The ABC's of Real Estate

The ABC’s Of Real Estate

real estate: Property consisting of land or buildings.

[ˈrē(ə)l əsˌtāt]

NOUN

Working with a real estate agent when you’re buying or selling a home has many advantages, but one of the best is never having to wonder, “what does this mean?” It’s like having your very own translator on speed dial, and with just a quick “Hey Siri, call my awesome REALTOR®” you can find the answers that you seek.

That being said, we still think that it’s a good idea to have a quick reference glossary of some of the most commonly used vernacular in the real estate world available for anyone who’s curious. And don’t worry, we’ll never be your fifth grade English teacher and tell you to go get the dictionary when you call!

Addendum

A document used to change an existing contract that outlines the specific part of the contract to be adjusted and the parameters of that change. The rest of the contract stays the same, regardless of the addendum.

Appraisal

The process of determining the value of a home based on an examination of the property itself, as well as the sale price of comparable homes in the area. 

Appreciation

Appreciation is the amount that a home increases in value over time.

Assessed value

How much a home is worth according to the county/city tax assessor who makes that determination in order to figure out how much city or state tax the owner owes.

Broker

An individual who has passed a broker’s license exam and received education beyond what the state requires of real estate agents. Real estate agents are required to work under the supervision of a broker.

Buyer’s agent

The agent who represents the buyer in the home-buying process. On the other side is the listing agent, who represents the seller.

Clear Title

A clear title doesn’t have any liens or levies from creditors and conveys that there is no question of legal ownership of the property.

Closing

Refers to the meeting where the sale of the property is finalized.

Closing costs

Fees paid at the closing of a real estate transaction that represent the point in time when the title to the property is transferred to the buyer. Closing costs can be incurred by both the buyer or the seller and are outlined in the purchase agreement.

Comparative Market Analysis (CMA)

A report on comparable homes in the area that is used to derive an accurate value for the home in question.

Contingencies

Conditions that must be met before the purchase of a home can be finalized. 

Deed

The legal written document transferring a title from the seller to the buyer. 

Dual agency

When one real estate agent represents both sides of the sale, rather than having both a buyer’s agent and a listing agent.

Earnest Money Deposit (EMD)

A deposit made by a homebuyer at the time they enter into a contract with a seller. Earnest money demonstrates the buyer's interest in the property and is generally deducted from the total down payment and closing costs.

Home Warranty

A warranty that can be purchased by the buyer or provided by the seller to protect from future problems to things such as plumbing and appliances.

Homeowner’s Association (HOA)

An organization in a condominium or planned housing community that makes and enforces rules about the appearance and maintenance of properties and that maintains common areas and amenities with money received from membership fees.

Homeowner’s Insurance

Insurance that covers loss or damage to your home. Insurance payments are often included as part of your monthly mortgage payments.

Inspection

A complete, professional inspection of a property intended to check and evaluate the safety of the structure and mechanical condition.

Listing

An agreement between a real estate broker and a homeowner that allows the broker to market and arrange for the sale of the owner's home. The word "listing" is also used to refer to the for-sale home itself.

Listing agent

This is the agent who represents the seller in the home-buying process. On the other side is the buyer’s agent, who represents the buyer.

Multiple Listing Service (MLS)

A marketing database set up by a group of cooperating real estate brokers to provide accurate and structured data about properties for sale.

Offer

This is the initial price offered by a prospective buyer to the seller. A seller may accept the offer, reject it, or counter with a different offer.

Pending

A sale is considered “pending” when all contingencies have been met and the buyer and seller are moving toward closing.

Pre-approval letter

A letter provided by a bank or lender to a buyer which provides an estimate on how much the bank will lend that person for the purchase of a home. 

Purchase Agreement

A document that outline the terms and conditions of a sale and holds the buyers and sellers legally accountable to meeting their agreement.

Real Estate Agent

A licensed professional who works under the supervision of a broker and assists both buyers and sellers in the home-buying process.

REALTOR®

A real estate agent who is a member of the National Association of Realtors and adheres to a code of standards and ethics set forth by that association.

Title

A document that represents the rights to the property. Those rights are transferred from the seller to the buyer during a real estate transaction and give the buyer legal rights to the property upon closing.

Transaction Broker

A broker who provides limited representation to a buyer, seller or both, in a real estate transaction, but does not represent either in a fiduciary capacity or as a single agent.

Under Contract

A home is “under contract” when a seller has accepted an offer from a buyer but the transaction has not yet closed.