There is a lot of technical terminology in Real Estate. It can be very confusing and overwhelming, especially if you are new to buying or selling a home.
🏘️ Below is a list of some of the most used real estate terms that you may want or need to know along your trek to real estate happiness.
But don’t worry, there won’t be a quiz. 😅
Find the answers to your most asked questions about real estate. Click on the big + button to view the answer.
An Active Property
The property is actively for sale and on the market. The sellers may have received offers but have not accepted any yet.
When an offer is accepted the property will become Pending the completed sale.
If the contract falls through, typically the property will go Active again.
What does As-is mean?
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.
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What is a backup offer?
When an offer is accepted contingent on the fall through or voiding of an accepted first offer.
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Buyer’s agent: The agent who shows the buyer’s property, negotiates the contract, or offer, and works with the buyer to close the transaction.
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Closing: The end of a transaction where documents are signed, and funds are dispersed.
See also Close of Escrow.
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Closing costs are the fees that the buyer and seller will owe associated with the home-buying process, such as the real estate brokerage commission and title insurance.
Most are paid by the buyer, but the seller pays for some.
The fees will vary with each transaction. Your lender or title rep will let you know what the fees are and how much you will need at the close of escrow.
The fees required to complete the real estate transaction include points, taxes, title insurance, financing costs, and items that must be prepaid or paid through escrow.
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Comparative market analysis or competitive market analysis, aka CMA, compares the sales price of similar properties in the area to help determine the price of a property.
A CMA estimates a home’s price based on recently sold, similar properties in the immediate area. Real estate agents and brokers create CMA reports to help sellers set listing prices for their homes and help buyers make competitive offers.
If you need more details about CMAs, read “What Is Comparative Market Analysis (CMA) in Real Estate?“.
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What is a Contingency?
A provision of the contract that keeps the agreement from being fully legally binding until a certain condition(s) is met.
For example, the purchase of a home can be contingent upon the buyer selling their home first.
Common contingencies include loan approval, satisfactory inspections, and appraisal.
- An appraisal contingency gives the buyer the right to back out if a professional property appraisal comes in lower than a specified minimum, usually the asking price of the property.
- A financing contingency loan approval gives the buyer time to obtain a mortgage and the right to cancel if financing is denied.
- An inspection contingency gives the buyer the right to have the home inspected by a set date.
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In real estate, a contingent offer is an offer made on a property, which says that certain conditions must be met in order for the sale to be completed.
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A real estate contract is a legally binding agreement between two parties for the sale and purchase of a property.
It outlines the price, terms, and conditions of the sale.
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Conventional sale: When the property is owned outright and has no mortgage.
Conventional sales are often smoother transactions than those that require financing as there is no dependence on the buyer receiving a loan to purchase the property.
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A counteroffer is a response to a buyer’s original offer on a house to make changes that better fit a seller’s goals.
A counteroffer is one step closer to an accepted offer!
A counteroffer shows that the seller is willing to work with the buyer, but on slightly different terms (usually a change in the price or contingencies).
Here’s how your real estate agent can help you navigate a counteroffer:
☑️ Buyers, we negotiate on your behalf and provide guidance on how to get your offer accepted.
☑️ Sellers, we help you stay clear of red flags and make sure you accept the right offer.
Negotiation is a BIG part of what we do as real estate pros! Connect with our team to learn more about how we provide 5-star representation for our clients.
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Days on market (DOM) means the number of days a home has been listed on the market.
The number of days the property has been on the market may reflect the desirability and/or pricing of the home.
If the home has been on the market too long, the property may be stale.
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What is a Disclosure Statement? 🤔
A legally binding document in which the seller reveals any potential flaws and issues the buyer needs to know about the property.
Also known as a “Seller’s Disclosure,” this is a legal document that outlines any known flaws that a home seller is aware of that could negatively impact the home’s value 🏡
💡 TIP: Buyers should scrutinize this document closely with their real estate agent to fully understand the condition of a home.
Our best advice? When it comes to buying a home, make sure you get an inspection to confirm what has been disclosed is accurate and discuss any potential deal breakers with your agent.
The three rules of this document are disclose, disclose, disclose.
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The representation of opposing principals (buyers & sellers) at the same time.
That is, one real estate agent represents both the buyer and the seller in one transaction (sale of a home).
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What is Earnest Money? 🤔
A deposit made to a seller that represents a buyer’s good faith to buy a home. It’s typically around 1% – 5% of the sale price.
