In the world of real estate, you’ll often hear words that aren’t common in daily life. We’ve put together this guide to help you understand our industry jargon!
If you are curious about a term you’ve heard that’s not on here, or have any questions about real estate, feel free to contact us! We’re happy to answer all your questions!
Real Estate Vocabulary:
Closing costs — A variety of expense associated with the purchase and sale of a home, such lender fees, title insurance, appraisal fees, homeowners insurance, and taxes.
Commission — A fee charged by a real estate agent for their services and expertise. In most cases, the seller pays the commission to his agent and the buyer’s agent
Contingency — Certain criteria must be met before a sale can close. Common contingencies include home inspection, financing, and home appraisal.
DTI — Debt-to-Income. This is the total percent of a borrower’s income that is paid toward debt each month. It is calculated as a ratio of a borrower’s gross monthly income over their debts (such as car payments, student loans, and credit card bills).
Earnest money deposit — Earnest Money is similar to a security deposit placed down by the buyer on the property. Depending on the price, location and terms agreed upon, the buyer and seller negotiate the amount offered as Earnest Money. There are terms surrounding what may or may not happen to these funds in the event of default, so please be sure to review your contract for full understanding. Of course, you can always contact us for more details!
Escalation clause — In order to make a competitive offer, a buyer may use an escalation clause where they state an amount they will increase their offer by if another offer is received that is higher than theirs.
Escrow — A neutral third party who handles the money and documents of the buyer and seller before a home closes.
Exclusive – You’ve probably seen this on many real estate signs. This means that the agent has the exclusive right to sell the property within a specified number of months. This motivates the agent to sell the property quickly for the highest price possible.
FIRPTA – Foreign Investment in Real Property Tax Act of 1980. If you buy U.S. real estate from a foreign person, you may be required to withhold 10% of the amount realized from the sale. This doesn’t apply for purchasing a residence for $300,000 or less.
MLS — Multiple Listing Service. The local real estate service that compiles available properties for sale submitted by real estate agents. The MLS can only be accessed by real estate agents and is the best way to get your home sold and to find a home to buy because it’s the most accurate and up-to-date way to search homes!
Pre-qualified vs. Pre-approved — When looking to buy a house, the first step is to get pre-qualified. This is where you give the lender a general overview of your financial situation and they give you an informal estimate of what you can afford. Getting pre-approved is the second step. This is where the lender will check your financial background and determine your creditworthiness. It’s important to complete both steps before looking for a home so you can shop for what you can afford and you’ll be one step closer to getting an actual mortgage when you submit an offer!
Title – legal right to ownership of property.
Title insurance — Insurance that compensates the buyer or lender if title issue arise after closing such as title defects, liens, or competing claims of ownership on a property.
Around the Home:
Chef’s Kitchen – A kitchen equipped for a professional chef or someone desiring to cook like one! A chef’s kitchen generally includes:
- A Sub-Zero fridge and freezer
- A gas cook range with a high Btu (British thermal unit which allows for large, hot flames)
- Room for multiple people to cook
- Multiple ovens
- Warming drawers
- Deep sinks
- Multiple dishwashers
Ensuite – a private bathroom attached to a bedroom
Roof Terms –
- Soffit – the exposed siding underneath the roof’s overhang
- Fascia – the area of siding directly above the soffit
- Guttering – the trough fixed beneath the edge of a roof to carry off rainwater
- Bargeboard – the board fixed to the end of a roof to hide the ends of the roof timbers