.
Equity: This is how much of the property or home the homeowner truly owns at the moment.
Escrow: This is the stage that comes before closing where the appropriate funds have been made and contracts are being held until the transaction can be completed by all parties.
Fair Market Value: A reasonable price that both the buyer and seller agree is fair according to the current market value.
Foreclosure: A foreclosure occurs when a property owner is unable or has not made the previously agreed-upon payments for their mortgage. Foreclosure times vary state-by-state but usually occur anywhere from two to three months after failed payments.
Homeowner’s Insurance: Homeowner’s insurance is essential and is a plan that covers the home in case of damages done due to weather, fire, vandalism, and many other reasons.
Listing Agent: This type of agent lists the available home on the regional Multiple Listing Service (MLS) and represents the seller throughout the selling process.
Loan to Value (LTV): This is the loan amount divided by the value of the property. This amount will be used to find your Principal, Interest, Taxes, and Insurance (PITI).
Lock and Float: A floating interest rate is subject to change, while a locked interest rate is set for a certain amount for however long your terms have outlined.
Multiple Listing Service (MLS): This is usually utilized by a group of brokers in order to see one another’s properties up for sale. They may also agree to share compensation among the homes listed.
Mortgage: Whenever a bank decides to lend you money, usually accompanied with some interest, you enter into an agreement known as a mortgage. Having a mortgage requires you to pay back the debt owed to the bank over a period of time.
Preapproval: Getting preapproved for a loan will depend on a few financial factors including employment, income, down payment, credit score, and possibly a few other forms of documentation. A preapproval is determined by these factors because it lets the bank know that you are reliable and trustworthy enough to make the payments owed.
Refinance: Many people refinance their homes to get a better interest rate, update their home, pay off their loan faster, get a fixed loan, and other reasons.
Underwriting (UW): An underwriter will likely be used to determine how much of a risk it believes you will be able to fulfill when it comes to a home loan.
Bookmark this real estate glossary of terms and stay up-to-date on all of the real estate slang phrases and terminology while going through the process of buying or selling your home. Have further questions? Trust in real estate agents like the Shawn Manderscheid Team to answer your real estate terminology for home buyers questions you’re looking for and leave the heavy lifting to the experts.