Navigating the real estate market can be daunting, especially with all the industry-specific jargon. To help you get started, here are 20 essential real estate terms explained in simple terms.
Real Estate Terms and Definitions
- Appraisal: An evaluation of a property’s value conducted by a professional appraiser.
- Balloon Payment: A large payment due at the end of a loan term after smaller, regular payments.
- Broker: A licensed individual who facilitates real estate transactions between buyers and sellers.
- Closing: is the final step in a real estate transaction where property ownership is transferred.
- Commission: The fee paid to a real estate agent or broker for their services, usually a percentage of the sale price.
- Comparative Market Analysis (CMA): An analysis used to determine a property’s value based on similar, recently sold properties in the area.
- Contingency: A condition that must be met for a real estate contract to become binding.
- Deed: A legal document that transfers property ownership from one party to another.
- Down Payment: The initial payment made when buying a property, usually a percentage of the total price.
- Earnest Money: A deposit made by a buyer to show serious intent to purchase a property.
- Easement: A right to cross or use someone else’s land for a specific purpose.
- Escrow: A neutral third party that holds funds or documents until certain conditions are met in a transaction.
- Fair Market Value: The price a property would sell for on the open market.
- Foreclosure: is the legal process where a lender takes ownership of a property due to the borrower’s failure to make mortgage payments.
- Homeowners Association (HOA): An organisation
- in a condominium or planned community that makes and enforces rules for the properties within its jurisdiction.
- Inspection: An examination of a property’s condition, typically conducted by a professional inspector.
- Interest: The cost of borrowing money, expressed as a percentage of the loan amount.
- Lien: A legal claim against a property as security for a debt or obligation.
- Listing: A property that is for sale, represented by a real estate agent or broker.
- Loan-to-Value Ratio (LTV): The ratio of a loan amount to the appraised value of the property.
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Conclusion
These real estate terms are fundamental for anyone involved in real estate transactions. Understanding them will help you make informed decisions and communicate more effectively with professionals in the industry. Stay tuned for the next parts, where we will cover more crucial real estate terminology.