50 Real Estate Terms to Know.
Real estate is full of complicated jargon. Here are the top 50 real estate terms to know.
50 Real Estate Terms to Know.
written by
- Travis French
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“Once your offer is accepted we’ll open escrow and you’ll wire the EMD to the title company.” Real estate agents are all guilty of using industry terms. Here are the top 50 real estate terms to know and a definition so you can understand.
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50 Real Estate Terms to Know.
1031 Exchange – Referring to IRS code section 1031. A 1031 exchange is a swap of one investment property for another that allows capital gains taxes to be deferred.
Addendum – An addendum is an addition to a contract that modified the terms and conditions. Common addendums for real estate include credits for repairs, adjustments in pricing due to appraisals or changes to the closing date.
Agency – The relationship between a client and an agent arising out of a brokerage agreement in which the agent agrees to do certain acts on behalf of the principal in dealings with a third party.
Appraisal – The process of developing an opinion of value for real property. Performed by licensed appraisers.
Assessed Value – The dollar value assigned to a property to measure applicable taxes. Assessed value can be seen on the assessors website for the county in which your property is located. Clark County Assessors.
Broker – A licensed agent who received their brokers license and can start or manage a brokerage and hire other real estate agents. In each real estate firm, the agent is actually working on behalf of the broker.
Closing – The date the deed is recorded and transferred from the sellers name into the buyers name.
Closing Costs – Fees paid at the closing of a real estate transaction. Common closing costs are escrow fees, mortgage origination fees, commissions and pre-paid costs e.g. taxes, insurance, etc. Learn more, then calculate your buyer’s closing costs or seller’s closing costs.
Common Interest Community (CIC) – Real estate to which a person, through ownership of a unit, is obligated to pay for a share of real estate taxes, insurance premiums, maintenance or improvement of, and other expenses related to common elements of the community.
Contingency Clause – Gives the parties the right to back out of their contract under specified circumstances that are negotiated between the buyer and seller. Common contingencies in real estate include appraisal, due diligence and loan.
Conventional Mortgage – A loan that is not secured by a government entity. Conventional loans are made through or guaranteed by private lenders or Fannie Mae and Freddie Mac. Often, a larger down payment is required for a conventional mortgage.
Comparative Market Analysis (CMA) – An estimate of a home’s value based on recently sold comparable properties in the immediate area.
Counter Offer – A response given to an offer.
Deed – A legal document regarding the ownership of property or legal rights.
Down Payment – An initial up-front partial payment for the purchase of a house. Generally paid in cash at closing with the balance paid later through the mortgage loan.
Dual Agency – When one agent represents both the buyer and seller in a transaction. Agents representing both parties must be careful not to advise either side as it could be a conflict-of-interest. Instead of an advisory roll, the agent’s roll becomes one of managing the process.
Due Diligence – The period when the buyer completes a home inspection of the property to determine the overall condition or any mechanical defects that may effect the value or livability of the home.
Earnest Money Deposit (EMD) – A deposit made to a seller, and held in escrow, that represents the buyer’s good faith to purchase the home. Often sent via wire transfer.
Equity – The difference between the value of your property and the amount you owe. Essentially, the amount of the home you actually own.
Escrow – A third party that holds money or an asset on behalf of the other two parties in a transaction.
Escrow Officer – Employee of a title or escrow company who acts as a neutral third party to facilitate the closing of a real estate transaction.
Fair Housing Act – The right to choose housing free from unlawful discrimination. Fair housing laws protect people from discrimination in housing transactions.
FHA Mortgage – A mortgage insured by the Federal Housing Administration and issued by an FHA approved lender. FHA loans require a lower minimum down payment and lower credit scores than most conventional loans.
Final Walk Through – A final inspection of the property prior to closing to insure the home is in the condition in which the buyer agreed to purchase it. Also an opportunity to make sure items agreed upon by both parties to be repaired were properly completed.
Let us pay your transfer tax, escrow fees and title policy.
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FIRPTA – A tax law that imposes US income tax on foreign persons selling US real estate. As a foreign person selling real estate, you may be required to withhold 10% of the amount realized from the sale. If you are purchasing from a FIRPTA seller, it’s important to make sure the amount is withheld or to verify proof of no withholding status.
Fixture – An object that is physically and permanently attached or fastened to a property. This includes nailed, screwed, bolted, glued or cemented. Ceiling Fans and window treatments are common examples.
