Let’s Talk Real Estate – Terminology For The Consumer

In the middle of a discussion with a client, have you ever said a term that is common within the industry and could immediately tell that your clients thought, “Huh”?

Regardless if your clients are first time home buyers or seasoned movers, it’s likely they will ask you to clarify a term once or twice throughout the transaction.

Be proactive by downloading and sharing this document with them which highlights the most commonly used, client facing real estate terms from A-Z. Your clients will appreciate the effort and you will be able to speak freely about all things real estate!

Real Estate Terminology  

  • Adjustable Rate Mortgage (ARM) — The interest rate is tied to a financial index making themonthly mortgage payment go up or down over time
  • Annual Percentage Rate (APR) — The percent of interest that will be charged on a homeloan.
  • Appraisal — A report highlighting the estimated value of the property completed by a quali-fied 3rd party. This is typically done for the benefit of the buyer to ensure the property isworth what they are paying.
  • Association Fee/HOA Fee — In addition to a mortgage, certain housing communities such astownhomes have a monthly fee associated with maintaining the common areas and ameni-ties.
  • Balloon Mortgage — A long-term mortgage loan that starts small but has a large paymentdue at maturity.
  • Closing — This is the final meeting where the buyer and seller sign the necessary paper-work, complete the transaction, and release/take possession of the property. Usually therepresenting agents and attorneys attend.
  • Closing Costs — The buyer and seller have expenses associated with the transaction otherthan that of the actual cost of the home. For example, the buyer has a variety of fees duefor obtaining a new loan and the seller must pay commission to both agents.
  • Closing Disclosure — A form that provides the final details about the mortgage loan. It in-cludes loan terms, projected monthly payments, and how much the extra fees will be.
  • Collateral — Something of value (in this case your home) that is held to ensure repaymentof a mortgage or loan.
  • Commission — A percent of the sale price of the home that is paid to agents. The seller payscommission to both the buyer and listing agent.
  • Comparables — Homes in the area of interest that have recently sold that have similar fea-tures.
  • Contingencies — Conditions which must be met in order to close. Contingencies are typicallytied to a date, referred to as a deadline. If the contingency is not satisfied the contract maybe canceled.
  • Counteroffer — The response from the seller in regard to an offer.
  • Debt to Income Ratio — A lender will look at a borrowers debt versus income to determinethe amount of loan they are eligible for and if they can repay their debt plus the home loan.
  • Down payment — A percent of the cost of the property that is paid up front as a part of themortgage.
  • Earnest Money — The deposit made from the buyer to the seller when submitting an offer.This deposit is typically held in trust by a third party. Upon closing the money will generallybe applied to the down payment or closing cost.
  • Escrow — This term has multiple meanings; earnest money is typical held by a third partyuntil closing in “escrow”. It can also be referred to as the time period from when the con-tract is written and accepted by the seller to when the home sale actually closes.
  • Equity — The difference in the market value of a home versus what is owed on the home.
  • FHA — A mortgage that is financed through a private lender and insured by the FederalHousing Administration, often requiring a lower down payment and income to qualify.
  • Fixed Rate — The interest rate will remain the same for the entire life of the mortgage.
  • Home Equity Line of Credit — A loan or line of credit that is determined based on the equityor homes value after subtracting the loans owed.
  • Home Inspection — The process in which a professional inspects the seller’s home for issuesthat are not openly apparent, then creates a report for the buyer to review.
  • Home Protection Plan — An annual service that covers the cost of repairs or replacementsto items covered in the plan; items like stoves, washer/dryers, etc.
  • Hybrid — A loan that starts with a fixed rate period, then converts to an adjustable rate.
  • Mortgage Insurance — Insurance written in connection with a mortgage loan that protectsthe lender in the event the borrower cannot repay their loan. This is usually not required ifthe borrower has 20% or more for the down payment.
  • Mortgage Note — A promise to pay a sum of money at a standard interest rate during a spe-cific term that is secured by a mortgage
  • Multiple Listing Service (MLS) — The national list of real estate properties that are availablefor sale. These are the most reliable sources to receive up-to-date listing information.
  • Pre-Approval — The process in which a buyer must provide a mortgage professional the ap-propriate information on income, debts, and assets that will be used to make the initialcredit only loan decision.
  • Pre-Qualification — Once approved for a loan, this is the process in which the maximum saleprice, loan amount, and month payments are calculated for the borrow. This not a loan ap-proval however, it useful to know prior to searching for a home.
  • Principal — The underlying amount of the loan which is actually borrowed.
  • Property Taxes — These are the taxes that are enforced by the city, town, county, and stategovernment entities. These taxes are included in the total monthly mortgage payment andare held in escrow by the lender.
  • REO — Real estate owned properties or foreclosed properties currently owned by a financialinstitution such as the bank that made the loan to the previous owner
  • Reverse Mortgage — This is specifically for seniors and it allows them to convert the equityin their home to cash.
  • Short Sale — A situation when the seller’s lender is willing to accept an offer and allows thesale to be completed for an amount less than the mortgage amount owed by the seller.
  • Title — A legal document proving current and proper ownership of the property. Also re-ferred to as a Title Deed, this document highlights the history of property ownership andtransfers.
  • Underwriting — The process in which the potential home buyer is evaluated for their finan-cial ability to obtain and repay a loan. This normally consist of a credit check and appraisalof the property.
  • VA Loan — Loans that are given to Americans who have served in the armed forces. Theyare administered by the Department of Veteran Affairs.

