Real Estate terms that can sound  like jargon, but have actual meaning . . .

Adjustable rate mortgage (ARM): A type of mortgage loan whose interest rate is tied to an economic index, which fluctuates with the market. Typical ARM periods are one, three, five, and seven years.

Annual percentage rate (APR): The total costs (interest rate, closing costs, fees, and so on) that are part of a borrower’s loan, expressed as a percentage rate of interest. The total costs are amortized over the term of the loan.

Application fees: Fees that mortgage companies charge buyers at the time of written application for a loan; for example, fees for running credit reports of borrowers, property appraisal fees, and lender-specific fees.

Appraisal: A document of opinion of property value at a specific point in time.

Appraised price (AP): The price the third-party relocation company offers (under most contracts) the seller for his or her property. Generally, the average of two or more independent appraisals.

“As-is”: A contract or offer clause stating that the seller will not repair or correct any problems with the property. Also used in listings and marketing materials.

Assumable mortgage: One in which the buyer agrees to fulfill the obligations of the existing loan agreement that the seller made with the lender. When assuming a mortgage, a buyer becomes personally liable for the payment of principal and interest. The original mortgagor should receive a written release from the liability when the buyer assumes the original mortgage.

Back on market (BOM): When a property or listing is placed back on the market after being removed from the market recently.

Balloon mortgage: A type of mortgage that is generally paid over a short period of time, but is amortized over a longer period of time. The borrower typically pays a combination of principal and interest. At the end of the loan term, the entire unpaid balance must be repaid.

Back-up offer: When an offer is accepted contingent on the fall through or voiding of an accepted first offer on a property.

Bill of sale: Transfers title to personal property in a transaction.

Board of REALTORS® (local): An association of REALTORS® in a specific geographic area.

Broker: A state licensed individual who acts as the agent for the seller or buyer.

Broker’s price opinion (BPO): The real estate broker’s opinion of the expected final net sale price, determined prior to the acquisition of the property.

Broker’s tour: A preset time and day when real estate sales agents can view listings by multiple brokerages in the market.

Buyer agency: A real estate broker retained by the buyer who has a fiduciary duty to the buyer.

Buyer agent: The agent who shows the buyer’s property, negotiates the contract or offer for the buyer, and works with the buyer to close the transaction.

Carrying costs: Cost incurred to maintain a property (taxes, interest, insurance, utilities, and so on).

Closing: The end of a transaction process where the deed is delivered, documents are signed, and funds are dispersed.

Commission: The compensation paid to the listing brokerage by the seller for selling the property. A buyer agency agreement may require the buyer to pay a commission to his or her agent.

Commission split: The percentage split of commission compensation between the real estate sales brokerage and the real estate sales agent or broker.

Comparative market analysis: A study done by real estate sales agents and brokers using active, pending, and sold comparable properties to estimate a listing price for a property.

Competitive market analysis (CMA): The analysis used to provide market information to the seller and assist the real estate broker in securing the listing.

Contingency: A provision in a contract requiring certain acts to be completed before the contract is binding.

Continue to show (Show for Backups): When a property is under contract with contingencies, but the seller requests that the property continue to be shown to prospective buyers until contingencies are released.

Contract of sale: An agreement between the third-party relocation company and the seller (transferee) whereby the third-party company purchases property owned by the seller.

Conventional mortgage: A type of mortgage that has certain limitations placed on it to meet secondary market guidelines. Mortgage companies, banks, and savings and loans underwrite conventional mortgages.

Counteroffer: The response to an offer or a bid by the seller or buyer after the original offer or bid.

Credit report: Includes all of the history for a borrower’s credit accounts, outstanding debts, and payment timelines on past or current debts.

Credit score: A score assigned to a borrower’s credit report based on information contained therein.

Curb appeal: The visual impact a property projects from the street.

Days on market (DOM): The number of days a property has been on the market.

Disclosures: Federal, state, county, and local requirements of disclosure that the seller provides and the buyer acknowledges.

Down payment: The amount of cash put toward a purchase by the borrower.

Dual agent: A state-licensed individual who represents the seller and the buyer in a single transaction.

Earnest money deposit: The money given to the seller at the time the offer is made as a sign of the buyer’s good faith.

Escrow account for real estate taxes and insurance: An account into which borrowers pay monthly prorations for real estate taxes and property insurance.

Exclusions: Fixtures or personal property that are excluded from the contract or offer to purchase.

Expired (listing): A property listing that has expired per the terms of the listing agreement.

FHA: Federal Housing Administration.

FHA (Federal Housing Administration) Loan Guarantee: A guarantee by the FHA that a percentage of a loan will be underwritten by a mortgage company or banker.

For sale by owner (FSBO): A property that is for sale by the owner of the property.

Gift letter: A letter to a lender stating that a gift of cash has been made to the buyer(s) and that the person gifting the cash to the buyer is not expecting the gift to be repaid. The exact wording of the gift letter should be requested of the lender.

