Confusing Real Estate Terms Decoded
Posted April 20th, 2016 by Clarissa Gregg

Confusing Real Estate Terminology
Selling a home can be a stressful time and not knowing the terminology can make for an even more stressful and confusing situation. Moving Station has prepared a list of words and phrases that you may hear during the home sale process. Becoming familiar with these words will help prepare you to have a more comprehensive experience. Moving Station is with you every step of the way, and will be here to help explain these more confusing aspects of the real estate process.
Appraisal A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby.
Comparative Market Analysis (CMA) – A report prepared by a real estate broker to determine a listing’s market value by comparing it with similar properties that are currently for sale, have a contract pending and have been recently sold. Properties used as comparables are of similar location, condition, size and age.
Comparable Sales – are properties of similar location, condition, size and age.
Closing – This has different meanings in different states. In some states a real estate transaction is not consider “closed” until the paperwork is recorded at the local recorder’s office. In others, the “closing” is a meeting where all of the documents are signed and money changes hands.
Contingent – When an offer has been made on a listing and accepted, but the actual sale is dependent on certain criteria, typically an appraisal, home inspection or mortgage approval.
Days on Market (DOM) – A measurement in days of how long a home has been listed for sale on the Multiple Listing Service (MLS).
Escrow – escrow is the third party who holds onto all monies and facilitates the terms of the contract. When someone says they have ‘a 30 day escrow’, that means escrow is holding onto the funds until both parties have completed their obligations as set forth in the contract, and only one those obligations have been completed will the home officially change hands and escrow closes.
Earnest Money Deposit – this is the initial deposit you give to the escrow company to show you are a serious buyer. This amount can be anything agreeable to both parties, but a larger deposit is still considered to signify a serious buyer. Earnest money deposits are given back to the buyer if they walk away from the sale within their contingency timeframe.
HUD-1 Settlement Statement – A document that provides an itemized listing of the funds that were paid at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow (impound) amounts. Each type of expense goes on a specific numbered line on the sheet. The totals at the bottom of the HUD-1 statement define the seller’s net proceeds and the buyer’s net payment at closing. It is called a HUD1 because the form is printed by the Department of Housing and Urban Development (HUD). The HUD1 statement is also known as the “closing statement” or “settlement sheet.”
Pending/Under Contract – This term indicates the home is waiting on final paperwork and no longer available for sale.
Pre-Qualified and Pre-Approved – these two terms are NOT interchangeable! Pre-qualified simply means a buyer has submitted some basic information to the bank, and the bank has responded with how much money they might qualify for. Pre-approved means that buyer has gone through a more in-depth process, filling out the mortgage application and submitting documentation proving employment, income, etc. The bank has responded with a written letter saying that the buyer is conditionally approved for a specific loan amount. A pre-approval is much stronger than a pre-qualification.
Title Company – A company that specializes in examining and insuring titles to real estate.
Title Insurance – An insurance policy that protects the buyer in the event the seller doesn’t have legal rights to the title or if there are liens on the property.
Sale-leaseback – A technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.

Leave a Reply

Your email address will not be published. Required fields are marked *