Each industry has its own jargon which can be overwhelming to those on the outside. Even having bought or sold a few times doesn’t guarantee you’ve heard and understood all of the lingo. To help you out in your real estate journey we’ve put together some common real estate terms (and a few uncommon but important ones) to help you navigate this unique world. When in doubt, just ask your agent!
Here are our definitions for common real estate terms:
Adjustable rate mortgage (ARM): A mortgage with an interest rate that fluctuates with the market.
Appraisal: Opinion of a property’s value at a specific point in time as determined by a licensed professional.
“As-is”: A clause in a contract stating the seller is not willing to make any repairs to the property.
Back on market: When a listing comes back on the market after having been under contract or withdrawn.
Balloon mortgage: A majority of the borrowed amount is generally repaid in a single payment (a balloon) at the end of the loan period.
Closing: The end of the real estate transaction. The deed to the property is delivered, all documents are signed and payments are made to each party.
Commission: Compensation paid to the real estate agents involved in the transaction as negotiated in the listing and buyer agreements. Generally a percentage of the sale price or a flat rate.
Comparative market analysis (CMA): A study completed by a real estate agent to estimate a price for a property based on active, under contract and sold properties with comparable features.
Contingency: A clause in a contract requiring certain acts to be completed in order for the contract to be binding. For example, a buyer may include a contingency for the sale of their current home.
Conventional loan: A home loan not insured or guaranteed by the federal government in anyway.
Counteroffer: The seller’s response to an initial offer by prospective buyer. Generally requires a 20% down payment.
Days on market: The number of days since a property was listed.
Disclosures: Documents provided to disclose important details of the property or existing business relationships from one party to another.
Down payment: Cash provided by a buyer towards the purchase of a property.
Earnest money: Money paid by the buyer at the time an offer is presented as a sign of good faith. Often managed by the title company.
FHA: Federal Housing Administration
FHA Loan: A loan insured by the federal government to protect the lender from borrower default. Requires a lower down payment than conventional loans and requires the borrower to pay for mortgage insurance.
Homeowner’s insurance: Insurance coverage including personal liability and theft in addition to hazard insurance for a property. Usually lumped into mortgage payment.
Listing agreement: A document to establish a real estate agent’s responsibilities to a seller.
Active: the property is available for purchase and the seller is accepting offers.
Under contract: a real estate contract is accepted by the sellers but has not yet closed.
Pending: past all contract deadlines and waiting for closing
Withdrawn: the listing has been taken off the market by the seller but may become available again at some point
Expired: a listing that has not sold within the amount of time outlined in a contract between an agent and seller
Sold: The home has been purchased by a buyer and is no longer for sale
Multiple listing service (MLS): An online search engine of available properties listed for sale. Other websites such as Zillow usually pull their listing data from the MLS.
Real estate contract: A binding agreement between a buyer and seller outlining details of a real estate transaction including price, timeline and commission.
VA Loan: A mortgage insured by the federal government offered only to veterans. Eligible borrowers are not required to produce a down payment.
Hopefully, this helps you feel more comfortable and prepared to enter (or re-enter) the world of real estate. If you have any questions or are ready to buy or sell a home, contact us today!