For Sale By Owner – When a homeowner chooses to sell their home without representation from a licensed real estate agent.
Fund – The process of wiring or releasing money from a mortgage lender to a title or escrow company prior to closing.
Home Inspection – An assessment of a properties physical structure and mechanical systems from the roof to the foundation.
Home Protection Plan (Home Warranty) – A renewable home service plan that helps with the cost to repair or replace parts of a home’s systems and appliances.
Home Owners Association – An organization in a subdivision, planned community, or condominium building that makes and enforces rules for the properties and its residents.
Homeowner’s Insurance – Protects you financially from damage to your home caused by items such as fire, wind, theft, vandalism, and water damage.
Lender – A business or person who lends money.
Lien – A right to keep possession of a property belonging to another person until a debt owed by that person is discharged.
Lockbox – An electronic device that holds a key and only allows access by qualified persons.
Multiple Listing Services (MLS) – Private databases that are created, maintained and paid for by real estate professionals to help their clients buy and sell property.
Mortgage Insurance – Lowers the risk to the lender of making a loan. Typically, borrowers making a down payment of less than 20 percent of the purchase price of the home will need to pay for mortgage insurance.
Multiple Counter Offer – When a home seller has multiple offers they can choose to send a multiple counter offer form instead of a traditional counter offer to inform the other parties, in writing, of competing offers.
Net Sheet – An estimate of net proceeds to be received by the seller, or total closing costs to be paid by a buyer at closing.
Offer – A conditional proposal made by a buyer to purchase real property which becomes legally binding if accepted. Offers are made on the Residential Purchase Agreement.
Personal Property – Any movable thing or intangible item of value that is capable of being owned by a person and not recognized as real property. Sofa, piano, dining room table.
Pre-Approval/Pre-Qualification – An estimate for credit given to a prospective buyer by a lender based on information provided.
Preliminary Title Report – A report prepared prior to the issuance of title insurance that shows the ownership of real property and any liens or encumbrances which will not be covered under a title insurance policy.
Probate Sale – The process after a homeowners death and beneficiaries legally obtain the asset to sell.
Proration – The act of dividing property taxes, interest, insurance premiums etc. between buyer and seller proportionately to time of use or the date of closing. Sellers often receive funds from buyers at closing for pre-paid items prorated for time of use.
Real Property Transfer Tax – A special tax imposed during the transfer of real property. In Clark County, Nevada the tax is $2.55 for each $500 of value or fraction thereof. A $500,000 home would impose a $2,550 transfer tax.
REO – Real estate owned is property owned by a lender after an unsuccessful sale in a foreclosure auction.
Right of Refusal – A contractual right to enter into a business transaction with a person or company before anyone else can. Often used during a Contingent Upon Sale transaction, if the party with the right declines to match or beat a new offer the obligor is free to entertain the new offer.
Sellers Real Property Disclosure (SRPD) – A required sellers disclosure by Nevada law in which the seller must disclose any and all known conditions and aspects of the property which materially affect the value or use of the residential property in an adverse manner. NRS 113.130 and 113.140.
Short Sale – A short sale listing occurs when a lender agrees to accept less than what is owed on the mortgage from the proceeds of the sale due to the homeowner defaulting on the loan.
Special Assessment (SID/LID) – A charge levied against properties within the boundaries of an area known as a Special Improvement District (SID). Typical improvements include streets, sidewalks, curbs and gutters, streetlights, sewer and water facilities. Assessments for properties in Nevada can be found at www.amgnv.com.
Title – The right to or ownership of a certain piece of real property.
Title Insurance – A form of indemnity insurance that protects lenders and homebuyers from financial loss sustained from defects in a title to a property. Owner’s title policy protects the new homeowner from claims against the title of the property.
Under Contract – The status of a property once an offer has been accepted.
VA Loan – A $0 down mortgage option issued by private lenders and partially backed, or guaranteed, by the department of Veterans Affairs. Eligibility for a VA loan is based on military service history and credit and income requirements.
BONUS definition: First&Sold Buy Before You Sell – The ability to pre-purchase your next home in cash, move-in, then list and sell your old home without the hassle of showings or stress of timing two closings. 😎
References:
www.investopedia.com red.nv.gov www.nar.realtor www.dictionary.com www.consumerfinance.gov www.clarkcountynv.gov www.va.gov
