Navigating the world of real estate can be overwhelming. Between listings, showings, bidding and closing the deal, nerves can become fraught. The process can become even more complicated for new buyers and sellers with all the new terms, phrases and abbreviations that go along with the process. Knowing some of the most common terms can help you understand this new language ahead of time and allow you to tread confidently through your property journey.
Appraisal
An appraisal is a professional evaluation of a property’s market value. Whether you’re buying or selling, an appraisal can clarify a home’s worth and play a crucial role in asking prices and mortgage approvals.
Pre-Approval
Before you fall in love with your dream home, head to the bank and ask for a mortgage pre-approval. Your lender will review your financials and determine how much you can likely borrow. It tells buyers that you’re serious about closing the deal and lets you know what price range you should be looking in.
Contingency
In real estate transactions, a contingency is a condition that must be met for the transaction to go forward. Typical contingencies include home inspections, appraisals and the buyer’s ability to secure financing.
Escrow
Escrow is when a neutral party temporarily holds money, such as your purchase deposit, until both parties have met the conditions of the sale. Once all the requirements are met, the money is released.
Closing Costs
These are the expenses that are not part of the property price. Closing costs include, but are not limited to, taxes, attorney fees and other related expenses. Both buyers and sellers incur closing costs.
Title
This term sets out ownership rights to a property. During a home purchase, the title is transferred from the seller to the buyer. A title company is often used to ensure that the ownership rights are clear of any issues.
Equity
Equity is the difference between your home’s current market value and the amount you owe on its mortgage. If you sell your home today, the money you receive will first pay off any outstanding mortgage(s) you may have. Any extra profit will go to you.
Working with Your Real Estate Agent
The realm of real estate is vast and filled with nuances, but understanding its terminology is the first step in making informed decisions. One final term you may have encountered is MLS (Multiple Listing Service). This is the massive online database where agents list properties for sale. If you’re hunting for a home, you’ve likely already searched the MLS.
At Edge Real Estate, we have access to more homes than you can find on your own by searching the MLS. We’re not here to dazzle you with fancy terminology—we’re here to answer your questions and help you negotiate the best deal possible. Whether you’re buying or selling, contact us today for all your real estate needs.
