Have you ever talked to a real estate agent and felt like you just entered another country – a country in which no other person speaks a language you understand? You can relax now fellow traveler. The lingo is simple once you have the basics down. Next thing you know, you’ll be sounding like a native Richmond Real Estate Agent.
Whether you are a first time homebuyer, a seasoned seller or are simply getting a feel for the market, the following list should help navigate common terms and phrases used by REALTORS®.
Real Estate Lingo 101/Technical Terms
442
Final building inspection form and is common with a new construction home but a 442 can be requested if a home has had work done to it.
1031 Exchange
If there is money made from the sale of a property then the taxes owed on that money made can be deferred by the IRS till a future date. Keeps more money in your pocket in the short term.
Addendum
Additional documents that go into a real estate contract.
Appraisal
The method in which a loan officer will determine if the property is worth as much (or as little) as the buyer is willing to pay for it.
Closing
The date in which the buyer’s purchase will record at the County and become their property.
Closing Costs
The entire package of miscellaneous expenses paid by the buyer and the seller when the real estate deal closes. These costs include the brokerage commission, mortgage-related fees, escrow or attorney’s settlement charges, transfer taxes, recording fees, title insurance and so on. Closing costs are generally paid through escrow.
CMA
Comparative market analysis or competitive market analysis. A CMA is a report that shows prices of homes that are comparable to a subject home and that were recently sold, are currently on the market or were on the market, but not sold within the listing period.
Commission
The real estate agents paycheck. Real estate brokers are 100% commission based.
Contingency
A condition that has to be fulfilled in order for another event to happen. Example: The successful purchase of home B is contingent on the successful sale of home A.
Easement
Is a written document (though it can be verbal but that is hard to uphold) that is recorded at the County giving a party the right to use someone else property for a specific use.
Escrow
A financial instrument held by a third party on behalf of the other two parties in a transaction. The funds are held by the escrow service until it receives the appropriate written or oral instructions or until obligations have been fulfilled.
Financing
The funding most people use to pay for a home.
FHA
The Federal Housing Administration provides mortgage insurance on FHA approved loans – typically the home has to meet certain standards as well as requires a minimum down payment from the borrower.
Fixture
Anything of value that is permanently attached to or a part of real property. (Real estate is legally called “real property,” while movables are called “personal property.”) Examples of fixtures include installed wall-to-wall carpeting, light fixtures, window coverings, landscaping and so on.
Foreclosure
The process of taking possession of a mortgaged property as a result of someone’s failure to keep up mortgage payments.
Grantor Tax
The Commonwealth of Virginia taxes the sale of real estate based on the selling price, any outstanding liens, and any other debts securing the original purchase.
HUD Homes
Homes owned and sold by U.S. Department of Housing and Urban Development, a government agency.
IDX
An acronym for Internet Data Exchange and is refers to the data feed that is downloaded from an MLS. IDX’s also make it possible for the public to search homes using a real estate broker’s website.
MLS
Stands for Multiple Listing Service and serve as the central hubs for brokers to share their real estate listings with cooperating brokers. Also, MLS’s are the source where real estate broker’s download home listings via an IDX feed to display on public websites.
Pre-Qualified
A process that allows the prospective buyer to submit a loan application to a lender before the home buying process.
Pre-Approved
Where the buyer has funding secured by a lender to purchase a home.
Purchase and Sale
The paperwork, contract, that outlines the details to a home purchase.
REO
An acronym for the term Real Estate Owned in which bank (or other financial institutions) give to their properties they own.
Short Sale
When a home owner is attempting to sell his/her home for less than is owed against it. Short sales have to be approved by the lienholder in order to be executed.
VA
The Department of Veteran Affairs and is typically associated with military service members using their eligibility to purchase a home using VA financing.
Zero Down
Used in terms of a financing method meaning there is no out of pocket expense for the borrower (buyer). Common zero down programs are USDA and House Key.
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