It can be confusing to enter the world of real estate and have no idea what anything means. That’s exactly why we created this short list of real estate terminology you’ll hear from brokers whether you’re buying a new construction home or selling a home you’ve treasured for years.
Crash Course of Need-To-Know Real Estate Terminology:
The Multiple Listing Service (MLS) is a tool to help listing brokers find cooperative brokers working with buyers to help sell their clients’ homes. In our area, we use the NWMLS or Northwest Multiple Listing Service.
An escrow is a legal agreement in which a third party controls money or assets until two other parties involved in a transaction meet certain conditions. Think of escrow as a mediator that reduces risk on both sides of a transaction – in this case, the sale, purchase, and ownership of a home.
A contingency clause defines a condition or action that must be met for a real estate contract to become binding. A contingency becomes part of a binding sales contract when both parties, the buyer and the seller, agree to the terms and sign the contract.
A purchase and sale agreement (PSA) is an agreement between a buyer and a seller of real estate property.
- Earnest Money
Earnest money is a deposit made to a seller that represents a buyer’s good faith to buy a home. The money gives the buyer extra time to get financing and conduct the title search, property appraisal, and inspections before closing.
Pending simply means that a buyer submitted an offer and the seller accepted. This means that the home is basically sold, but the deed and title haven’t been passed on yet. Most offer letters include clauses stating that the home seller can’t cancel the sale if a higher offer comes in.
Closing (also referred to as completion or settlement) is the final step in executing a real estate transaction. On the closing date, ownership of the property is transferred to the buyer. In most jurisdictions, ownership is officially transferred when a deed from the seller is delivered to the buyer.
A pre-approval is a preliminary evaluation of a potential borrower by a lender to determine whether they can be given a pre-qualification offer.
Real estate appraisal, property valuation, or land valuation is the process of developing an opinion of value for real property. Real estate transactions often require appraisals because they occur infrequently, and every property is unique.
A feasibility study in real estate is the analysis you conduct before undertaking development to find out if it is viable. When you are doing a feasibility study, you look at the proposed location for the development and the conditions impacting the project.
This guide should help you be more familiar with the real estate process but remember your real estate broker is there to help you navigate buying and selling your home so they are a valuable resource, too. If you are ready to find your next home, check out our home search feature on our website or reach out today.