If you’re just looking at real estate online or you’ve met with an agent already…you’ll quickly learn that real estate has it’s own language. You’ll hear all about putting your home on the MLS, the agent putting together a CMA and “sorry, but that home is already contingent.” Say what!? So today, I’m breaking down real estate lingo.
- MLS: You’ll hear your agent say they will put your house up on the local MLS, and this stands for multiple listing service. This is the central hub where agents share their listings with other agents. It lists everything you would ever want to know about a house…and sometimes more.
- CMA: You’ll also hear your agent say they will put together a CMA for you. This stands for comparative market analysis. This is what your agent uses to find out the home’s value and determine a fair asking price. They do this by using your house as the subject house and use other houses as comps.
- Comps: Comps are properties that recently sold and are extremely similar to the property being analyzed, in terms of square footage, bedrooms, bathrooms, location and overall shape.
- Contingent: When you find a house online that you LOVE and call your agent to tell them about it…then they come back and tell you it’s contingent? That means they are under contract for the property, but it’s dependant on something else happening. It could be contingent on an inspection of the house, on the buyer’s house selling or the appraisal.
- Earnest Money: Once you have reached mutual acceptance on a property, you have to put down a deposit immediately. That’s earnest money. It’s a deposit showing that you are serious and committed to the contract. Assuming everything goes well and as planned, this money will go toward the buyer’s down payment on the house or closing costs. However, the seller will keep the earnest money if the buyer breaches the contract or just gets cold feet toward the end.
- Escrow: This is where earnest money is usually kept. It’s a neutral third party that holds funds and documents before a property is closed. They handle it all for a fee that’s usually paid in the closing costs. They make the transaction happen, using the forms and documents that the agents put together and you signed. This company is also sometimes referred to as a closing company.
- HOA: You’ve probably heard all about the monthly or yearly fees you may have to pay to them an HOA, but what is a homeowners’ association? It’s an organization made up of neighbors who manage the common areas of a neighborhood; think parks, snow removal, pools. They are also responsible for enforcing any covenants, conditions, and restrictions (commonly called CC&Rs) that apply to a property.
- Appraisal: This is a requirement by the lender and is the process of determining the value of the house. This isn’t necessarily the same price as the selling price. It’s just the loan officer making sure the property is worth as much as the loan is for.