Good faith estimate: Under the Real Estate Settlement Procedures Act, within three days of an application submission, lenders are required to provide in writing to potential borrowers a good faith estimate of closing costs.

Homeowner’s insurance: Coverage that includes personal liability and theft insurance in addition to hazard insurance.

HUD: U.S. Department of Housing and Urban Development.

HUD/RESPA (Housing and Urban Development/Real Estate Settlement Procedures Act):A document and statement that details all of the monies paid out and received at a real estate property closing.

IDX: (Internet Data Exchange) Allows real estate brokers to advertise each other’s listings posted to listing databases such as the multiple listing service.

Inclusions: Fixtures or personal property that are included in a contract or offer to purchase.

Independent contractor: A real estate sales agent who conducts real estate business through a broker. This agent does not receive salary or benefits from the broker.

Interest rate float: The borrower decides to delay locking their interest rate on their loan. They can float their rate in expectation of the rate moving down. At the end of the float period they must lock a rate.

Interest rate lock: When the borrower and lender agree to lock a rate on loan. Can have terms and conditions attached to the lock.

List date: Actual date the property was listed with the current broker.

List price: The price of a property through a listing agreement.

Listing: Brokers written agreement to represent a seller and their property. Agents refer to their inventory of agreements with sellers as listings.

Listing agent: The real estate sales agent that is representing the sellers and their property, through a listing agreement.

Listing agreement: A document that establishes the real estate agent’s agreement with the sellers to represent their property in the market.

Listing appointment: The time when a real estate sales agent meets with potential clients selling a property to secure a listing agreement.

Listing exclusion: A clause included in the listing agreement when the seller (transferee) lists his or her property with a broker.

Loan: An amount of money that is lent to a borrower who agrees to repay the amount plus interest.

Loan application: A document that buyers who are requesting a loan fill out and submit to their lender.

Loan closing costs: The costs a lender charges to close a borrower’s loan. These costs vary from lender to lender and from market to market.

Loan commitment: A written document telling the borrowers that the mortgage company has agreed to lend them a specific amount of money at a specific interest rate for a specific period of time. The loan commitment may also contain conditions upon which the loan commitment is based.

Multiple listing service (MLS): A service that compiles available properties for sale by member brokers.

Multiple Offers: More than one buyers broker present an offer on one property where the offers are negotiated at the same time.

NATIONAL ASSOCIATION OF REALTORS® (NAR): A national association comprised of real estate professionals.

Net sales price: Gross sales price, less concessions, to the buyers.

Off market: A property listing that has been removed from the sale inventory in a market. A property can be temporarily or permanently off market.

Offer to purchase: When a buyer proposes certain terms and presents these terms to the seller.

Open house (public): When a listing that is on market is available to the public for viewings and showings.

Pending: A real estate contract that has been accepted on a property but the transaction has not closed.

Preapproval: A higher level of buyer/borrower prequalification required by a mortgage lender. Some preapprovals have conditions the borrower must meet.

Prepaid interest: Funds paid by the borrower at closing based on the number of days left in the month of closing.

Prequalification: The mortgage company tells a buyer in advance of the formal mortgage application, how much money the borrower can afford to borrow. Some pre-qualifications have conditions that the borrower must meet.

Principal:The amount of money a buyer borrows.

Principal, interest, taxes, and insurance (PITI): The four parts that make up a borrower’s monthly mortgage payment.

Promissory note: A promise-to-pay document used with a contract or an offer to purchase.

R & I: Estimated and actual repair and improvement costs.

Real estate agent: An individual who is licensed by the state and who acts on behalf of his or her client, the buyer or seller. The real estate agent who does not have a broker’s license must work for a licensed broker.

Real estate contract: A binding agreement between buyer and seller. It consists of an offer and an acceptance as well as consideration (i.e., money).

REALTOR®: A registered trademark of the NATIONAL ASSOCIATION OF REALTORS that can be used only by its members.

Relist: Property that was listed with another broker but relisted with a current broker.

Secondary market: An institutional investment market that purchases mortgages from mortgage lenders.

Sign rider: An additional sign placed on a brokerage yard sign; it may include the agent’s name, “open Sunday,” “contract pending,” “sold,” the new price, and so on.

Special assessment: A special and additional charge to a unit in a condominium or cooperative. Also a special real estate tax for improvements that benefit a property.

Temporarily off market (TOM): A listed property that is taken off the market due to illness, travel, repairs, and so on.

Transaction fee: A fixed amount in addition to commission charged to sellers.

Under contract: A property that has an accepted real estate contract between seller and buyer.

VA: U.S. Department of Veterans Affairs.

VA Loan Guarantee: A guarantee on a mortgage amount backed by the U.S. Department of Veterans Affairs.

Vacate date: The date on which the seller (transferee) vacates the property (generally the date when responsibility for property expense by the transferee ends) and the third-party company assumes ownership for the property through a buyout.

Walk-through: A showing before closing or escrow that permits the buyers one final tour of the property they are purchasing.

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