Common Real Estate Terms

January 25, 2024

Common Real Estate Terms

Huh, what?! CMA, ARM, Conventional Loan, FHA, HOA - confused yet? Stay calm, we got your back and you’re not alone. Most people are confused with all of these real estate terms.

Check out this great article explaining 14 of the most common real estate terms.

We also want to share a few terms of our own with you:

Commission: The amount of money paid to the buyer's agent (if there is one) as well as the seller's agent (if there is one). These amounts are negotiable and compensate the agent for their work. Keep in mind, that times have changed. In today’s world, a buyer may be responsible for paying some or all of the commission to their agent (buyer’s agent).  

Dual Agency: When an agent represents both the buyer and the seller in the transaction. If this is to occur, it requires permission from all parties involved. You should have or will receive a copy when you begin working with us. By agreeing to dual agency, you also agree to be shown any of our personal listings and any of our offices. Dual agency also means the seller is represented by a different agent within our office/brokerage - and not necessarily myself.

Executed Contract: This means the contract has been signed by all parties involved (usually the buyer and seller). Until the contract is signed by all parties, it is not valid or enforceable so it’s important everyone signs the contract as soon as possible.

REO: Real estate owned or REO is a class of property owned by a lender—typically a bank, government agency, or government loan insurer—after an unsuccessful sale at a foreclosure auction. A foreclosing beneficiary will typically set the opening bid at a foreclosure auction for at least the outstanding loan amount. If there are no bidders that are interested, then the beneficiary will legally repossess the property. This is commonly the case when the amount owed on the home is higher than the current market value of this foreclosure property, such as with a high loan-to-value mortgage following a real estate bubble. As soon as the beneficiary repossesses the property it is listed on their books as REO and categorized as an asset (non-performing asset).

Short Sale: When a homeowner lists their property for sale and the market value is less than the outstanding mortgage balance, it is typically linked to significant declines in the property's market value. Essentially, this means that the seller owes more money to the bank than the current market value of the home. It's a challenging situation for sellers but can present a favorable opportunity for buyers. However, the downside to short sales is that they often take a prolonged period to close (typically 6-12 months), and there's no guarantee of closure as all involved banks must agree to accept less money for the house than what is owed by the seller.

Have a question about a common real estate term? Send an email or call us at (609) 948-4306

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