A Dictionary Of Real Estate Marketing Terms You Should Know Before You Buy A House

The real estate industry is a unique one, as it requires its own set of specialized terminology to really understand the industry. That being said, if you’re not involved with real estate at all, then most of these terms will probably be foreign to you. Luckily, we’ve compiled a list of some real estate marketing terms that are important for almost anyone to know before they buy a house. If you’re curious about any particular term and want to know more about it, just continue reading.

Seller’s Market

The seller’s market is the current state of the housing market where there are more buyers than sellers, so sellers have the upper hand and can list their homes at a higher price.

Short Sale

A short sale is a transaction where a home is sold for less than the outstanding mortgage balance.

Listing Agreement

A listing agreement is an agreement between the seller and their agent that spells out commission, terms and conditions.

Closing Costs

Closing costs are any fees paid to third parties associated with buying or selling a home.

Escrow Account

An escrow account is used to hold money in trust during a real estate transaction.

Appraisal

An estimate of a property’s value, usually conducted by a licensed professional appraiser, which is sometimes required by lenders in order to approve a loan. The appraisal gives them peace of mind that they won’t lend more than what a property is worth

Contingency Clause

Contingencies are conditions put in place before the closing date of the sale.

Down Payment

A down payment is money given to secure a mortgage loan.

The down payment is the amount of cash you pay for your home at the time of closing. A typical home loan requires a 20 percent down payment, but conforming loans will accept a 5 percent down payment, and FHA loans will accept a 3.5 percent down payment.

Credit Score

Is a summary of your credit history based on your payment history, the amount of debt you have, the length of your credit history and the types of credit you have.

A three-digit number used to gauge the creditworthiness of people applying for loans. The higher the number, the better your score and the easier it is for you to get a loan or credit card at favorable rates. If you have a low credit score, it may be more difficult to qualify for a mortgage.

Amortization

Amortization is the length of time it will take you to pay off your mortgage loan, based on the size of each payment and the interest rate. A shorter amortization period will mean higher monthly payments, but you’ll pay less interest in the long run.

Mortgage Rate

A mortgage is an agreement between you and a lender that gives the lender the right to take away your home if you don’t pay back what you owe. Mortgages are used when people buy a house, or use the value of their house as collateral for a loan.

Pre-Approval Letter

A pre-approval is a first step to getting a mortgage. It’s when a lender looks at your financial situation to see if you can get a pre-qualification letter from them.

APR

Annual Percentage Rate: The true cost of a mortgage loan expressed as a yearly interest rate.

Equity

The difference between the value of a property and any debts or liens against it.

Deed

The legal document that provides ownership information about the property.

Under Contract

A home is “under contract” when a buyer has submitted an offer to a seller, who has accepted it but not yet closed the deal.

VA mortgage

The Department of Veteran’s Affairs provides guarantees on home loans to service members, veterans, and eligible surviving spouses. This guarantees a portion of the loan, which leads to more favorable terms for the borrower.

Title

When a real estate transaction is complete, those rights are transferred from the seller to the buyer and give the buyer legal ownership of his or her new home.

Transfer of Ownership

The transfer of ownership is the process by which a property’s deed and title are transferred from the seller to the buyer at closing.

FHA mortgage

The Federal Housing Administration (FHA), created in 1934, helps first-time homebuyers by insuring loans, making it easier for lenders to offer low down payments and other benefits.

Fixed-rate mortgage

A fixed-rate mortgage is a loan with an interest rate that stays the same for the lifetime of the loan. This type of mortgage gives you more stability and predictability over the lifetime of your loan, but your monthly payments can fluctuate as property taxes and homeowner’s insurance change.

For sale by owner

FSBOs are homes being sold without the help of a real estate agent. The biggest benefit to the seller is that they avoid paying commission fees. However, there are a few benefits for the buyer.

Foreclosure

If a homeowner doesn’t make a mortgage payment for more than 90 days, foreclosure is the process by which the owner loses all rights to the property. If they are unable to pay off the outstanding debt or sell it via short sale, the lender takes control of the property at auction.

Some Highlights

Don’t let the jargon of the housing market get you down. Here are some common real estate marketing terms used in home buying, along with definitions and tips for using them to your advantage. Hope this real estate terms 101 helps you more familiarize with some of the common real estate marketing terms used in home buying.

Work with a real estate professional who can provide you with all of the information you need to make an informed decision.