Decoding Real Estate Jargon

Entering the world of real estate can be an overwhelming experience, especially when bombarded with unfamiliar terminology. To help you navigate the landscape with confidence, I’ve compiled a list of 10 common real estate terms that every homebuyer, seller, or enthusiast should know. Understanding these terms will empower you in making informed decisions throughout your real estate journey, whether you’re buying or selling. 

1. **Appraisal:**
   An appraisal is an assessment conducted by a certified appraiser to determine the fair market value of a property. This valuation is crucial for lenders to establish the loan amount they are willing to provide. A lender will order the buyer’s appraisal… It protects the bank’s interest in the property. Appraisals are a buyer’s right when purchasing with cash, but not required unless you question the property’s value.  
2. **Closing Costs:**
   Closing costs are the fees and expenses incurred by buyers and sellers during the closing of a real estate transaction. These can include loan origination fees, title insurance, and attorney fees, among others. Closing costs are technically the buyer’s responsibility, but buyers often ask for the seller to contribute towards them. In the Middle Georgia area, closing costs are usually equal to approximately 3% of the loan amount, and are in addition to down payment and rate buy-downs.
3. **Escrow:**
   Escrow refers to a neutral third party that holds funds during the real estate transaction. It ensures that both the buyer and seller fulfill their contractual obligations before the deal is finalized. Escrow/trust accounts are highly regulated within the industry with the federal government, who can audit any escrow account. Funds are disbursed only when every party to the transaction can agree on where they go if a transaction terminates.
4. **Fixed-Rate Mortgage:**
   A fixed-rate mortgage is a type of home loan where the interest rate remains constant throughout the entire term of the loan. This provides predictability for homeowners as their monthly payments stay the same. The vast majority of loans issued today are fixed-rate loans.
5. **Home Inspection:**
   A home inspection is a thorough examination of a property’s condition, typically conducted by a professional inspector. It helps buyers identify potential issues and negotiate repairs before finalizing the purchase. This is a cost outside of closing costs, and is an optional but necessary step in buying your home- the licensed/insured inspector will review the property from roof to subfloor to look for latent defects the seller may not even know about. 
6. **Listing:**
   A listing is a property advertisement or description created by a real estate agent and posted on the Multiple Listing Service (MLS). It includes details about the property’s features, price, and other relevant information. While information provided in a listing is reliable, but cannot be guaranteed. I recommend verifying all information you find in a property listing.
7. **Pre-Approval:**
   Before house hunting, it’s necessary to get pre-approved for a mortgage. This involves a lender assessing your financial situation and providing a written commitment for a loan amount, strengthening your position as a serious buyer. The lender will provide you with a preapproval letter to accompany any offer you make on a listing, and will spell out which type of loan you have as well as your preapproval amount.   
8. **Seller’s Market vs. Buyer’s Market:**
   These terms describe the prevailing conditions of the real estate market. In a seller’s market, demand exceeds supply, giving sellers the upper hand. Conversely, in a buyer’s market, there are more properties available than buyers, favoring buyers with negotiation power. While we discuss the market in these terms nationwide, our local market does not always line up with the national standing. Robins Air Force Base along with the large manufacturing industry in Middle Georgia keep our market strong and healthy while larger urban markets may struggle.
9. **Title Insurance:**
   Title insurance protects both the buyer and lender against potential issues with the property’s title, such as liens or legal disputes. It provides peace of mind by ensuring a clear ownership history. Lenders will have title insurance on their interest, but I highly advise all buyers to purchase title insurance- it’s a one time purchase which protects you for the life of your ownership in the property.
10. **Underwriting:**
    Underwriting is the process by which lenders assess the risk of providing a loan. It involves reviewing the borrower’s credit history, financial documents, and the property’s appraisal to determine loan eligibility. Underwriters are different from the lenders we talk to getting preapproved. Underwriters ensure all documents are within compliance.

This is just a sample of some of the words I use every day, so if you’ve heard a word you’d like explained, contact me and I’m happy to answer any of your questions! Buying and selling real estate doesn’t have to be difficult and always depends on who you have working for you. 

If you’re new here, hi! I’m Hope, I am a Georgia native and live in Houston County, GA with my husband, 2 kids, and 3 dogs. I offer over a decade of experience in listing, selling, renting, and investing, and I strive to protect all my clients (including tenants) from predatory practices in real estate. When I’m not selling homes, you’ll find me spending time with my family, reading, listening to music, or playing with the dogs.

I’m a Realtor, an Accredited Buyer’s Representative, and a Military Relocation Professional. I love learning and problem solving… it’s why I love what I do! I inform my clients so that they’re able to make well-informed decisions with fewer regrets.  I’ve worked in real estate full time since 2012 and was raised in a construction family, so it’s what I know best. If you have any questions about real estate in general or about buying, renting, or selling a property, let’s chat!

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