Essential Real Estate Terms You Should Know

by Bonnee Proo 06/09/2019

Home buying and selling can be a complicated process, especially for first-timers. The vocabulary involved will only compound your confusion if you jump right into it without knowing what they mean. Real estate, like other fields, has some terms that are peculiar to it. Before you set out to list your home for sale or seek to buy one, it is good to understand some valuable real estate terms you will encounter in the process. Here are some words you must know when involved in a home purchase:

Appraisal

In the real estate market, every property has unique qualities owing to its different conditions and structures. An appraisal determines the estimated value of a piece of real estate based on specific criteria. Appraisal reports by a certified real estate appraiser are used to resolve mortgage loans and taxation issues.

Contract

A purchase contract is a written document that contains the contract price and other terms of a property sale. The property is said to be 'under contract' when both the buyer and seller have reached an agreement and signed a formal offer and acceptance on the sales price and contingencies.

Listing agent

A listing agent is a real estate specialist operating with a license. They are in the real estate market to help home sellers advertise, market, and sell their homes. They represent the seller during negotiations and charge a commission on the sale.

Buyer’s agent

A buyer’s agent represents the interest of a buyer during negotiations on a home purchase. They usually charge commissions for bridging the gap between the buyer and the seller, but the seller pays the commission.

Debt-to-income ratio

Debt-to-income ratio, or DTI, is an essential factor that mortgage lenders consider before granting you a mortgage for your new home purchase. It shows how much your debt load is. You can calculate your DTI by dividing the sum of your debt expenses and your monthly housing bill by your gross monthly income, and then multiply by 100. Arriving at a percentage higher than thirty-six percent, after calculating your DTI, points to the need for adjusting your budget.

Escrow company

An escrow company functions as an unbiased third party that monitors the transaction process. They ensure that all parties involved follow proper procedures before closing the deal and hold the earnest money until buyers and sellers sign all paperwork.

Earnest money

After a buyer indicates an interest in purchasing a home, a percentage of the selling price is paid immediately to the seller but placed into escrow. This money is called earnest money and indicates the buyer’s serious intent to purchase. If the buyers decide to back out, a contingency in place can help them recover their money. However, when the transaction goes through successfully, the money becomes a part of the buyer's down payment. 

Contingencies

These are conditions that need to be fulfilled for the home sale to go forward. A home appraisal is a common contingency clause. Another is a financing contingency which is the required time frame for a buyer to raise funds to acquire the property. A popular contingency is the length of the closing process. 

Always ask your real estate agent to explain any terms you do not understand so that you can make the right decisions.

About the Author
Author

Bonnee Proo

A Penn State undergrad with an MBA from University of Redlands, I specialize in the sale of new and existing homes in San Diego County. Licensed for 12 years in the Real Estate and Mortgage Banking industries, I have a strong background in Mortgage Banking and Investment property. Prior to real estate. I spent 18 years as a Corporate Accountant specializing in Healthcare and Biotechnology. I’ve always been a "numbers person.” However, my joy comes from working with and helping people make well-versed decisions with sometimes the largest investment they will ever make in their life…their home.


Leveraging my experience over the years, I am known for outstanding client service, available 7 days per week or whenever called upon to assist, execute, negotiate, guide or encourage. I strongly believe it is my duty to not only represent my clients to the best of my ability, but also to educate them throughout every step of the home buying (or selling) process, arming them with topnotch information and market insight so that they are able to make the best decisions possible. I am honest and trustworthy. I wholeheartedly believe that commitments are made to be kept. Also, I am extremely hardworking and knowledgeable about the real estate/mortgage industries and I have an EXCELLENT team of affiliates (lender, escrow, title, inspectors, etc.) with whom I work that are just as hardworking and knowledgeable in their respective lines of work, and always ready to assist.


During my spare time, you will either find me swing dancing or swinging a golf club. I also enjoy walking/hiking or spending time at the gym always working on trying to stay healthy; socializing with friends; and spending quality family time with husband, Phillip and my sassy, little fur-baby, Sadi.


 


AFFILIATIONS


National Association of Realtors (NAR)


California Association of Realtors (CAR)


Pacific Southwest Association of Realtors (PSAR)


Senior Real Estate Specialist (SRES)


San Diego Regional Chamber of Commerce (Ambassador)


East County Chamber of Commerce (Ambassador)


University of Redlands (Alumni Board)


Meals on Wheels (Volunteer)