Essential Real Estate Terms To Guide You in Your Home Search
Real estate is such a vast and complex industry. It plays a vital role in modern society, providing people with homes, land, offices, and commercial spaces.
However, the real estate market can be intimidating, especially for first-time buyers or investors. In this blog, we will explore some of the most common real estate terms to help you navigate the market with confidence.
What Is The Difference Between A Real Estate Agent And A Real Estate Broker?
A real estate agent is a licensed professional who helps people buy, sell, or rent properties. They have knowledge of the local real estate market and can guide clients through the buying or selling process.
A real estate broker on the other hand is a higher-level of real estate agent who is licensed to own their own real estate firm. A real estate broker can aid people with real estate transactions and, like an agent, can help with the sale or purchase of real estate. If you're preparing to sell or buy a home, either a broker or an agent will be able to help you out legally.
In a nutshell: A real estate agent is licensed to assist customers in buying and selling real estate and receives a sales commission when a deal is successfully closed and. They can represent either the buyer's or seller’s side. A real estate broker performs the same duties as real estate agents but can work independently and hire agents for their own firm.
What is a Mortgage?
A mortgage is a loan that is used to buy a property. The borrower agrees to pay back the loan, plus interest, over a set period of time.
An initial deposit—a one-time payment made toward the cost of a property—is often required when you purchase a home. A mortgage can be used to cover the balance of the cost of your house. Your property will be yours, but in order to retain it, you'll need to make mortgage payments on a regular basis.
The lender will charge interest as part of your regular mortgage payments as compensation for letting you borrow money. The mortgage interest rate, which is expressed as a percentage of the total amount you still owe, determines how much interest you will pay.
What is a home inspection?
A home inspection is a thorough examination of a property's structure and systems, including plumbing, electrical; Heating, Ventilation, and Air Conditioning or HVAC. It is conducted by a licensed home inspector and can uncover any issues that may need to be addressed before the sale is finalized.
A good home inspection can provide important details on the state of a house and its systems. This lets the buyer know what expenses, upkeep, and repairs the house might need both now and in the future.
What is a title search?
A title search is an examination of public records to ensure that the seller has a legal right to sell the property and that there are no liens or other claims against the property.
This initial step is just to identify the owner of the property you wish to purchase. It is important because, first, it's possible that the present owner isn't even aware of a previous title dispute. Second, since mortgage liens and other debts, as well as easements and restrictive covenants, follow the property, not the owner, the debts of any prior owners may come back to haunt you.
What is a closing?
Closing is the final step in the buying or selling process, during which the buyer and seller sign all necessary documents and transfer ownership of the property.
The timeline between making an offer and closing a sale can vary. The typical time to close for mortgage-financed house purchases is 50 to 51 days, according to ICE Mortgage Technologies, a platform for mortgage consulting and technology. Closings could, however, take as little as 30 days, particularly in all-cash transactions.
One process that frequently takes the longest in mortgage closings is securing the mortgage. Applying for a mortgage preapproval before you begin house hunting will speed up the closing process because some of the verification procedures will have already been performed.
What is a home warranty?
A home warranty is a service contract that covers the repair or replacement of major home systems, such as HVAC or plumbing, for a set period of time after the sale.
Imagine you have been enjoying a new dishwasher that you bought last year till the manufacturer's warranty runs out. If you don't have a home warranty, fixing or replacing it could cost you hundreds or even thousands of dollars.
If you have a home warranty, you can submit a claim online or through our customer support staff of your home warranty company, and they'll handle the rest. After they get your claim, they'll put you in touch with a qualified repair provider to evaluate the issue, and your appliance or system will be fixed as soon as they can.
What is pre-approval?
A pre-approval is a letter from a lender stating that you are approved for a certain amount of mortgage financing. It can help you determine your budget when shopping for a home.
If you are pre-approved, you will receive an acceptance letter offer that, depending on the lender, is valid for 60 to 90 days. You will then need to reapply with new documentation and a new credit pull. Your preapproval limit may also change if there are any significant alterations to your financial position.
While you can view homes without preapproval, it is best to get one early on in the home-buying process. You can learn whether there are any concerns that would make it difficult for you to obtain finance with this method.
What is earnest money?
Earnest money is a deposit made by the buyer to show that they are serious about purchasing the property. It is typically 1-3% of the purchase price and is held in escrow until the sale is finalized.
In the event that a buyer discovers a problem with the property or decides to back out of the contract, earnest money can safeguard both parties. Going above and beyond by obtaining Verified Approval or putting down an earnest money deposit can help demonstrate to a seller that you are serious about your offer, differentiating your offer from that of other buyers.
What is a contingency?
A contingency is a condition that must be met before the sale can be finalized, such as a satisfactory home inspection or appraisal.
In the event that the terms are not met, a contingent contract allows both parties some leeway. According to Carlos Del Rio, a real estate lawyer, contingency clauses "safeguard buyers and sellers by giving them the right to cancel a contract if the terms aren't met."
What is an appraisal?
An appraisal is an evaluation of a property's value, conducted by a licensed appraiser. It is used to determine how much the property is worth and how much the lender is willing to lend.
Your home's evaluated value is essentially a neutral and accurate estimate. For buyers, sellers, and lenders alike, a precise estimate of a home's value is advantageous. Whereas lenders can recognize a good deal, sellers can ensure they're asking the right price for the home.
What is a multiple listing service (MLS)?
An MLS is a database of properties for sale that is shared among real estate agents. It allows agents to easily find and show properties to their clients.
Marketing your home effectively means getting it in front of as many people as you can. And when you join an MLS, that is precisely what takes place. A skilled real estate agent will employ a number of techniques, including the MLS, to secure a great deal for their client.
What is a home equity loan?
A home equity loan is a loan that allows homeowners to borrow against the equity in their home. The loan is secured by the property and can be used for a variety of purposes, such as home improvements or debt consolidation.
What is a foreclosure?
A foreclosure is a legal process in which a lender takes possession of a property from a borrower who has defaulted on their mortgage payments.
What is a short sale?
A short sale is a sale of a property in which the proceeds are less than the outstanding balance on the mortgage. It is typically used as a way to avoid foreclosure.
What is a home equity line of credit (HELOC)?
A HELOC is a line of credit that allows homeowners to borrow against the equity in their home. It is similar to a credit card in that the borrower can draw on the line of credit as needed, up to a certain limit.
Understanding real estate terms is essential for home buyers to navigate the complex process of buying a home. By familiarizing yourself with common terms such as appraisal, closing, and preapproval, you, as a home buyer, can make informed decisions and avoid potential pitfalls.
With the right knowledge and guidance, home buying can be an exciting and rewarding experience.
Let us help you
Got any questions with regards to real estate? The Skye Group Atlanta is a full-service real estate firm located in Atlanta, Georgia. We specialize in helping people buy or sell residential or commercial properties, and we also help our clients with financing.
Contact us today:
Call us at (770) 312-0538
Email us at info@skyegroupatl.com
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