Have you recently sat down with a REALTOR® to discuss purchasing your first home and were hit with a bunch of terms that you have never heard of in your life?  Are you selling your home and aren’t quite sure of all the abbreviations your agent is using?  Like many other professions, agents have a plethora of terms that they use that are unique to their jobs, and sometimes we forget that our sellers and buyers may not be as familiar.  While you should always stop your agent and ask for clarification, sometimes it isn’t until after a conversation that we reflect and say, “What is that again?”  If that happens to you, then look no further.  Below is a list of basic real estate terms and what they mean to help you make the most informed decision about your real estate transaction.

Addendum: When a buyer or seller needs to make a change to the contract, an addendum is written explaining what the change is and both buyers and sellers provide signatures. It is an addition to the original contract.

Active: An available home for sale is designated as active.

Active Under Contract: A home that has a contract on it, but the buyers have yet to complete all their contingencies. Sometimes, sellers will accept backup offers if their current one falls through. If you are searching homes in 22508 online, sometimes the word contingent is used instead on the website.

Appraisal: An appraisal is the mortgage lender’s (when a buyer is obtaining a mortgage)  third party evaluation of the value of a home. 

As-is: A home being sold in its current condition without any repairs completed by the sellers.

Buyer’s Agent: The real estate agent representing the buyer.

Seller’s Agent: The real estate agent representing the seller.

Closing: The date that the sale is final.  Buyers and sellers (separately) go to  a title company, a lawyer’s office, or with a mobile notary to sign the closing documents.

Closing Costs: Closing costs are the fees charged by the title company, insurance, HOA’s, taxes, and other costs associated with the sale/purchase of the home. These must be paid when the property is transferred from seller to buyer.

CMA: Comparative Market Analysis is used to determine the market value of your home.

Comparables:  Homes that are similar in location, size, and condition to a seller’s property.

Contingency: During the buying and selling process, a contingency is a part of the agreement that must be met in order for the home sale to continue. Contingencies can vary from one contract to another.

Conventional:  A type of private loan buyers can use to purchase a home.

DOM: The average number of days that a home spends on the market before going under contract.

Disclosure: A document from the seller that identifies any known issues in a home that could affect the buyer’s decision to purchase a property.

Due diligence: A period of time that the buyer has to complete any inspections that can help them decide whether to continue with the purchase of the home.

EMD: Earnest Money Deposit is an initial deposit buyers put down on the home after the contract is accepted by the sellers and buyers.

Easement: The legal right to use another’s land for a specific purpose. Easements are used to permit access to roads, water, or utilities.

Equity:  The difference between a homeowner’s current mortgage balance and the market value price of the home is the home’s equity.

Escalation Clause:  A part of a buyer’s offer that automatically increases the offer price for a home by a set amount of money if the sellers receive another higher offer.

Escrow holder:  The third party identified in the contract that will collect and hold any money or other items until closing.

FHA: A government backed loan used by buyers.  

Foreclosure: The process a mortgage lender goes through to repossess a property after the owners have stopped making mortgage payments. Banks will then sell the home. Buying a foreclosure can take longer than a typical real estate transaction.

HOA:  A home owner’s associate is a group that manages a neighborhood, sets rules and regulations, and maintains common grounds.

Home sale contingency:  A condition for purchasing a home that states that the buyer must first sell their current residence in order to continue with the purchase of another.

Pest Inspection:  An inspection for evidence of wood destroying insect damage or active insect infestation in a home.

Pre-approval: Being pre-approved for a mortgage means that a buyer has spoken with a mortgage lender and given the lender financial documents. The lender has determined the amount of money the buyer has to spend on a house.

Pre or post occupancy agreement:  An arrangement between buyers and sellers to rent the house for an extended time either before or after closing.

Proof of funds: A bank statement,  money market account, or other certified statement provided by the buyers proving that they have enough funds to purchase a property.

Home Inspection: An inspection of the condition of the home completed by an independent home inspector. Usually attended by the buyers, the home inspection can be a contingency or informational depending on the contract.

Home inspection for informational purposes only:  A home inspection that is completed by the buyers to gain a better understanding of the condition of the home with the acknowledgement that the sellers will not complete an repairs.

MLS: The Multiple Listing Service is the database of homes for sale in your area. Realtors® use the MLS to share information about listings and search for listings for buyers. There are many different MLS throughout the country.

Mortgage: A home loan that is used to pay for the purchase of a property.

Mortgage rate lock:  A rate lock freezes the given mortgage rate for a period of time while a home is under contract.  It protects the buyer from having to pay a higher mortgage rate if the rate increases while the home is closing.

Perc Test:  A test completed on raw land to determine the type and size of septic system suitable for the property.

Radon Testing:  A test for the odorless gas that can collect in homes.  Usually completed as part of a home inspection, radon testing is checks for high levels of radon in a home.

Short Sale: A home listed for sale for a price lower than the mortgage is a short sale. These are used by home owners to avoid going into foreclosure. The time it takes to purchase a short sale home can greatly vary.

Showing: A scheduled time when a buyer tours a home in person.

Staging:  Home staging is the process of preparing your home for the market by decluttering, deep cleaning, and arranging furniture in a way that will be most appealing to the largest group of buyers as possible.

Title Company:  A business that researches the property and determines if there are any issues that could impede a sale.  The title company holds closings too.

VA loan:  A type of loan for purchasing a home available to veterans.

Walk-through: A final inspection of the home by the buyers just before closing.

Water quality test: For homes in 22508 with wells, a water quality test evaluates the water’s ph levels and other substances that may be present.

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