10 Real Estate Terms You Are Most Likely To Hear

Real Estate

The Top 10 Real Estate Terms You Are Most Likely to Hear 

 We came up with a list of the ten most commonly used terms in real estate and broke each term down to what it means and when/why it will get used.

Pre-APPROVAL (vs Pre-qualification)

Most often used by: Real Estate Agent / Mortgage Lender

 Pre-approval is the result of submitting a mortgage application, having a credit check completed, providing preliminary supporting financial documentation and meeting or speaking with your mortgage lender before submitting an offer on a property.  Pre-qualification is simply filling out the mortgage application and receiving a cursory credit check to determine how much of a home you can afford based on the information you have provided.  As you can see, in a time crunch when the real estate market is HOT, pre-qualification is the way to go as documentation is something that can be done when you have an executed contract on a property.  However, Pre-Approval is much further down the road of obtaining a loan and usually the only thing missing the home you are wanting to purchase.  Click here for more information on getting Pre-Approval 

 

Escrow

Most often used by: Title company

An escrow is usually an arrangement where a third party (like a title) company receives, holds, and disburses funds (like an earnest money deposit) on behalf of two parties who are on either side of a transaction. The escrow, or Title Company, works as a neutral, third party in the transaction in order to execute the timeline and conditions of the executed real estate contract.  The title company completes the closing disclosures that bring the buyer and the seller the amount they need to close on the home and/or the amount they will net as proceeds from the transaction.  These numbers are usually referred to as closing costs.  

 

Closing

Most often used by: Title company

Also referred to as completion, or settlement, closing is what describes the final transfer of funds ands documents to the final parties, and is the second to last step in the real estate transaction with the last piece of the puzzle being the funding of the transaction by the lender and disbursements sent to the respective parties by the Title company. Closing date is usually agreed upon in advance by both parties, who must either be present,  have some form of representation present, documents mailed out to them in another location and signed in front of a mobile notary or locally signed with a mobile notary that is approved by the Title company.  Closing is when ownership is transferred from owner to the buyer.

 

Mortgage

Most often used by: Mortgage Lender

Mortgage is a debt instrument that allows a purchaser to acquire a piece of real property without paying the entire purchase amount. Mortgages are contractually financial agreements between the borrower and the lender, where the property is used as collateral in the event the borrower cannot pay.

 

Amenities

Most often used by: Real Estate Agent / Appraiser

Amenities are known as desirable or useful feature of a property or neighborhood development that makes the location a desired location in which to reside.  Examples of amenities include a neighborhood park, a swimming pool, built in washer and dryer, granite countertops, hardwood floors, outdoor patio or kitchen, 3 car garage or exercise facility that the community has access to through the Homeowners Association.

 

Comparables

Most often used by: Real Estate Agent / Appraiser

Often called “comps” or “market analysis”  is a term used to describe nearby, like-kind properties that have similar characteristics of the property in question (subject property) that would give a representation of the home’s value.  These values are determined by using the history of sold properties, currently pending properties and currently active properties in a relatively close general location to the subject property.Click here to view comps in your area or to compare prospective neighborhoods! 

 

Market

Most often used by: Real Estate Agent

This term is used to describe the current state of activity going on in a particular area, neighborhood, city. Its often encompassing of the volume of transactions, the types of homes being sold, how much they are being sold for, and how long they are on the market. Click here for an example of what a CMA (Comparative Market Analysis can do for you!

 

Inspection

Most often used by: Real Estate Agent / Title Company/ Home Inspector

This is an important term, as the inspection can make or break a transaction. A home inspection is a limited, non-invasive examination of the condition of a home, often in connection with the sale of that home by a Licensed Home Inspector that is contracted to inspect the property by the purchaser of the property.  Inspection is usually conducted in the “Option” period of the contract in the State of Texas.  

 

Appraisal

Most often used by: Real Estate Agent / Mortgage Lender

Real estate appraisal, performed by a licensed professional appraiser,  property valuation or land valuation, is the process of developing an opinion of value for real property. The appraiser and the property appraisal is scheduled through the buyer’s lender.  It is common that the taxable value of a property differ from the market value of the property according to the local County Appraisal District.  Property taxes are calculated according to the appraised value, so this is a very important term for those in real estate.

 

Disclosure

Most often used by: Real Estate Agent / Mortgage Lender / Title Company

Most often used by well, everyone. Disclosure is making information that is secret, or new, known for everyone. You will most likely hear something about the Seller’s Disclosures, which is a notice of the seller's knowledge of the condition of the property as of the signed date.

 

Now that you are armed with an updated vocabulary, you can go through the process of home ownership not feeling like you are hearing a foreign language and give yourself some power throughout the process.   

 

Thanks for reading!

 

Have a great day!