Closing: This is the date on which a buyer officially becomes the owner of the house. Closing typically takes place at the title company, and all parties (buyer & seller) must be present or have someone represent them through Power of Attorney.
Closing Costs: Fees that are associated with obtaining a mortgage. Closing costs are the buyer’s responsibility and are paid at the closing of a real estate transaction.
Closing Fee: The fee that a title company charges to close at their office. The closing fee is separate from the closing costs and can be paid by the buyer, the seller, or split evenly.
CMA: Comparative Market Analysis or Competitive Market Analysis. Report showing the value of a house. Uses statistics that include days on market, current & historical sale prices, upgrades, and other market factors.
CNE®: Certified Negotiation Expert. Real estate agent designation awarded to an agent who has undergone extensive negotiation training specific to real estate.
Commission: A percentage of the contract price of a home paid to the listing agent and buyer’s agent at closing. This amount is negotiated by listing agent and seller. The full amount is paid by the seller; in other words, buyers do not pay agents’ commission.
Contingency: One event will only occur if another event occurs. This condition is typically found in contractual agreements between a buyer and a seller when a buyer has to sell their current home (Sale 1) before they are able to purchase the next one (Sale 2). In other words, Sale 2 will only occur if Sale 1 occurs.
Contract: A legally binding agreement between two parties. In order to have a valid Contract of Sale in real estate there must be: an offer, an acceptance, competent parties, consideration, legal purpose, written documentation, description of the property, and signatures of the principals.2
DOM: Days on Market. The number of days a home has been on the market. This variable is often used to analyze market conditions and determine pricing when a house is going to be listed or needs a price reduction.
Down Payment: The amount of money a buyer pays upfront in order to purchase a property. It is paid at the signing of the loan documents at closing.3
Earnest Money: After an offer is accepted, the buyer will typically provide a deposit demonstrating their good faith and intention to purchase the home. The earnest money deposit may be about 1% of the purchase price of the home, and is agreed upon in the Purchase Agreement. Typically, the listing agent’s brokerage will hold the deposit in escrow and the buyer will get it back at closing.
Easement: A right to cross or otherwise use someone else’s land for a specified purpose. A utility easement on a property means that the city must have access to that section of land, and a homeowner cannot put a fence on the easement.4
Fixture: Anything fastened or attached to the house that is part of the sale. Once an appliance has been connected to utilities, it can be considered a fixture. Fixtures may include underground storage tanks, landscaping, furnaces, sprinkler systems, and water softeners. It is generally a good idea to talk to your agent before removing a fixture from your home.
FSBO: For Sale By Owner. Sometimes pronounced “fiz-bo.” The owner of the house has chosen to sell without using the professional services of a real estate agent.
- Pre-Qualified: A quick run of credit, income, and debt. This is the preliminary step to determine whether someone may be eligible for a loan, and what type would be most suitable.
- Pre-Approved: An in-depth look at the buyer’s credit, income-debt ratio, and other factors that make them strong candidates for the loan.
- Official Application: Once the seller accepts the buyer’s offer, the buyer can officially apply for a loan. Usually, this application must be made within 3 days of the offer acceptance. It typically takes 30-45 days for the loan to be approved.
- Cleared to Close: The loan has been approved and is ready to close! The closing is then scheduled.
Listing: A property that is available for sale on the Multiple Listing Service.
- Active: Status of a listed house. The house is available for purchase and the seller is accepting offers. The house is available for showings.
- Active + C: Status of a listed house. Active with contingency. The seller has accepted an offer, but may take backup offers in case the first offer falls through (ex: the mortgage is not approved or there are problems with home inspections). The house is available for showings.
- Pending: Status of a listed house. The seller has accepted an offer and the sale is in process. The house is not on the market during this period, which can last from 30-45 days or longer depending on the type of sale.
- Sold: Status of a listed house. The transaction has closed successfully and the house is officially off the market.
- Expired: Status of a listed house. The seller’s contract with a real estate agent has ended and the house has not sold. The house is off of the market.
- Withheld: Status of a listed house. The house is temporarily off of the market for a period of 30 days.
- Released: Status of a listed house. The seller and agent have mutually agreed upon ending their listing contract. The house is off of the market.
Possession: Move-in day! The buyer can move into the new home on this date. Possession can be the same day as closing, but may be different depending on each party’s situation (ex: the seller still needs to close on their next house before they move out).
Real Estate Agent: Someone who is licensed to help people buy or sell commercial or residential real estate (may also be referred to as a real estate salesperson). They are not held to the same standards and Code of Ethics as a Realtor®.
Do you have questions about other real estate terms that have not been listed here? Text your question to 317-662-0858 or use our contact form!