Effective communication is the most important skill needed when trying to convey needs and wants. In order to communicate effectively, it is essential for all parties to speak and understand the language being used. The world of real estate, like any business, has a language that includes vocabulary foreign to all other than those who are in the real estate profession. For most of us, our encounter with real estate is irregular at best and does not allow us the time to become familiar with language of the profession. Below is a list of real estate terms and their definitions that will help reduce the stress that language barriers create when buying or selling a home.

 

Agent

Someone licensed who acts on the behalf of the seller or buyer is called an agent.  An agent is not required to conduct real estate transactions.

 

Acceptance of Offer

A deal made when the seller and buyer agree to the conditions and price of the offer to purchase is the acceptance of the offer.

 

Appraisal

Appraisals of properties to be sold are required by institutions that lend money. An appraisal provides a valuation of the property.

 

Buyer

Someone entering the real estate world to buy a single family home, condominium, townhouse or land is called the buyer.

 

Buyer’s agent

Represents the interest of the buyer not the seller and works to secure the best deal for the buyer.  In many markets, the buyer’s agent is paid by the seller’s agent out of the sales commission.

 

Buyer’s market

A buyer’s market occurs when there are more houses to be sold than buyers to buy them. It’s called the buyer’s market because the condition of the market is such that buyers can better negotiate terms.

 

Caveat Emptor         

A term that means that there is risk each time we make a purchase without a warranty.

 

Closing

Closing is the financial settlement of a real estate transaction. Buyers and sellers are responsible for the cost of the closing. Closing is the final step in a real estate deal.

 

Closing Statement

The closing statement is an item-by-item list of the fees and costs associated with the sell of a property.

 

Commission

Commission is the fee agents charge for selling a property. The seller pays the commission at closing.

 

Comparative Market Analysis (CMA)

The act of comparing similar properties to determine a fair sale price of a property is called comparative market analysis.

 

Consideration

Money, promise, or anything of value given in turn for an act is called a consideration. A consideration is not the same as earnest money.

 

Contract

Both the buyer and seller must accept a contract, legal document that explains the conditions of the sell. A contract includes several things: condition of the sale, commission if applicable, and signatures of both parties.

 

Deed

A deed transfers the property from seller to buyer.

 

Disclosure of Information

The revelation of pertinent information about the property by the buyer/buyer’s agent to the seller is called a disclosure of information.

 

Dual Agent

A dual agent represents both the buyer and seller. An agent working in the capacity of a dual agent must inform both the buyer and the seller of dual agency.

 

Earnest Money

To show that a buyer is serious about the purchase a specified amount of money is presented. This money is called earnest money.

 

Exclusive Agency

In an exclusive agency the seller is given the right to sell the property to one broker or any of his agents. The seller cannot employ others to sell if an exclusive agency agreement is entered.

 

Fair Market Value

An agreement on the price of a property by the buyer and seller in a competitive market is called a fair market value. In order to be considered a fair market value each party must enter into the agreement without pressure.

 

Fannie Mae (FNMA)

Fannie Mae, a corporation that buys mortgages, is considered a secondary mortgage institution.

 

Foreclosure

A foreclosure occurs when a homeowner cannot honor the mortgage agreement with the listing institution.  The lending institution must follow the appropriate notification process for the State in which the property resides.

 

Freddie Mac (FHLMC)

Freddie Mae is an organization that purchases mortgages.

 

FSBO

FSBO is the acronym that stands for For Sale By Owner. Sellers who choose this option do not use real estate agents in the traditional manner.

 

Ginnie Mae (GNMA)

Ginnie Mae is government agency that has as its function to buy FHA-insured and VA-guaranteed mortgages for the purpose of making money available for institutions that loan money.

 

Homeowners’ Association

Homeowners’ Association is an organization found in some communities that has the purpose of maintaining the grounds and addressing issues that impact the value of the properties located in the community.

 

Housing and Urban Development (HUD)

A federal government program that oversees housing the regulations of the housing industry.

 

Interest

Interest, the money a lending institution charges for a buyer to use its money, is usually paid monthly.

 

Lien

A lien is a legal order filed against a property for a debt owed.

 

Listing

Placing a property on the market for sale is called a listing.

 

Listing Contract

A listing contract is a legal document giving a broker or agent the right to sale a property.

 

Mortgage

The arrangement a buyer makes to repay a loan is called the mortgage. There are several types of mortgages:

ARM (adjustable rate mortgage) is a loan agreement that can fluctuate because with an ARM the interest rate changes. This type of mortgage is good for a buyer who plans to keep a property short term.

Amortization

The calculation of mortgage payment installments including both interest and principal which pays down the mortgage completely over the agreed upon term of the loan.

Balloon Mortgage

A mortgage payment that is larger than the others and is the last payment is referred to a balloon mortgage.

Loan Assumption

Loan assumptions occur when the buyer takes the mortgage agreement of the seller.

Blanket Mortgage

A blanket mortgage covers several properties and is not usually used with a purchase of a single home.

Mortgage Broker

A mortgage broker acts as a “matchmaker” for the borrower and the

lending institution by bringing the two together.

Conventional Loan

The government does not guarantee conventional loans.

 

Offer and Acceptance

Offer and acceptance occurs when a buyer makes an offer and the seller agrees.

 

Offer to Purchase

An offer to purchase is an amount of money the buyer offers the seller to purchase the property.

 

Private Mortgage Insurance (PMI)

Insurance that protects the lending institution from a borrower defaulting on a mortgage.

 

Price

In real estate price, actual amount of money paid for a property, refers to something that has happened.

 

Principal

The actual amount a buyer borrows is the principal. Monthly payments usually include this amount plus interest.

 

Seller

Someone entering the real estate world to sell a single family home, condominium, or townhouse is called the seller.

 

Seller’s Agent

Someone who works exclusively for the seller is a seller’s agent. A seller’s agent must reveal to the buyer his role.

 

Seller’s Market

An issue of supply and demand, where there are more buyers than sellers is called a seller’s market. The seller has the advantage because there are not as many houses for the buyer to consider and prices tend to rise.

 

Title

A title conveys ownership of a property.

 

Value

The monetary worth of a property is its value and is based on a balance of what price buyers will pay and what price homeowners are willing to sell a property.

 

There are many other terms that you may run across when dealing with Real Estate Transactions.  If you have any questions regarding these terms or any others, please feel free to contact Chris at info@webuytheusa.com.  WeBuyTheUSA specializes in buying houses fast in any areas and any condition.  Whether you have an ugly house that you can’t sell or if you are facing a foreclosure situation, we can help.  Before you list with a Realtor, give us a chance to buy your house direct without fees or commissions.   www.WeBuyTheUSA.com and www.WantedHouses.com.