10 Confusing yet Commonly-Used Real Estate Terms Simplified
Real estate talk contains a lot of jargon. This means brokers and agents will throw around acronyms and terms that may bounce off the top of your head. Here we’ve compiled a list of common yet confusing terms for you to help grasp the lingo with ease.
One of the most common terms that will be used throughout the process of buying/selling a house is Escrow. Essentially, this refers to a neutral third party that is in possession of valuable information or assets that will be used to fulfill an obligation at a later date.
2. CMA: Comparative Market Analysis
A crucial component for sellers in terms of valuing their property is the comparative market analysis. This comprehensive analysis helps them understand the houses in their area that were recently sold or are currently on the market. As a result, they can make a more informed decision on how to price their own property.
These are essentially conditions that the buyer and seller agree upon at the time of purchase. A contract cannot become binding unless the contingency is met. For example, if a contingency at the time of purchasing a property is that the house needs to pass a professional home inspection arranged by the buyer.
If you take a loan to pay for a new house, equity is the numerical value of how much of the house you own. In other words, it is the difference between the actual market value of the house and how much money you still owe on it in terms of loans or mortgage.
Amortization is the process that helps homeowners, who have taken a loan to pay for their house, predict their monthly payments in the future. If they were to give a fixed rate of interest every month, they would need to pay varying amounts. However, amortization fixes the amount you pay every month by adjusting the proportion of interest over time.
This is a part of your real estate contract where someone other than the owner, such as a neighbor, may have access to certain areas of your property.
7. Transfer Tax
This is a tax that is placed on the transfer of deeds between two parities. It is usually imposed by the state, but some cities also impose their own taxes as well.
Most people who cannot afford to buy a home upfront take a mortgage. This is a loan in which the property you are purchasing will be held as collateral in case the money cannot be repaid.
This is the process of replacing your existing mortgage with a new one. This new mortgage will have separate terms and interest rates and can often help buyers save significant amount of money over time.
10. Net Lease
This is a lease wherein the tenant will be required to pay for the maintenance of the property along with the fixed rent.
While real estate’s terminology doesn’t end here, the terms listed above will help you get a basic grasp so next time you know what you’re talking about!
Are you ready to buy or sell? If so, please contact us. We’d be happy to help.