Have you ever heard your realtor say a word that had you scratching your head?
The world of real estate can seem foreign and complicated to some, especially if you’re a first-time buyer or seller. Even if you’re considering entering the real estate industry as a profession, you can benefit from knowing a few terms so that you can maneuver your way through the world of real estate.
Knowledge is power, and in real estate, you’ll feel more confident in your ability to make decisions and understand the process if you had knowledge of the terms realtors and brokers use to communicate regarding your deal.
Let’s start with the basics: what is real estate?
Real estate can be defined as property that is man-made or natural and can include land and anything else attached. There are five categories of real estate. It consists of:
- Residential
- Commercial
- Industrial
- Raw land
- Special use
Individuals, private companies, and even government agencies can invest in real estate by purchasing a home or renting a property.
Now that you have a solid foundation on what real estate is, you can go ahead and learn more about these # real estate terms. This terminology should be added to your dictionary and should be kept in your back pocket for that moment when you find yourself in the midst of a real estate deal.
1. Mortgage
A mortgage is a loan that is used to finance a house or property.
A reverse mortgage is a financial agreement where the homeowner converts their equity in their home into cash without having to sell the house or pay monthly. Reverse mortgage counseling is required for this transaction.
2. Agent
A real estate agent is the person who will be representing you in the real estate transaction. They are professionals with a real estate license that can answer any questions you may have throughout the process. Their duties include showing you listings, negotiating on your behalf, sending you paperwork to sign, and closing the real estate deal.
3. Addendum
An addendum is an additional agreement tacked onto a contract that details any further requests that the individual on either side of the contract would like to make. These are specifications that were not explicitly laid out in the purchase agreement when buying a renting a property.
Some types of matters that are included in an addendum include keeping furniture with the house, repainting, and more. Such contingencies would be found in the addendum.
4. Contract
A real estate contract is a written agreement detailing the terms and conditions of a real estate deal. It must be notarized and signed by both sides of the agreement. A contract is a reference should any disagreements emerge.
5. Disclosures
For an open and honest real estate transaction, your agreement should include disclosures that offer serious buyers or renters information that could make the property seem less desirable. This includes any structural issues, the condition of the A/C unit, etc.
6. Pre-Approval
If you’re serious about buying a home, the first step you should take is getting pre-approved for a loan. This approval means you are a serious, credible buyer looking to place an offer. A seller is more likely to entertain you if you have a pre-approval. You are also able to know how much money the bank is willing to loan you based on your credit history. This then determines how much money you know you can put down to buy the house.
7. Walkthrough
A walkthrough is when the potential buyer tours the home they have placed an offer on so they can assess any negotiating points or important fixes to point out in the addendum of the contract. This is your chance to point out any concerns or aspects of the house you want fixed before you move in or discounted off the price of the house.
8. Escrow
When a house is in the closing phase, the transaction goes into escrow. Escrow is when your funds are secured by a third party until the contracts are signed and the transaction is complete.
9. Curb Appeal
If a home has “curb appeal,” that means it is attractive on the outside and can probably sell a lot easier than one that needs some TLC.
10. Turnkey
A property that is “turnkey” does not need any work done and is ready for move-in.
