Real Estate: Terms you should know, A to G

Submitted by Lisa DiBiase

Do you “Understand” what your agent is saying? For home buyers and sellers, the real estate jargon can be intimidating. 

Some people are not comfortable asking what it means, therefore I have put together a list of the most common acronyms and real estate terms we use daily!

Appraisal Gap: An appraisal gap is the difference between the fair market value determined by the appraiser and the amount you agreed to pay for the home. An appraisal gap doesn’t mean you have to cancel the sale, but it may mean you have to negotiate with the seller or pay the difference for the home out of pocket.

“As-is”: A contract or offer clause stating that the seller will not repair or correct any problems with the property. Also used in listings and marketing materials.

Back on market (BOM): When a property or listing is placed back on the market after being removed from the market recently. This typically occurs when a listing was previously under contract and the buyers terminated the purchase and sale contract.

Back-up offer: When an offer is accepted contingent on the fall through or voiding of an accepted first offer on a property.

Broker’s price opinion (BPO): The real estate broker’s opinion of the expected final net sale price, determined prior to the acquisition of the property. Agents will perform this upon the request of a bank, typically when a property is in the foreclosure process.

Clear to Close: A term used by a lender when all conditions have been met by the buyer for the loan to be funded at closing. 

Closing: The end of a transaction process where the deed is delivered, documents are signed, and funds are dispersed.

Commission: The compensation paid to the listing brokerage by the seller for selling the property. A buyer agency agreement may require the buyer to pay a commission to his or her agent.

Commission split: The percentage split of commission compensation between the real estate sales brokerage and the real estate sales agent or broker.

Competitive market analysis (CMA): An analysis done by real estate sales agents and brokers using active, pending, and sold comparable properties to estimate a listing price for a property.

Contingency: A provision in a contract requiring certain acts to be completed before the contract is binding.

Continue to show: When a property is under contract with contingencies, but the seller requests that the property continue to be shown to prospective buyers until contingencies are released.

Cooperative (Co-op): Where the shareholders of the corporation are the inhabitants of the building. Each shareholder has the right to lease a specific unit. The difference between a co-op and a condo is that in a co-op, one owns shares in a corporation; in a condo one owns the unit fee simple.

Counteroffer: The response to an offer or a bid by the seller or buyer after the original offer or bid.

Credit report: Includes all of the history for a borrower’s credit accounts, outstanding debts, and payment timelines on past or current debts.

Credit score: A score assigned to a borrower’s credit report based on information contained therein.

Days on market (DOM): The number of days a property has been on the market.

Dual agent: A state-licensed individual who represents the seller and the buyer in a single transaction.

Earnest money deposit (EMD): The money given to the seller at the time the offer is made as a sign of the buyer’s good faith.

Escalation Clause: An escalation clause, or “escalator,” is a section in a purchase and sale contract that states that a prospective buyer is willing to raise their offer on a home should the seller receive a higher competing offer. The clause will state how much more the buyer is willing to pay than the highest offer and their spending limit.

Escrow account: An account for real estate taxes and insurance which borrowers pay monthly prorations for real estate taxes and property insurance.

Expired (listing): A property listing that has expired per the terms of the listing agreement.

FHA: Federal Housing Administration.

For sale by owner (FSBO): A property that is for sale by the owner of the property.

Gift letter: A letter to a lender stating that a gift of cash has been made to the buyer(s) and that the person gifting the cash to the buyer is not expecting the gift to be repaid. The exact wording of the gift letter should be requested of the lender. <

Lisa DiBiase is a Broker/Owner of Landing Real Estate. She and her company represent buyers and sellers and is your trusted partner for all the years to come. For all your real estate needs contact Lisa at 207-653-0823 or lisa@landinghomesmaine.com