For many first-time homebuyers, knowing common real estate terms can help prevent the feeling of information overload. Once you learn the language real estate agents use, you may feel much more comfortable in your quest to find your dream home.
Here are some helpful real estate terms to know:
You’re likely to encounter the term “contingent” when house hunting on major search engines or a multiple listing service.
This word shows up as a status on listings where a prospective buyer or buyer’s agent has made an offer and the property owners, or sellers and seller’s agent, has accepted the offer.
However, contingent status indicates there are additional criteria for the closing of the sale, such as additional home inspections, appraisals or mortgage approval.
Escrow refers to a third party temporarily holding on to a portion of money involved in the property sale. The money is typically held in a dedicated escrow account, and during this time the house might be referred to as “in escrow.”
Escrow accounts are a tool used to mitigate financial risk for both the homebuyer and home seller during the real estate transaction.
Earnest money is the money added to an escrow account or trust as a sign of good faith in the transaction. A seller might require earnest money as a way to ensure the buyer is sufficiently motivated and qualified to go through with the purchase.
While it’s often added to the third-party account early in the process, earnest money is entirely different from a down payment.
There are many types of “value” in the real estate lexicon, but appraisal value specifically refers to the results of a professional appraisal.
The key difference between appraisal value and other property value terms like “fair market value” and “assessed value” is the appraisal value is based on a specific time point (typically during the sale or refinancing process). This means appraisal values can change over time and from one appraisal to the next.
Closing costs are the final expenses due at the end of the home-buying process. Some services you’ll need to pay for as part of the closing costs include credit reports, mortgage insurance, property taxes, homeowners association dues and legal processing fees.
Closing costs are separate from monthly mortgage payments, but are often paid to your mortgage lender.
While these are only a few important terms to know, they can be extremely helpful in understanding both complex and basic real estate concepts. The more you develop your real estate vocabulary, the better your home search experience will be.
For any other real estate terms you may have come across and have questions about, your real estate agent will be able to help break them down into more digestible tidbits.
In twenty five years of real estate sales and marketing experience, I have sold hundreds of properties, while developing detailed knowledge of Sonoma & Napa area communities. I am a life-long resident in the North Bay and after a full day at work, I enjoy spending time with my four children, and participating in their many school and recreational activities.
Over the years, my clients have expressed diverse plans and dreams. I seek to truly understand and appreciate my clients' goals, focusing my efforts on realizing them. It has been fun learning more about the unique opportunities that attract people to the area such as the culinary community, the viticulture and wine industry as well as outdoor adventure tourism. It is important to me to listen to my clients, do what it takes to serve their needs and I am dedicated to treating everyone involved in a transaction both in a personal and professional manner. I work hard to anticipate and respond to the routine tasks at hand as well as the complex challenges that come up during real estate transactions while ensuring my goal to deliver you the outcome you desire.