Whether you are an aspiring realtor or someone about to do a real estate transaction, understanding real estate lingo can make it a lot easier. Here are some important real estate terms with their meanings for an easy cheat sheet.
Mortgage – The most popular term in real estate industry, it refers to the document that says the lender can take control of the property if the borrower defaults on his payments.
Mortgage broker – Professional who acts as an intermediary between the borrower and the lender and helps in obtaining the mortgage.
Closing costs – These are costs borne by the seller and the buyer in addition to the price of the property. They range from 2 to 5% of the value of the property and include administrative charges, title insurance, attorney fee, and so on.
Appraisal – Appraisal is a process that helps in determining the fair value of a property. It is done by a neutral third party in exchange for a fee.
Comparative Market Analysis – a “CMA” is a report containing prices of comparable home sold recently in the area. It helps in arriving at the fair market value of a property.
Contingencies – These are the conditions that must be met before the deal can be closed or finalized. There can be different types of contingencies such as financing, appraisal, home inspection, etc.
Agency – This is a term that refers to a relationship created between one person called principal (buyer or seller) and another person called agent (realtor.) Principal places trust upon agent and gives him the right to represent him in dealings with third parties.
Equity – Equity is the portion of the value of a property that is unencumbered. It is the difference between the market value and the amount owed to the lender.
Home Warranty – This refers to a warranty provided by a third party and paid for by the seller or buyer. It can cover appliances, mechanicals, etc.
Listing agent – This is the real estate agent who represents the seller in a real estate transaction.
Buyer’s agent – This is the realtor who represents the buyer in a real estate transaction.
Offer – This is the document given by the buyer to the seller containing his promises.
Pre-approval letter – This document is issued by a lender to the buyer stating how much money he can get as loan for the purchase of a property.
Private mortgage insurance – Called PMI, this is an insurance policy to protect the lender against default by the borrower.
Title insurance – This is an insurance policy that protects the owners and lender against any disputes over the ownership of the property.