For many first-time homebuyers, knowing common real estate terms can help prevent the feeling of information overload. Once you learn the language real estate agents use, you may feel much more comfortable in your quest to find your dream home.
Here are some helpful real estate terms to know:
You’re likely to encounter the term “contingent” when house hunting on major search engines or a multiple listing service.
This word shows up as a status on listings where a prospective buyer or buyer’s agent has made an offer and the property owners, or sellers and seller’s agent, has accepted the offer.
However, contingent status indicates there are additional criteria for the closing of the sale, such as additional home inspections, appraisals or mortgage approval.
Escrow refers to a third party temporarily holding on to a portion of money involved in the property sale. The money is typically held in a dedicated escrow account, and during this time the house might be referred to as “in escrow.”
Escrow accounts are a tool used to mitigate financial risk for both the homebuyer and home seller during the real estate transaction.
Earnest money is the money added to an escrow account or trust as a sign of good faith in the transaction. A seller might require earnest money as a way to ensure the buyer is sufficiently motivated and qualified to go through with the purchase.
While it’s often added to the third-party account early in the process, earnest money is entirely different from a down payment.
There are many types of “value” in the real estate lexicon, but appraisal value specifically refers to the results of a professional appraisal.
The key difference between appraisal value and other property value terms like “fair market value” and “assessed value” is the appraisal value is based on a specific time point (typically during the sale or refinancing process). This means appraisal values can change over time and from one appraisal to the next.
Closing costs are the final expenses due at the end of the home-buying process. Some services you’ll need to pay for as part of the closing costs include credit reports, mortgage insurance, property taxes, homeowners association dues and legal processing fees.
Closing costs are separate from monthly mortgage payments, but are often paid to your mortgage lender.
While these are only a few important terms to know, they can be extremely helpful in understanding both complex and basic real estate concepts. The more you develop your real estate vocabulary, the better your home search experience will be.
For any other real estate terms you may have come across and have questions about, your real estate agent will be able to help break them down into more digestible tidbits.
I'm John Mahan, Sales Associate with William Raveis Real Estate, Harwich Port Office.
Throughout his childhood, John Mahan spent summers on Cape Cod at his parents’ home in Dennis Port. His intro to the Cape was, as he puts it, when his parents “carried me down the stairs at Sea Street Beach when I was a week old.” With a lifelong connection to Cape Cod, it seemed only natural for John and his wife, Mary, to move to Harwich – where they still reside – with their two young children in 1996.
Prior to moving to Cape Cod, John lived in the Worcester-Auburn area where he worked for Mass Electric for 10 years and was a member of the International Brotherhood of Utility Workers. When John and his family moved to the Cape, he worked at NSTAR for six years.
John began his career in real estate in 2002 when he joined Team Waystack Realty in Harwich Port. He has been a consistent top producing realtor in the Harwich area for the past 20 years. John’s approachable demeanor, combined with an integral understanding of the Cape Cod residential real estate market, have allowed him to build trusting, long-term relationships with his clients – both sellers and buyers.
