Growing up, it is not common that we are taught what real estate is and how to invest in it, let alone teach the basic terminologies that go with it. However, in ‘Adulting’ as they say, this is a concept that we should value and try our best to learn to avoid making bad decisions. In short, Real Estate is one of our necessities in life and whether you are a renter, homeowner, buyer, seller, etc, these all means shelter and a way to earn income as well. In order to understand how the process works, we all must educate ourselves about proper real estate terms.
TWENTY REAL ESTATE TERMS
We have listed 20 basic real estate terms to help you understand the complexity of real estate and make sure to learn something about it.
Buyer’s Agent -
This refers to a licensed professional that looks for the buyer’s property and they are the one negotiating for the best price for their clients.
2. Listing Agent -
This is the counterpart of the Buyer’s Agent which represents the seller of the property.
3. Real Estate Broker -
This refers to a real estate agent that was able to pass the estate broker’s exam and accumulated the required number of transactions.
4. Listing -
This refers to the properties for sale which are listed or published in property finding sites and articles.
5. Offer -
This refers to the initial value that the seller offers that the buyer can accept, negotiate, and reject.
6. Assessed Value -
This is the amount the property costs regarding the tax which the owner pays based on the location.
7. Contingencies -
This refers to the condition both the buyer and seller discussed that must be fulfilled before a deal is made.
8. Closing -
This means that the property is considered sold and a deal has been made between two parties. This also means the completion of important documents.
9. Closing Cost -
Aside from the final price of the property and the down payment, there is a closing cost that makes up for the two to five percent of the overall payment. This may include payment for a lender, the title company, attorneys, insurance companies, taxing authorities, homeowner’s associations, real estate agents, and other closing settlement related companies
10. Amortization -
This refers to the process of paying for both principal and interest payments.
11. Appraisal -
To be able to get a loan, the property must be appraised by a professional appraiser to know the value of the property. This will help the bank ensure they are lending the proper amount for the value of the real estate.
12. Principal -
This refers to the amount of money that was borrowed to be able to purchase the property.
13.“As Is” -
This could mean two things: if the property is marketed as “AS IS” the seller will not be doing the repairs, if there is any, of the property. It could also refer to the price. As Is properties are usually lower than the marketing price, hence, the “As Is” is marketed.
14. Cash Reserves -
This refers to the money that the buyer saves after the down payment and closing costs.
15. Equity -
This refers to the ownership of the property, how much of the principal have you paid indicates the percentage in which you own.
17. Mortgage -
This refers to the agreement made with a bank or other on which a loan was placed with interest in exchange for taking the title/deed of the property.
19. Title Insurance -
This is a research paid through closing costs that looks into public records to make sure the property is ready for sale.
18. Days on Market (DOM) -
This refers to the number of days on which a property is listed on the market.
19. Inspection -
Inspections are required to check the property such as the property foundation, the plumbing, appliances, and making sure the overall structure is in good condition to avoid future repairs once a deal has been made.
20. Home Warranty-
This is used as protection for future problems regarding the property.
In conclusion, there are many more real estate terms to learn and these are just some of the basic terms that we feel that you need to know. This is one step forward in educating yourself in real estate.