Click to download a printable PDF version

12 Action Items to Boost Productivity, Results in 2015

Make these commitments to yourself and your business in 2015 and set yourself up for success.

1. Update your RE/MAX profile. This is critical! Make sure remax.com users and your colleagues sending referrals through RE/MAX Mainstreet are seeing your most current information. You can update both profiles in one spot on Mainstreet. Click the “Your Account” link that appears at the very top of any Mainstreet page, and then click “Profile.”

2. Update your business plan. If you don’t already have a business plan, make it a top priority. If you do have one, schedule now the dates and times when you’ll review and update it throughout the year.Productivity - Button on White Modern Computer Keyboard.

3. Register for R4 in Las Vegas. It’s the best bang for your buck of any convention you can attend. March 2-5, 2015, thousands of RE/MAX Affiliates will get together to share ideas, referrals and fun. And there are dozens of educational sessions to choose from.Register today!

4. Plan your day, every day. Be sure from day to day you know exactly what you’re going to do the moment your workday starts. Having a set daily schedule keeps you from wasting time on unproductive activities.

5. Revisit your website. Is it in need of an overhaul or maybe just some updates? Make sure content is current, including your contact information. Click through every link on the site (or better yet, delegate this to someone) to make sure visitors aren’t encountering any dead links or obsolete information. If you have a contact form, test it to make sure it’s still working as it should be.

6. Restock your promotional materials. Make sure you have plenty of business cards, yard signs, sign riders and any other personalized and branded items you use regularly. Visit Shop RE/MAX at shop.remax.net to browse Approved Suppliers who offer trademark-compliant products.

7. Take time for yourself and your family. Schedule your vacations, and family and personal commitments first, whenever possible. If you’ve given due time and attention to these areas of your life, you’ll be able to focus more on your business when it’s time to work.

8. Take a designation course. Either finish up a designation you’ve started or think about a new direction you might like to take your expertise – new construction, working with seniors, serving military members, specializing in buyer agency. RE/MAX University offers you convenient, 24/7 access to a multitude of designation courses at exclusive pricing.

9. Expand your business. Perhaps it’s the right time to explore opportunities in luxury and commercial real estate. Take time to learn more about The RE/MAX Collection and RE/MAX Commercial.

10. Follow a new source of real estate news. Real estate headlines change rapidly and frequently – just like the real estate industry itself. Staying on top of the latest news can help you get ahead of trends and be a resource for your clients. The RE/MAX Update email you receive Wednesdays is a great start.

11. Read a business book. Ask for recommendations from your colleagues or check the bestseller lists. The right business books can help you stay motivated and give you a new outlook on your business.

12. Consider cause marketing. Consumers continue to prefer brands that support a charity they care about. Make a commitment to a cause you care about and make it part of your business. The Miracle Home and Miracle Property programs for RE/MAX Affiliates, which benefit Children’s Miracle Network Hospitals, are fantastic and meaningful turnkey options.

RE/MAX Affiliates may share this article, provided they do not charge for it and this notice is included. All other rights reserved.

RE/MAX Gold Agent & Team Business Building Plan for 2015

If you haven’t started to plan out 2015 or if you have a plan already in place. This is a great tool to assist you in building your business for 2015.  It’s 14 pages and full of examples of how to plan a successful year.  Simply click and download the entire document.  Once completed, share with your manager or an accountability partner to help keep you on track.