There are plenty of moving parts when it comes to buying and owning a home. It’s no surprise then, that the terms that go along with the process might be a bit confusing. Every industry has its own jargon, and real estate is no different. First, there are legal terms, and then there are the adjectives that real estate listing agents use to make the properties they’re selling sound attractive.
Here are a few commonly used real estate terms.
1. Appraisal — In order to get a loan from a bank to buy a home, you first need to get the home appraised so the bank can be sure they are lending the correct amount of money. The appraiser will determine the value of the home based on an examination of the property itself, as well as the sale price of comparable homes in the area.
2. Assessment or Assessed Value— Refers to the city or county’s opinion of the property’s value. Important note: Assessments impact your property tax rate. Appraisals do not.
3. Closing Costs —For buyers taking out a mortgage loan, closing costs are the expenses and fees associated with the purchase of a home such as, lender fees, title insurance and homeowners insurance.
4. Comparative Market Analysis (CMA) — A CMA report on comparable homes in the area is used to derive an accurate value for the home in question.
5. Highest and best — Also known as “best and final,” represents the best offer you can make the seller. If the seller receives multiple offers, they might call for all the bidders to submit their “highest and best” offer by a set deadline so that they can select among these final offers.
6. Inspection — Prior to the purchase of a house, a professional inspector (certified by ASHI, the American Society of Home Inspectors) investigates the home. The inspector focuses on structural flaws, mechanicals like plumbing and HVAC, and other aspects of the home. The inspector can furnish a written report but cannot quote a price for repairs (they’re not a contractor).
7. Zestimate — A Zillow estimate or Zestimate, is a “fun” tool for home buyers and sellers because it is a free, easy to access tool to get an idea of a home’s value. However, it is important to realize that a Zestimate is no substitute for the services of a skilled real estate agent. It uses a program based on averages that give a general idea of the price of a property, whereas a real estate agent will calculate the value using detailed information and experience.
Words and Phrases
1. Cozy —Snug, comfortable, and homey are the dictionary definitions. But in real estate speak, it means tiny and cramped.
2. Lots of potential — Might mean it’ll only reach its full potential with 100 hours of renovation and a heap of cash.
3. Chef’s kitchen — This usually means the kitchen is a major selling point of the home. But there’s no industry-wide definition of the term, and there’s nothing stopping brokers from advertising a kitchen as such, even if the layout and appliances aren’t so great.
4. Great for entertaining — It’s likely the home has an open floor plan, for example a kitchen that flows into the living room.
5. Unique — Code for hard to sell. If a previous resident painted the walls hot pink, it’s unique, but chances are low buyers will be impressed.