10 Real Estate Terms: Which Ones Do You Know?

Each field has its own terms to imply a specific information. So as real estate. If you are realtors or working in real estate agents, you must have a good understanding of real estate terms, from that you can address real estate-related questions from homebuyers and sellers. If you are not sure which terms you should know, check out our 10 essential real estate term below.

10 Real Estate Terms Every Agent Should Know

1. Adjustable-rate mortgage (ARM)

An adjustable-rate mortgage (ARM) is a type of mortgage which allows you to have interest rates change periodically. A home buyer with an adjustable-rate mortgage will have lower initial interest rate for a period of time. After this period of time, the interest rate will change monthly, even yearly.

2. Amortization

Amortization is refering to the schedule of your monthly mortgage loan payments. At first, you will mainly pay for interest and a small portion for pricipal. As you continue to make your payments, the interest amount will decrease and your payment will mainly focus on the mortgage balance. The lower the principal, the lower the interest on the principal.

3. Appraisal

An appraisal in real estate refers to the process to estimate the real value of a property by real estate agents. An appraisal is held by a lender to ensure that the amount being requested for the loan reflects the property’s fair market value.

4. Buyer’s agent

Buyer’s agent is legally licensed to support home buyers. They represent the buyers to negotiate for the best price, provide information around the house for buyers. All they do is to help buyers have a good deal!

5. Closing

Closing means closing date when the buyer and seller gain approval in the negotiation process. The deal is closed with all payment made. And the ownership of the property belongs to the buyers. They can start moving in or renovating the property.

6. Closing costs

Closing costs are the fees incurred by either the buyer or seller. They are made to finalize a real estate transaction. Appraisal fees, taxes, loan origination fees, credit report fees, title insurance,… are included in closing cost.

7. Property deed and title

Many people consider deed and title are the same. However, in fact they are two separate legal concepts. Deed is a physical, legal document signed by both the buyer and the grantor or seller. It is used to confirm the property ownership of the new owner. It usually includes a description of the property and identifies the grantee (buyer) and grantor (seller) of a specific transaction. On the other hand, title is a legal concept , not document, to state the rights to use the property.

8. Down payment

Down payment refers to the the amount of money which homebuyers have to pay during te housing period. A common down payment amount is 20% of the total purchase price upfront. However, some lenders only require 3 percent or even no down payment at all.

9. Escrow

Escrow is a legal concept describing a financial instrument which a third party holds something of value (often the buyer’s earnest money check). Normally, Escrow is used when two parties are in the process of completing a transaction, and there is uncertainty over whether one party or another will be able to fulfill their obligations. The third-party holds the funds until both parties have fulfilled their contractual requirements

10. Fair market value (FMV)

Fair market value is the common term in real esate. It is the price of the property when both buyers and sellers who are knowledgeable about the dwelling but still willing to pay.

These are some common terms in real estate market and there are still a lot of terms which we should know about. Understanding all the term is the key to help you have a great communication with your clients and from that shorten your home selling process.