Skip To Content

Real Estate 101: Terms You Need to Know

Navigating the real estate market can feel overwhelming, especially if you’re unfamiliar with the industry’s jargon. To help you feel more confident, we’ve compiled a list of essential real estate terms and their definitions. Whether you’re buying, selling, or simply curious, understanding these terms can make the process smoother.

MLS (Multiple Listing Service)

The MLS is a database used by real estate agents to share information about properties for sale. It’s a centralized system that makes it easier for agents to find homes for their buyers and for sellers to ensure their property gets maximum exposure. Think of it as the backbone of the real estate market, ensuring transparency and accessibility. The MLS also disperses information to other websites such as Zillow, Realtor.com, and more.

CMA (Comparative Market Analysis)

A CMA is a report prepared by a real estate professional to determine the value of a property. It compares the home in question to similar properties (known as “comparables” or “comps”) that have recently sold in the area. A CMA helps sellers set a competitive price and buyers understand a property’s fair market value.

FSBO (For Sale By Owner)

FSBO refers to a property that is being sold directly by the owner without the assistance of a real estate agent. While this can save on commission fees, it often requires the seller to handle marketing, showings, and negotiations, which can be challenging without professional expertise.

Closing or Settlement

Closing, also known as settlement, is the final step in a real estate transaction. It’s when ownership of the property officially transfers from the seller to the buyer. During closing, all necessary documents are signed, and funds are distributed. For buyers, this is when you get the keys to your new home!

Lien

A lien is a legal claim against a property that must be resolved before it can be sold. Liens are often used as collateral for debts, such as unpaid taxes, contractor fees, or mortgages. When a property is sold, any existing liens must be paid off using the proceeds from the sale.

Contingency

A contingency is a condition that must be met for a real estate contract to be finalized. Common contingencies include financing (the buyer must secure a mortgage), inspection (the property must pass a home inspection), and appraisal (the home’s value must meet or exceed the agreed-upon price). Contingencies protect buyers and sellers by ensuring specific requirements are met before the deal moves forward.

Closing Costs

Closing costs are the expenses associated with finalizing a real estate transaction. They typically include fees for the title search, appraisal, home inspection, loan origination, and more. Buyers and sellers often negotiate who covers certain costs, but buyers usually bear the majority. Closing costs usually range from 2% to 5% of the home’s purchase price.

Deposit (or Earnest Money)

A deposit, also known as earnest money, is a sum of money a buyer provides to show they are serious about purchasing a home. This amount is held in escrow and later applied to the down payment or closing costs. If the buyer backs out of the deal for a reason not covered by a contingency, they may forfeit their deposit to the seller.

The Bottom Line

Understanding these basic real estate terms can make your buying or selling experience less daunting and more efficient. If you have questions or need guidance, a trusted real estate professional can provide clarity and help you navigate the process with confidence.

Comments are closed.

Contact Us Now

*
*
*
*

<-- Client Provided 11/13/24-- >