Some Real Estate Terms that are used to Buy and Sell a Home

    We have found that sometimes there are terms that are used by Realtors that aren’t always understood by those looking to Buy or Sell their homes.  We figured that we would share a few of them for you.  This Real Estate Glossary was borrowed from the National Association of Realtors. We would be happy to further discuss any and all that you have questions about. The list has been shortened for the purposes of this blog. We hope you find this interesting and educational.

    Real Estate Glossary

    1099: The statement of income reported to the IRS for an independent contractor.

    24-hour notice: Allowed by law, tenants must be informed of showing 24 hours before you arrive.

    Accompanied showings: Those showings where the listing agent must accompany an agent and his or her clients when viewing a listing.

    Addendum: An addition to; a document.

    Adjustable-rate mortgage (ARM): A type of mortgage loan whose interest rate is tied to an economic index, which fluctuates with the market. Typical ARM periods are one, three, five, and seven years.

    Agent: The licensed real estate salesperson or broker who represents buyers or sellers.

    Annual percentage rate (APR): The total costs (interest rate, closing costs, fees, and so on) that are part of a borrower’s loan, expressed as a percentage rate of interest. The total costs are amortized over the term of the loan.

    Application fees: Fees that mortgage companies charge buyers at the time of written application for a loan; for example, fees for running credit reports of borrowers, property appraisal fees, and lender-specific fees.

    Appraisal: A document of opinion of the property value at a specific point in time.

    Appraised price (AP): The price the third-party relocation company offers (under most contracts) the seller for his or her property. Generally, the average of two or more independent appraisals.

    “As-is”: A contract or offer clause stating that the seller will not repair or correct any problems with the property. Also used in listings and marketing materials.

    Back-up offer: When an offer is accepted contingent on the fall through or voiding of an accepted first offer on a property.

    Board of REALTORS® (local): An association of REALTORS® in a specific geographic area. Ours is the Greater Chattanooga Realtors.

    Broker: A state-licensed individual who acts as the agent for the seller or buyer.

    Broker of record: The person registered with his or her state licensing authority as the managing broker of a specific real estate sales office.

    Buyer: The purchaser of a property.

    Buyer agency: A real estate broker retained by the buyer who has a fiduciary duty to the buyer.

    Buyer agent: The agent who shows the buyer’s property, negotiates the contract or offer for the buyer, and works with the buyer to close the transaction.

    Closing: The end of a transaction process where the deed is delivered, documents are signed, and funds are dispersed.

    Commission: The compensation paid to the listing brokerage by the seller for selling the property.

    Commission split: The percentage split of commission compensation between the real estate sales brokerage and the real estate sales agent or broker.

    Comparative market analysis: A study done by real estate sales agents and brokers using active, pending, and sold comparable properties to estimate a listing price for a property.

    Competitive market analysis (CMA): The analysis used to provide market information to the seller and assist the real estate broker in securing the listing.

    Contingency: A provision in a contract requiring certain acts to be completed before the contract is binding.

    Continue to show: When a property is under contract with contingencies, but the seller requests that the property continue to be shown to prospective buyers until contingencies are released.

    Conventional mortgage: A type of mortgage that has certain limitations placed on it to meet secondary market guidelines. Mortgage companies, banks, and savings and loans underwrite conventional mortgages.

    Counteroffer: The response to an offer or a bid by the seller or buyer after the original offer or bid.

    Credit report: Includes all of the history for a borrower’s credit accounts, outstanding debts, and payment timelines on past or current debts.

    Credit score: A score assigned to a borrower’s credit report based on information contained therein.

    Curb appeal: The visual impact a property projects from the street.

    Days on market: The number of days a property has been on the market.

    Disclosures: Federal, state, county, and local requirements of disclosure that the seller provides and the buyer acknowledges.

    Divorce: The legal separation of a husband and wife effected by a court decree that totally dissolves the marriage relationship.

    Down payment: The amount of cash put toward a purchase by the borrower.

    Earnest money deposit: The money given to the seller at the time the offer is made as a sign of the buyer’s good faith.

    Escrow account for real estate taxes and insurance: An account into which borrowers pay monthly prorations for real estate taxes and property insurance.

    FHA: Federal Housing Administration.

    FHA (Federal Housing Administration) Loan Guarantee: A guarantee by the FHA that a percentage of a loan will be underwritten by a mortgage company or banker.

    Fixture: Personal property that has become part of the property through permanent attachment.

    For sale by owner (FSBO): A property that is for sale by the owner of the property.

    Gift letter: A letter to a lender stating that a gift of cash has been made to the buyer(s) and that the person gifting the cash to the buyer is not expecting the gift to be repaid. The exact wording of the gift letter should be requested of the lender.

    Good faith estimate: Under the Real Estate Settlement Procedures Act, within three days of application submission, lenders are required to provide in writing to potential borrowers a good faith estimate of closing costs.

    Hazard insurance: Insurance that covers losses to real estate from damages that might affect its value.

    Homeowner’s insurance: Coverage that includes personal liability and theft insurance in addition to hazard insurance.

    HUD: U.S. Department of Housing and Urban Development.

    HUD/RESPA (Housing and Urban Development/Real Estate Settlement Procedures Act):A document and statement that details all of the monies paid out and received at a real estate property closing.

    IDX: (Internet Data Exchange) Allows real estate brokers to advertise each other’s listings posted to listing databases such as the multiple listing service.

    Inclusions: Fixtures or personal property that are included in a contract or offer to purchase.

