Common Real Estate Terms Without Going To a Real Estate School

Although most of us are familiar with the meanings of many of the terms used in the real estate industry, some of
the terms can be confusing, misunderstood or even sound like a foreign language (and yes, the terms do vary
somewhat from Country to Country).

Well, you don't need to go to a real estate school to learn the basics, because they are explained here:

Agent
An person who represents a seller, a buyer (or both) in the sale or purchase of real estate.

Appraisal
An appraisal is an estimated value of a real estate property by a professional third party such as a Certified Real
Estate Appraiser. A written property appraisal my help the buyer borrow the required funds to buy the property.
Lenders always want “hard” evidence before they are willing to risk their money in property deals. Also every non-
owner financed mortgages will require an appraisal and is generally paid for by the buyer. Having a full written
property appraisal can put everyone’s minds at ease.

Assessment
The value of a property as calculated by the local tax jurisdiction. This assessment is then used to determine the
amount of property taxes the property owner is due to pay (in some countries an assessment is refered to as
"Rates".

Buyer's Agent
A Buyer's Agent is precisely what the term implies. He or she is a Real Estate Agent who has made an agreement
to represent the buyer exclusively, rather than representing the seller.

Comparable Market Analysis (CMA)
A comparable market analysis is a comparison of the prices of similar houses in the same general geographic
area. A buyer or seller can use a CMA to help determine the true value of a property. A CMA is far more reliable
than simply looking to see what other home sellers are asking for their properties. What people ask for and what
they eventually get can be poles apart.

Closing
This is the process that effects the final transfer of the deed from the seller to the buyer. Closing also finalize all
aspects of the mortgage of the property.

Closing Costs
These are the funds required at the time of closing (not to be confused with the down payment which is additional).
Closing costs can include: loan origination fees, discount points, recording fees, pre-paids and Attorney fees.
These closing costs can often equate to around 3% to 5% of the price of the property.

Contingencies
These are conditions written into Real Estate offers and contracts to prevent a buyer from being forced to buy a
property that is unsatisfactory - either structurally or financially.
Here are some examples of contingencies:

"This offer is subject to the buyer's obtaining adequate financing."
This could specify the maximum interest rate that you will pay or, that if the appraised value is less than agreed
upon purchase price, the contract can be voided and full deposit refunded or the contract renegotiated.

"This offer is subject to a satisfactory home inspection and buyer's approval of that report."
The inspection should be completed within a designated number of days.

"This offer is subject to the buyer's approval of a title insurance policy to be obtained at the seller's expense."

"This offer is contingent upon the seller's providing the required survey certificate to the buyer at the seller's
expense."

Please note - these are only examples and you should alway obtain proper legal advice from a real estate attorney
before adding, removing or altering clauses or signing any real estate contract.

Common Real Estate Terms Explained Without Having To Go To A Real Estate School continues...

Deed
The document that, when recorded with your local government, determines ownership of a property. A Deed is
transferred from seller to buyer at closing.

Duplex
A structure that consists of two separate family units.

Earnest Money
Money that is submitted with an offer to purchase which indicates a buyer's seriousness and good faith. In virtually
all cases, earnest money will need to be submitted at the time of the offer and remains in escrow until the time of
closing, at which time it becomes part of the down-payment.

Escrow
Funds held in reserve both prior to closing (for example the earnest money and deposit) by a third party and after
closing by the mortgage company to pay future taxes and homeowners insurance. In some areas, "escrow" also
refers to the closing process.

Escrow Agent
A neutral third party who ensures that all conditions of a real estate transaction are met.

FSBO (For Sale By Owner)
Real Estate that is sold by the owner of the property without using a real estate agent.

Foreclosure Property
The legal process by which an owner's right to a property is terminated, usually due to default. Typically involves
a forced sale of the property at public auction, with the proceeds being applied to the mortgage debt.

Homeowner's Association
An owners group (within a condominium, apartment, townhouse or single family subdivision), that establishes
general guidelines for the operation of the community, as well as its standards.

Inspection
A thorough inspection of a home (inside and out) being considered for purchase. The inspect will look for defects
in the property.

Legal description
A specific way of identifying and locating a piece of real estate that is acceptable to a court of law.

Listing
A property for sale by a Real Estate Brokerage and Agent.

MLS (Multiple Listing Service)
A group of brokers joined together in a marketing organization for the purpose of pooling their respective real
estate listings. In exchange for a potentially larger audience of buyers, the brokers agree to share commissions.

A Multiple Listing Service combines the listings for all available properties in an area, except For-Sale-By-Owner
(FSBO) properties, in one directory or database.

In general, access to a Multiple Listing Service database is restricted to licensed real estate agents. Those agents
pay a fee to view the listing database.

Pre-paids
Paid for (in cash) at closing for such items as homeowners insurance for one year and real estate taxes for
several months.

Principal
The amount borrowed for a mortgage loan. In most cases, monthly mortgage payment include both the interest
and the principal (be assured, though, that the lions share will go to the interest portion in the first years of the
loan).

Property Tax
An annual or semi-annual tax paid to one or more governmental jurisdictions based on the amount of the property
value assessment. Property Tax is generally paid as part of the mortgage payment.

Real Estate Attorney
A lawyer who specializes in real estate transactions.

Real Estate Broker
A real estate agent who is licensed by the state to represent a buyer or seller in a real estate transaction. A real
estate broker gets paid a commission. Most real estate brokers also have agents working for them.

Recording
The act of entering deed and/or mortgage information into public record with your local government jurisdiction.

Recording fee
A fee charged by real estate agents for conveying the sale of a piece of property into the public record.

Sub-Agent
A real estate agent who is working with a buyer but who represents the seller in the transaction.

Title
The actual legal document conferring ownership of a piece of real estate.

Title Company
Companies that ensure that the title to a piece of property is clear and provide title insurance.

Title Insurance
This is paid at closing and is to protect your ownership rights (title) from claims against it. Title insurance may be
the responsibility of the buyer, the seller, or both, depending on where you live and what is the norm.

Waiver
A voluntary relinquishing of certain rights or claims.

Warranty
Covers either most of the house in a new home. In an older home a warranty may cover selected items such as
the water heating or air conditioning/heating system. Warranties can vary widely and are optional in used homes
(paid for by either the buyer or the seller).

Zoning
Laws that govern specifically how a zoned area can be used. For example, an area may be zoned for single family
residential, condominiums, commercial or retail, or a mix of two or more uses.

Zoning Variance
A one-time modification of existing zoning law.