We’ve all been there – helplessly adrift in a sea of real estate terms and jargon, wondering if you’ll ever understand what’s going on? Fear not, I’m here with a handy-dandy glossary to help you decode this cryptic lingo. So, sit back, relax, and let’s demystify the language of real estate.
Real Estate Terms You Should Know:
Listing
It’s your home’s debut in the market! A listing includes details about your property such as location, size, amenities, and, of course, the asking price.
Appraisal
This is an estimated value of a property determined by a professional appraiser. Think of it as a home’s price tag, but set by an independent party. It’s intended to act as an unbiased opinion that can re-affirm the final selling price.
Fair Market Value (FMV)
This is the price a buyer would willingly pay, and you’d willingly accept. An appraiser usually determines FMV after considering factors like your home’s condition and comparable sales in the area.
Comparative Market Analysis (CMA)
It’s like getting a backstage pass to the real estate market. A CMA gives you a snapshot of similar properties in the same area that have been sold recently, helping you figure out a fair price for your property. You may also heard this referred to as “comping”.
Staging
This is the art of dressing up your home to make it more appealing to buyers. Staging can involve anything from rearranging furniture to a full home makeover.
Disclosure
As a seller, you’re required to reveal known issues about the property’s condition. Honesty is the best policy here.
Escrow
An escrow is a neutral third party who safeguards the money during the transaction process. An escrow officer or company acts as the neutral middleman holding the funds until the transaction is complete. This service is often carried by a lawyer, or real estate agent.
Contingencies
These are conditions that buyers put in their offers, like home inspections or financing approval. It’s a ‘subject to’ clause that can affect your sale.
Inspection
A professional inspector examines your home for any defects or necessary repairs. It’s like a health check-up for your home.
Principal
This is the amount you originally borrowed for your home. It’s like the root of the money tree, while the leaves are the interest.
Equity
This is the difference between your home’s current value and the amount you owe on your mortgage. It’s like a secret stash of money you’ve built up over time.
Underwriting
This is the process where your lender examines your creditworthiness and determines if you’re a safe bet for a mortgage. It’s like a financial background check.
Pre-Approval
A lender evaluates your creditworthiness and gives you a heads-up on the loan amount you can get. It’s like having a financial cheat sheet before you go house hunting.
Zoning Laws
These are rules set by local governments that dictate how a property can be used. It’s the rulebook for what you can and can’t do with your property.
Title
The title is the legal proof that you own the property. It’s the document that legally says “This house is mine.”
Closing Costs
These are expenses, over and above the property cost, paid at the time of closing the deal. These can include attorney fees, title insurance, and property transfer taxes.
Commission
This is the fee you pay a real estate agent for their services, typically a percentage of the sale price.
Foreclosure
When a homeowner can’t keep up with their mortgage payments, the lender can get court approval to take back the property and sell it to recoup their money.
Power of Sale
This term is often used interchangeably with foreclosure, but they’re different. Power of Sale is a clause in your mortgage agreement that allows the lender to sell the property without a court’s intervention if you default on payments. There are court oversee Power of Sales, but let’s not get into the weeds now. It’s a speedier process compared to foreclosure that most A-lenders in Ontario prefer to pursue over foreclosure.
Hang In There, You’ve Got This
The world of real estate is vast, and understanding key terms is your first step towards mastering it. This list is just the tip of the iceberg, so as you learn and grow keep this list on hand so you can refer back, and soon you’ll be navigating real estate discussions like a pro. Knowledge is power, after all, so congrats on powering up your game today!
…May your real estate journey be smooth and your transactions be ever in your favour.