Earnest money is a deposit from the buyer to the seller, made in good faith to show dedication to purchasing the property 🏡
IMPORTANT FACTS 👇
💰 The amount varies by market
💰 Goes towards the purchase of your home
💰 Protects the seller if a buyer backs out
💰 A buyer may get this money back – due to failed inspections or contingencies
💡 TIP: In a seller’s market, you may consider making your earnest money non-refundable.
Our best advice? When it comes to buying in a low inventory, competitive market, it’s essential to partner with a Buyer’s Agent who understands how to make your offer stand out to sellers 🥊
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What is a Listimate™?
A Listimate™ is a home value estimate based on our proprietary system of determining a home’s value, or the dollar value of a home if listed for sale at the time of the estimate.
We created this system based on over 30 years of experience in retail residential real estate resale properties.
We consider Listimates™ as the true current market value of a specific property. If you decide to list your home with Guthrie Group Homes, your Listimate™ will be the price we recommend you use as the asking price for your home.
How is a Listimate™ different from Zillow’s Zestimate?
We suggest you read our article “Comparative Market Analysis vs. Zestimate“.
How Accurate Is It?
Our track record speaks for itself. 99% of our listings sell at or above the asking price, and they sell fast!
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What is a Listing?
In real estate, the word “listing” is typically used to refer to the for-sale home or property itself, although it technically means the agreement between the broker and the owner of the home to market and sell the property.
When you hire a Realtor to sell your house, that is referred to as “taking a listing”.
This is not the same as listing the property on the MLS (Multiple Listing Service), however, when an agent takes a listing, they usually list it on the MLS.
See also, Pocket Listing.
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What is a Listing Agent?
The real estate agent who represents the home seller during a real estate transaction.
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What is the market value of a home?
It’s the highest price in terms of dollars that a property will bring in a competitive and open market.
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MLS stands for Multiple Listing Service. They collect, compile and distribute all information about homes listed for sale.
The MLS is the organization real estate brokers use to search for and list properties for their clients.
Membership isn’t open to the general public, although selected MLS data may be sold to real estate listing websites, like Realtor.com or our own MLS listing search where the public can search the MLS at no charge.
See also the term “listing“.
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What is an Offer to Purchase in real estate? 🤔
When does it come into play? And what does it entail?
An Offer to Purchase – usually just referred to as an offer – is a written document submitted by a prospective buyer to a seller that outlines the terms of the sale.
You’ve probably heard someone say:
We just put in an offer to buy our first home.
The buyer’s agent will be the one to submit the offer to the seller’s agent. The seller’s agent will then bring the offer to the seller.
It can be submitted at any time during the negotiation process, but it usually occurs after the buyer has made an initial offer and the seller has accepted it.
The Offer to Purchase should include all of the terms of the sale, including the purchase price, the down payment, the closing date, and any contingencies.
Once the offer is accepted, you are “under contract” to purchase the home, pending any contingencies.
Below is an example of an Offer to Purchase Real Estate.
![An example of an offer to purchase real estate.](https://gghknoxville.com/wp-content/uploads/2024/07/offer-to-purchase-real-estate-01-740x958.jpg)
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![Pending](https://gghknoxville.com/wp-content/uploads/2022/10/Pending.png)
What does Pending mean?
With a property that is pending, the property owner has accepted an offer from a buyer and they are under contract with that buyer.
Their agreement may be subject to a variety of contingencies: inspections, appraisal, financing, and more.
The home is not sold just yet. Typically if the sale does not go through, the house will return to “Active” status.
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Did you know that some properties are never listed publicly?
Known as pocket listings, these properties are sold “off-market.” The broker chooses who to share the listing with—usually an exclusive list of clients and agents.
Typically, pocket listings are used to enhance the seller’s privacy. They are especially popular for ultra-luxury listings or when the seller is a public figure.
However, not everyone supports the practice. In fact, the U.S.-based National Association of Realtors (NAR) requires its members to post listings on the MLS, in most cases—although the legality of NAR’s policy is currently being challenged in the U.S. judicial system.
Curious to find out what strategy we would recommend to sell your home in today’s market? Reach out for a free consultation.
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What are Property Taxes?
Proprety Taxes are a levy or tax imposed by a municipality (city, town, or county) on real estate and personal property. The amount of tax varies depending on the property value.
