Understanding Real Estate Lingo

There are many terms thrown around in the world of real estate. 

If you are not exactly sure what most of them mean,  

YOU ARE NOT ALONE!

I get a lot of questions like... "What exactly does escrow mean?" or "Wait, does ratified mean we are under contract??"

My goal is to have you understanding these terms, and how they affect you...

Escrow - I get the most questions about escrow, and I hear it explained many different ways. To put it simply, escrow is a neutral third party that works with the buyer, seller, agent, and lender to carry out all of the terms and conditions regarding the sale of a property. The escrow deposit is received from the buyer to be put towards the future purchase of the home, and is held in an escrow account until the day of closing. 
          Why is escrow so important? A home is one of the largest purchases most people will make in their lifetime. It is good to have a neutral third party to hold both the buyer and seller accountable to all the agreed upon terms of the contract.

Ratified - If you have ever heard "Congrats on your ratified contract!" That simply means... "Congrats! The buyer or seller has accepted your offer and both parties have signed on the dotted line". So congrats! You are officially under contract! When you hear ratified, think - finalized and official. If you have a verbal contract, that means things can still change, for example, another buyer can jump in and steal the property from under you with a better offer. Not good. Ratified is the term you are looking for.

Pre-Approved - So you have decided to buy your first home, and your agent keeps telling you to talk with a lender and get pre-approved. So what exactly does that mean, and how much work does it require? Many lenders can quickly get you pre-qualified by asking you a few questions over the phone, but in this competitive market, most sellers are looking for a buyer who has already been pre-approved. Pre-approval requires you to submit documentation such as pay stubs, tax forms, etc., to prove you can actually afford to buy. It should not be daunting, and will prove you are a solid buyer, when submitting an offer on that perfect home you do not want to lose!

Contingency - When you decide to sell your home and you receive an offer that includes an inspection, appraisal, or a home to sell, these are all called "contingencies". Once you are past the inspection period and repairs if any, are agreed to, that contingency is now removed, and you can move forward. If the buyer also has a home to sell, their offer is contingent on them selling their home, before they can purchase yours. An offer with very few contingencies is often considered a clean offer. If the buyer needs financing, most lenders will automatically require an appraisal contingency. If it is a cash buyer, the appraisal is often waived. Contingencies can make or break a deal, so less is more when it comes to an attractive offer.

Competitive Market Analysis (CMA) - When you decide to list your home, your agent should put together a market analysis to help you make an educated decision on how to price your home competitively. This is a report of comparable homes in your neighborhood that have recently sold, or are currently for sale, as well as any that tried to sell and couldn't. Comparable homes are like type homes in your neighborhood, with similar square footage, beds, baths, age, condition, and upgrades. If you are thinking of selling, I would be happy to provide you a free, no hassle market analysis of your home!

Well, there you have it! I have given you a very general list of basic real estate terms. If you have any questions, or need further explanation, feel free to email me at crystyknowles@gmail.com.