The ABC's Of Real Estate.

Few Simple Terms of Real Estate

Appraisal: If you want to know what something is worth, you've got to hire a third-party appraiser to give an opinion of what the home is worth

Appreciation: When a house goes up in value overtime

Amortization: Spreading multiple payment over a period of time

Broker: A person who buys and sells stuff. In Real Estate that could be the realtor buying and selling homes or the loan officer selling mortgages

Buyer's Agent: The realtor that is representing the buyer to help them find a home

Closing: This is what happens at the very end of a purchase process when the buyer and seller essentially sign paperwork and the property changes hands from one party to the other

Closing Cost: When you buy a house there's a lot of extra fees that get added on top of the purchase price, those are called closing cost

Closing Documents: Those big whole stacks of papers you sign if you want to get the house

Deed: A piece of paper that says you own a property

Depreciation: When something loses value over time, it wears down with time. In Real Estate that could equal really big tax benefits

Discount: I bet you love getting a really good deal on something. A discount is basically, getting a really good deal on a piece of property

Down Payment: The amount of money you have to put down on a property to be able to secure the loan

Due Diligence: When you get a property on a contract, you are given a period of time called due diligence to check your facts, do some research and make sure everything adds up on the deal

Duplex: A home that consists of two dwelling units in one

Equity: The part of the house that you own outside of the loan

Escrow: A neutral third-party that holds on to all of the money when a transaction is taking place

Eviction: If your renter doesn't pay rent they are going to get kicked out of the property, that's called Eviction

Fair Market Value: This is pretty much the fair price according to everyone in the market

Fixed Rate Mortgage: A fixed interest rate on the property that doesn't go up or down with the market

Flip: When you buy a house at a big discount and then hope to sell it for a big profit

Foreclosure: This is what happens when you don't make your mortgage payment and the house then goes back to the bank and you get Evicted.

Fourplex: This is like a Duplex times two. Four units in one

House: If you don't know what a house is, please stop reading. The four walls stuff you live inside with a roof on it... Ring a bell?

Home Inspection: When you pay an expert to go through the house and tell you all the problems with it

Interest: If you want to borrow money from the bank you will have to pay them back but they want some money on top of that, and that's called Interest

Insurance: When you buy a house, stuff happens. It could get broken into, burn down. Insurance is a small amount of money you pay to a third party company that will fix your house and restore it back to normal

Investor: Someone who takes money, puts it into real estate, watches it grow, and hope to make more money from it

Landlord: The owner and manager of a piece of property that they own

Lease: A contract that a renter signs to rent a property for a period of time

Lease Option: When the owner of a house decides to let someone else rent it until they can buy it

Listing: When somebody sells a house they package all of the information about the house and put it in a file called Listing

Liquidity: How spendable your money is. e.g. If it's tied up in a house and you can't get it out, that's not very liquid now, is it? But if you took a loan out and pulled some of the money out - it's very liquid

Loan Officer: The specialist that works with you in a bank to help you get a loan

Market: The real estate market consists of all of the homes in an area

Mechanical Lien: If you had someone come over to do some work on your house and you didn't pay them, they can put a demand on the house and you can't refinance it or sell it until they've been paid

Mortgage: A loan that is secured by a piece of property

Offer: If you found a property that you like and you want to buy it, you submit an offer. It's basically the paperwork that says "I'd like to buy your property at X price."

Pre-Qualification: If you want to buy a house, you go to a bank, you give them your financial information, and they tell you first of all if you can buy a house and how much money you can borrow

Pre-approval Letter: This is the bank giving you an official document saying that they are ready to give you a loan on a property

Principal: The amount of money that you've borrowed in a loan and have to pay back

Profit: The money that you make on a house

Property Taxes: You might think you own a house but actually the government owns the land and every year they ask you to pay some taxes on that

Purchase Price: When a buyer and a seller come together and agree upon a price for the property, that's called the Purchase Price

Refinance: When you go to the bank to get a new loan to either lower an interest rate or pull some money out of the house

Seller's Agent: The realtor who gets paid to help the seller sell the property

Seller Disclosures: If you sell a property, you have to disclose and share the entire history of any problem you are aware of with that house.

Short Sale: When someone is behind on their payment to the bank and they try to sell it to someone else at a lower price hoping that the bank will accept a discount

Tax Benefit: When you buy real estate it comes with all sorts of tax benefits. So if you want to pay less to the government, buy more real estate

Tax Lien: If you don't pay your taxes someone is going to tack it on to your houses and you can't sell it until those taxes are paid

Tenant: Someone who rents a house

Triplex: This is like a duplex, only has 3 units

Title: When you hold title to the property, it means you are the legal and lawful owner and nobody else

VA Loan: Veteran's Loan. If you served in the military in any capacity, the government makes it super easy for you to qualify to buy a house at a very low interest rate

Let's stop there for now. Hopefully you learned a thing or three :)

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