ABCs of Real Estate
Everyone knows their ABCs, right? Well here at Advon, our industry leaders want to teach you the ABCs or Real Estate to help guide you home.
real estate business agent handing out house key of a new apartment
A| Appraisal: An estimation of a home’s market value by a licensed appraiser based on comparable recent sales of homes nearby.
B| Backup Offer: A secondary offer on a home that is under contract and becomes active if the primary contract falls through.
C| Contingent Offer: An off is accepted by the seller, but certain conditions must be met before the sale is final.
D| Down payment: The percentage of the home purchase price (usually between 5%-20%) paid upfront in cash.
E| Escrow: A neutral third party that holds funds from the buyer and distributes them when all conditions have been met.
F| Federal Housing Administration (FHA): The government agency that insures loans designed for low to moderate income borrowers.
G| Good Faith Estimate (GFE): Provided by the lender to a borrower, GFE was an estimate of fees due at closing. New Mortgage rules in 2015 replaces this form with one called a Loan Estimate.
H| Home Owner’s Association: A management organization within a community, subdivision or neighborhood that creates and enforces rules for properties within its jurisdiction.
I| Inspection: An examination of property and its systems performed by a qualified professional, usually before the sale of a home.
J| Jumbo Mortgage: A mortgage that exceeds the conforming-loan limit, commonly used for luxury home purchases
K| Key rate: An interest rate set by the federal government that determines the cost to borrow money- in this case, a mortgage to buy a home.
L| Loan to Value (LTV): The risk assessment ration used by lenders to calculate the LTV, divide the mortgage amount by the appraised value
M| Multiple Listing Service (MLS): A database for real estate agents to list and market for-sale homes.
N| Net proceeds: The amount received by the seller at closing after all other costs have been deducted.
O| Open House: An event hosted by a listing agent to showcase a home to potential buyers.
P| Pre-approval letter: A letter indicating that a lender is willing to loan a specific amount of money for a home purchase; pre-approval does not guarantee a loan.
Q| Quitclaim deed: A deed that transfers property rights without any validation of ownership: typically used between spouses and family members.
R| Real Estate Owned (REO) property: A repossessed property owned by a lender after an unsuccessful sale at auction.
S| Seller disclosure: A document completed by the seller disclosing the property’s history and defects.
T| Title: The right to ownership of real property recognized and protected by the law.
U| Under Contract: A buyer has submitted an accepted offer, but the closing is not yet final.
V| VA loan: A mortgage loan for veterans and their spouses, made by private lenders and guaranteed by the US Government.
W| Walkthrough: The final inspection conducted before the sale is final.
X|X marks the spot: Where you sign on the dotted line for your dream home.
Y| Yield-Spread Premium (YSP): The amount a lender pays a mortgage officer for selling a loan with a higher interest rate than the par rate.
Z| Zero lot lines: A residence built very close to- or directly on- the property line.
