Real estate is full of jargon and terminology that can confuse anyone learning the process to either buy or sell a home. In law world, terminology gets a cool name like legalese but in real estate its just plain ol’ jargon. El Boring but that is what we have to deal with. Nothing fancy or cool; just plain. Terms like escrow, title, docs, 442, 1031 exchange, purchase and sale, bidding process, REO, short sale, and pre-qualifcation are just a few of the terms in an average transaction.

Real Estate Jargon & Terminology

442

Final building inspection form and is common with a new construction home but a 442 can be requested if a home has had work done to it.

1031 Exchange

If there is money made from the sale of a property then the taxes owed on that money made can be deferred by the IRS till a future date. Keeps more money in your pocket in the short term.

Addendum

Additional documents that go into a real estate contract.

Appraisal

The method in which a loan officer will determine if the property is worth as much (or as little) as the buyer is willing to pay for it. Read more about the residential appraisal process.

Closing

The date in which the buyer’s purchase will record at the County and become their property.

Commission

The real estate agents paycheck. We don’t sell we don’t eat. Real estate brokers are a 100% commission based and receive no salary, health care, and/or insurance. It’s the reason I’m online a lot.

Contingency

A condition that has to be fulfilled in order for another event to happen. Example: The successful purchase of home B is contingent on the successful sale of home A.

Easement

Is a written document (though it can be verbal but that is hard to uphold) that is recorded at the County giving a party the right to use someone else property for a specific use. Read about Road Maintenance Agreements.

Escrow

A neutral third party who reviews all documents and oversees the transactions to make sure all conditions are met, all the money is accounted for, and

Excise Tax

Washington State taxes the sale of real estate based on the selling price, any outstanding liens, and any other debts securing the original purchase. Read more on Real Estate Excise Tax.

Financing

The vehicle in which most people use to pay for a home. In Washington it typically managed through a Deed of Trust and not a Mortgage.

FHA

The Federal Housing Administration provides mortgage insurance on FHA approved loans – typically the home has to meet certain standards as well as requires a minimum down payment from the borrower.

Foreclosure

The legal (sometimes not so legal – ROBO signers) process by which a lending institution takes over possession of a property due to the homeowner not paying their house payments. Read more on Washington Foreclosures and More Washington Foreclosures.

Fiduciary Duties

Real estate brokers hired, by either a buyer or seller, has to act in the best interest of their client and not their own.

Home Inspection

A buyer’s independent review of a home interior and exterior condition with a buyer recieving a property report detailing the items looked at. Read more about Home Inspections and Keeping Costs Down.

HUD Homes

Homes owned and sold by U.S. Department of Housing and Urban Development, a government agency. Read more about HUD Homes.

IDX

An acronym for Internet Data Exchange and is refers to the data feed that is downloaded from an MLS. IDX’s also make it possible for the public to search homes using a real estate broker’s website. Example: Search Homes.

Liens

Debts that are bound to the property and are filed at the County for recording. Liens can follow the property and not the owner and it’s the title insurance company’s role to notify the buyer of those liens.

Listing Agreement

An agreement between the property owner and the listing broker that details the terms in which the listing broker has the right to represent the seller, advertise the property, and be compensated for their efforts.

MLS

Stands for Muliple Listing Service and serve as the central hubs for brokers to share their real estate listings with cooperating brokers. Also, MLS’s are the source where real estate broker’s download home listings via an IDX feed to display on public websites.

Pre-Qualified

A process that allows the prospective buyer to submit a loan application to a lender before the home buying process.

Pre-Approved

Where the buyer has funding secured by a lender to purchase a home.

Purchase and Sale

The paperwork, contract, that outlines the details to a home purchase. Read more on the Purchase & Sale.

REO

An acronym for the term Real Estate Owned in which bank (or other financial institutions) give to their properties they own. Read more on REOs.

Recording Numbers

The numbers associated with the legal recording of the property and its owners at the County’s Assessors office. Legally, real estate brokers cannot deliver the buyer their keys until the documents have recorded at the County. Read more on the County’s Recording Division.

Seller’s Disclosure Statement

Called Form 17 by us brokers, it is a document that states what the owner knows of the property and that seller’s are to provide by law.

Short Sale

When a home owner is attempting to sell his/her home for less than is owed against it. Short sales have to be approved by the lienholder in order to be executed. Read more on Short sales.

Tax ID Number

The number given to particular property that associates all the property’s history. Think of a Tax ID # as a property’s social security number. Read more about Tax ID #’s.

Title Insurance

Insurance that the buyers get (and lenders want) to make sure their are no clouds on the property that may affect transfer of ownership.

Title Clouds

Someone or something (a business) that is attached to the property, very bad. Most common are construction liens (the builder didn’t pay a subcontractor so the sub put a lien on the property).

VA

The Department of Veteran Affairs and is typically associated with military service members using their eligibility to purchase a home using VA financing.

Zero Down

Used in terms of a financing method meaning there is no out of pocket expense for the borrower (buyer). Common zero down programs are USDA and House Key.

Related posts:

1. The Residential Purchase & Sale Agreement
2. What is title insurance?
3. What is Escrow?
4. Gaining the Most from a Real Estate Purchase
5. Capturing Opportunity in a Highly Depressed Real Estate Market