AAppraisal: An unbiased estimation of a home’s market value by a licensed appraiser to determine whether the home’s contract price is appropriate given the home’s condition, location, features, and on comparable recent sales of nearby homes.
BBackup offer: An offer on a home under contract that becomes active if the primary contract falls through. Some sellers will have more than one backup offer.
CContingent offer: An offer that is accepted by the seller, but certain conditions must be met before the sale is final. For instance, the buyer needs to sell their current home before moving forward with the purchase of the new home.
DDown payment: The percentage of the home purchased price paid upfront in cash. It is a common belief that a buyer needs to have 20% down…NOT TRUE PEOPLE!!! There are programs out there available that require as little to a big fat ZERO to 5%. I’ll get into these more in another post.
EEscrow: A neutral third party that holds funds from the buyer and distributes them when all conditions have been met. Here is really great video by Fidelity Title explaining escrow…and below is a hilarious clip from Portlandia about escrow.
FFiduciary Responsibility: A legal obligation of one party to act in the best interest of another. Or in other terms, MY duty to represent you, my client, and your interests first and foremost.
GGood Faith Estimate (GFE): Replaced with a Loan Estimate (given to buyer at the beginning of the process) and Closing Disclosure Form (given towards end) are required forms used by lenders to give to borrowers with an estimate of fees due at closing. More info here.
HHome Owners Association (HOA): A management organization within a community, subdivision or neighborhood that creates and enforces rules for properties within its jurisdiction. There is usually a monthly or annual fee for this and a buyer should understand the rules and regulations of an HOA before purchasing.
IInspection: An examination of a property and its systems performed by a qualified professional, usually before the sale of a home. In Oregon, we have a standard 10 day inspection period, however, it can be shortened or extended when agreed on by both parties.
JJumbo mortgage: A mortgage that exceeds the conforming-loan limit.
KKey rate: An interest rate set by the federal government that determines the cost to borrow money—in this case, a mortgage to buy a new home. Check BankRate.com for current mortgage rates.
LLoan-to-value (LTV): The risk assessment ratio used by lenders. To calculate the LTV, divide the mortgage by the appraised value.
MMultiple Listing Service (MLS): A database for real estate agents to list and market for-sale homes. This is where sites like Zillow, RedFin, individual, and brokerage get their information on listings.
NNet proceed: The amount received by the seller at closing after all other costs have been deducted.
OOpen house: An event hosted by a listing agent to showcase a home to potential buyers. When a listing is new to the market a the listing agent can also host a “brokers open” which in Portland is on Tuesday, mid-day and encourages other brokers to preview your house.
PPrincipal:The amount of money borrowed to purchase a home. Paying off the principal allows a buyer to build equity in a home. Principal is combined with interest to determine the monthly mortgage payment.
QQuitclaim deed: A deed that transfers property rights without any validation of ownership; typically used between spouses and family members. Think, inter-family property transfer or adding to the deed.
RReal estate owned (REO) property: A repossessed property owned by a lender after an unsuccessful sale at auction.
SSeller disclosure: A document completed by the seller disclosing the property’s history and defects. Here’s a great article going over seller disclosures.
TTitle: The right to ownership of real property recognized and protected by the law.
UUnder contract: A buyer has submitted an offer and the seller has accepted, but the closing is not final.
VVA loan: A mortgage loan for veterans and their spouses, made by private lenders and guaranteed by the U. S. Government.
W Walkthrough: The final inspection conducted before a home sale is final. I personally do these and encourage my buyers to join me.
XX marks the spot: Where you sign for your dream home! -I know this one’s corny, but what else do you use for X?
YYou can be a homeowner! So many people think it’s not attainable for them or will cost more than renting. Let’s figure it out together and make it happen!
ZZero lot lines: A residence build very close to—or directly on—the property line.
Article adapted from Zillow’s Handout: The ABCs of Real Estate.