10 Common Real Estate Terms Defined
Although your real estate professional is the most knowledgeable resource to guide you through buying or selling, it is important to build an understanding of common terms used in the process! Navigating through this market can be tricky enough, so it is best to gain familiarity with some of the terms you might hear. Here’s a list of 10 terms you might hear in the real estate selling or buying process.
Appraisal – an estimation of the home’s current value. An appraisal is done by a licensed appraiser and is something required by mortgage lenders to determine if the amount of lending is fair.
Comparative Market Analysis (CMA) – an analysis done by a real estate professional to determine the value of the market based on similar homes that have been sold in the same area.
Contingencies – a house that is contingent on the market means that the seller has accepted the offer, but before it can be closed certain criteria have to be met. A common contingency for example is when a buyer is contingent on selling their previous home before closing and the house they are purchasing.
Escrow – An account that the lender sets up to receive monthly payments from the buyer.
MLS (Multiple Listing Service) – Often referred to by its acronym, it is a database that REALTORS ® are able to access and add information about properties in the area. When a home comes for sale, it is listed under the MLS by the seller’s agent.
Pre-approval letter – before purchasing a home, a buyer can obtain a letter from the bank providing an estimate on how much the bank will lend that person.
Refinance – refinancing refers to restructuring a home loan, replacing that home loan with an entirely new one with different rates and payments. The main reason homeowners will refinance is to get a lower interest rate.
Seller’s Market – this is a term that a used quite frequently to describe the market right now. When buyer demand is much higher than the housing inventory, people will refer to it as a seller’s market.