Property taxes are an annual tax that local municipalities collect each year, based on the assessed value of your property (not on the appraised value of your home). These funds help pay for services that benefit the community, such as schools, roads, maintenance, etc.
First-time homeowners often forget to factor property taxes into the overall cost of their new home, which can come as a nasty shock come tax season. So let this be a reminder to all homeowners to calculate property taxes into their annual budget!
💰 BONUS TIP: If you own a rental property, your property taxes may be tax-deductible 💰
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![Real Estate Professional Real Estate Professional](https://gghknoxville.com/wp-content/uploads/2022/10/Real-Estate-Professional.png)
Define Real Estate Professional.
An individual who provides services in buying and selling homes.
Real estate professionals are there to help you through the confusing paperwork, find your dream home, negotiate any of the details that come up, and so you know exactly what’s going on in the housing market.
There are several types of real estate professionals including Realtors®, real estate agents, and real estate consultants.
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What is a short sale?
The sale of a home sold for less than what’s owed on the mortgage to prevent foreclosure.
A “short sale” is a home sold at a discounted price. But why would someone want to sell their home for less than it’s worth? 🤔
Homeowners struggling to make payments on their mortgage are faced with the option to foreclose on their property, which can severely damage their credit.
But a short sale can leave less of a negative impact, and some sellers can qualify for other home loans once the short sale closes.
If you’d like to learn more about short sales in our area (how they work, if they’re in your best interest, or how to take advantage of them if you’re a buyer), send us a message 📲
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![Sold Sold](https://gghknoxville.com/wp-content/uploads/2022/10/Sold.png)
The property is Sold
The property has been sold and is off the market. The transaction has been completed and the new buyers own the home.
The property is no longer available to purchase or take offers on.
Time to look for another home to buy. 😉
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What does Temporarily off the market (TOM) mean?
The owner has decided to take the listing off the market for an undetermined amount of time. Typically, this is because work is being done, or the home is unavailable for showings at the time.
Usually, the home will be back on the market in the near future. If not, the listing status will go to Cancelled.
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Once you have made your offer and the offer is accepted by the seller, the following questions may arise.
What does “under contract” mean?
Under contract means that all parties have agreed on terms, have signed the contract, and the signed contract has been delivered to both buyer and seller. Payment of the escrow deposit is expected but is not a requirement to make a binding contract.
What is escrow?
The escrow money, escrow deposit, or good faith deposit is money that is included with an offer, or as soon as an offer is accepted, to show the seller that you are serious about moving forward with the purchase of the home.
Because you forfeit this deposit if you back out of the purchase for any reason not allowed for in the contract, the larger the escrow deposit, the more seriously your offer is taken.
This is not the same as the down payment.
Do I need an inspection?
We always recommend that you have a home inspection done. In the grand scheme of things, paying a few hundred dollars to have peace of mind that there are no hidden dangers or problems is well worth the money.
The inspections you may need or want will vary depending on the home you are buying and the contract terms. Your agent will thoroughly discuss the inspections with you once your offer is accepted.
How much are inspections?
The cost of the home inspection depends on the size of the house and additional inspections requested, such as swimming pool, septic tank, termite/pets report, insurance, four-point (HVAC, plumbing, roof, and electrical,) wind mitigation, and radon. An average home inspection, without additional inspections, is about $300.
I will give you my recommendations for inspectors, but you can choose your own if you wish.
What if my loan doesn’t get approved?
If you have gone through the pre-approval process and have been forthcoming with all the information requested by your lender, it’s unlikely you will be turned down, but it does happen.
Make sure you do not change jobs, purchase big-ticket items on credit, take out a car or boat loan, or open any other new credit accounts while your mortgage is being processed.
If your loan does fall through, talk with your lender about changing to a different loan type.
When can I start moving?
When you have the keys! When you are financing your purchase, it takes four to six weeks for your loan to be processed. Once the lender gives the all-clear, closing is scheduled. You will sign your loan documents and both parties will sign documents transferring ownership to you.
Unless other arrangements have been agreed upon by both parties, the sellers should have completely vacated the home when they sign the closing papers. You can have your belongings ready to move, and a moving company scheduled before you go to closing.
At closing, you will receive the documentation you need to provide utility companies with proof of your new residence.
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What does Withdrawn mean?
The listing was withdrawn from the market by the owner. This could be for various reasons: The owners may have decided they do not want to sell anymore, or maybe they didn’t like the offers they received.
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