For many first-time homebuyers, knowing common real estate terms can help prevent the feeling of information overload. Once you learn the language real estate agents use, you may feel much more comfortable in your quest to find your dream home.
Here are some helpful real estate terms to know:
Contingent
You’re likely to encounter the term “contingent” when house hunting on major search engines or a multiple listing service.
This word shows up as a status on listings where a prospective buyer or buyer’s agent has made an offer and the property owners, or sellers and seller’s agent, has accepted the offer.
However, contingent status indicates there are additional criteria for the closing of the sale, such as additional home inspections, appraisals or mortgage approval.
Escrow
Escrow refers to a third party temporarily holding on to a portion of money involved in the property sale. The money is typically held in a dedicated escrow account, and during this time the house might be referred to as “in escrow.”
Escrow accounts are a tool used to mitigate financial risk for both the homebuyer and home seller during the real estate transaction.
Earnest money
Earnest money is the money added to an escrow account or trust as a sign of good faith in the transaction. A seller might require earnest money as a way to ensure the buyer is sufficiently motivated and qualified to go through with the purchase.
While it’s often added to the third-party account early in the process, earnest money is entirely different from a down payment.
Appraisal value
There are many types of “value” in the real estate lexicon, but appraisal value specifically refers to the results of a professional appraisal.
The key difference between appraisal value and other property value terms like “fair market value” and “assessed value” is the appraisal value is based on a specific time point (typically during the sale or refinancing process). This means appraisal values can change over time and from one appraisal to the next.
Closing costs
Closing costs are the final expenses due at the end of the home-buying process. Some services you’ll need to pay for as part of the closing costs include credit reports, mortgage insurance, property taxes, homeowners association dues and legal processing fees.
Closing costs are separate from monthly mortgage payments, but are often paid to your mortgage lender.
While these are only a few important terms to know, they can be extremely helpful in understanding both complex and basic real estate concepts. The more you develop your real estate vocabulary, the better your home search experience will be.
For any other real estate terms you may have come across and have questions about, your real estate agent will be able to help break them down into more digestible tidbits.
About the Author
Kimberly Hering
Kimberly Hering's devotion to helping people achieve their real estate goals stems from her genuine enjoyment of the process. Whatever the task, Kimberly makes it her mission to get it done, however she can, without compromising her client's needs. Often, that means thinking outside the box. After working with Kimberly, clients describe her as being Trustworthy, Creative, Patient, Highly Skilled, Attentive to the Process and having a lot of Integrity.
After spending more than 15 successful years working on Wall Street, Kimberly transitioned into Real Estate, joining Alain Pinel Realtors, then moving to Zephyr, now Corcoran Global Living, in 2018. During her career on Wall Street, Kimberly was a Vice President working as an Institutional Equity Salesperson for Montgomery Securities for 10 years. She covered the top money managers throughout the US and Canada. She joined Jefferies & Co as a Senior Vice President managing the Western Region Institutional Sales group, while continuing to cover the top money managers.
Kimberly leverages her extensive experience selling equities to top money managers throughout the US and Canada, to successfully negotiating any Real Estate transaction seamlessly for her clients. Kimberly is well versed in Marin's neighborhoods, towns, cities, and education system.
Living in the Bay Area for 35 years, 25 years in Marin and having 2 sons in local Marin schools, Kimberly spends a lot of time volunteering in the community and serving on various local Boards. Kimberly has a collection of resources ranging from the best local breakfast spots to vetted contractors. With her reliable list of valuable resources, Real Estate experience and unsurpassed knowledge of Marin's many communities, Kimberly can guide her clients through every aspect of a Real Estate transaction seamlessly.
Relocating to Marin, downsizing, upsizing, first time home buying, final home purchase or sale, or a lot to build a dream home, no matter the undertaking, Kimberly works seamlessly until the job at hand is completed with 100% satisfaction.