    Independent contractor: A real estate sales agent who conducts real estate business through a broker. This agent does not receive salary or benefits from the broker.

    Interest rate lock: When the borrower and lender agree to lock a rate on loan. Can have terms and conditions attached to the lock.

    List date: Actual date the property was listed with the current broker.

    List price: The price of a property through a listing agreement.

    Listing: Brokers written agreement to represent a seller and their property. Agents refer to their inventory of agreements with sellers as listings.

    Listing agent: The real estate sales agent that is representing the sellers and their property, through a listing agreement.

    Listing agreement: A document that establishes the real estate agent’s agreement with the sellers to represent their property in the market.

    Loan application: A document that buyers who are requesting a loan fill out and submit to their lender.

    Loan closing costs: The costs a lender charges to close a borrower’s loan. These costs vary from lender to lender and from market to market.

    Loan commitment: A written document telling the borrowers that the mortgage company has agreed to lend them a specific amount of money at a specific interest rate for a specific period of time. The loan commitment may also contain conditions upon which the loan commitment is based.

    Loan package: The group of mortgage documents that the borrower’s lender sends to the closing or escrow.

    Loan processor: An administrative individual who is assigned to check, verify, and assemble all of the documents and the buyer’s funds and the borrower’s loan for closing.

    Loan underwriter: One who underwrites a loan for another. Some lenders have investors underwrite a buyer’s loan.

    Lockbox: A tool that allows secure storage of property keys on the premises for agent use. A combo uses a rotating dial to gain access with a combination; a Supra® (electronic lockbox or ELB) features a keypad.

    Managing broker: A person licensed by the state as a broker who is also the broker of record for a real estate sales office. This person manages the daily operations of a real estate sales office.

    Mortgage broker: A business that or an individual who unites lenders and borrowers and processes mortgage applications.

    Mortgage loan servicing company: A company that collects monthly mortgage payments from borrowers.

    Multiple listing service (MLS): A service that compiles available properties for sale by member brokers.

    Multiple Offers: More than one buyer’s broker present an offer on one property where the offers are negotiated at the same time.

    NATIONAL ASSOCIATION OF REALTORS® (NAR): A national association comprised of real estate professionals.

    Net sales price: Gross sales price, less concessions, to the buyers.

    Offer to purchase: When a buyer proposes certain terms and presents these terms to the seller.

    Open house (public): When a listing that is on market is available to the public for viewings and showings.

    Pending: A real estate contract that has been accepted on a property but the transaction has not closed.

    Preapproval: A higher level of buyer/borrower prequalification required by a mortgage lender. Some preapprovals have conditions the borrower must meet.

    Prequalification: The mortgage company tells a buyer in advance of the formal mortgage application, how much money the borrower can afford to borrow. Some pre-qualifications have conditions that the borrower must meet.

    Principal, interest, taxes, and insurance (PITI): The four parts that make up a borrower’s monthly mortgage payment.

    Private mortgage insurance (PMI): A special insurance paid by a borrower in monthly installments, typically of loans of more than 80 percent of the value of the property.

    Professional designation: Additional nonlicensed real estate education completed by a real estate professional.

    Professional regulation: A state licensing authority that oversees and disciplines licensees.

    Real estate agent: An individual who is licensed by the state and who acts on behalf of his or her client, the buyer or seller. The real estate agent who does not have a broker’s license must work for a licensed broker.

    Real estate contract: A binding agreement between buyer and seller. It consists of an offer and an acceptance as well as consideration (i.e., money).

    REALTOR®: A registered trademark of the NATIONAL ASSOCIATION OF REALTORS that can be used only by its members.

    Seller (owner): The owner of a property who has signed a listing agreement or a potential listing agreement.

    Showing: When a listing is shown to prospective buyers or the buyer’s agent (preview).

    Sign rider: An additional sign placed on a brokerage yard sign; it may include the agent’s name, “open Sunday,” “contract pending,” “sold,” the new price, and so on.

    Special assessment: A special and additional charge to a unit in a condominium or cooperative. Also a special real estate tax for improvements that benefit a property.

    Supra®: An electronic lockbox (ELB) that holds keys to a property. The user must have a Supra keypad to use the lockbox.

    Transaction: The real estate process from offer to closing or escrow.

    Under contract: A property that has an accepted real estate contract between seller and buyer.VA: U.S. Department of Veterans Affairs.

    VA Loan Guarantee: A guarantee on a mortgage amount backed by the U.S. Department of Veterans Affairs.

    W-2: The Internal Revenue form issued by an employer to an employee to reflect compensation and deductions to compensation.

    W-9: The Internal Revenue form requesting taxpayer identification number and certification.

    Walk-through: A showing before closing or escrow that permits the buyers one final tour of the property they are purchasing.

    Will: A document by which a person disposes of his or her property after death.

    Notice: The information on this page may not be current. The archive is a collection of content previously published on one or more NAR web properties. Archive pages are not updated and may no longer be accurate. Users must independently verify the accuracy and currency of the information found here. The National Association of REALTORS® disclaims all liability for any loss or injury resulting from the use of the information or data found on this page.

    Trackback from your site.

    Leave a Reply

    About our blog

    Our agents write often to give you the latest insights on owning a home or property in the Chattanooga area.

    Testimonials

    Barry Evans was very knowledgeable and helpful during our purchase process.  There wasn’t a lot on the market and he helped us see things “outside of our box” and we ended up falling in love with a house we would have initially not given a second thought to.
    Kelly and Candace