Real Estate Agent and Trainer, Robert Rico, lists and explains 8 important real estate terms that everyone should know. Do you want to see more video blogs? Subscribe here!
Whether you’re just getting started in your new real estate career, or you’re just getting into real estate in general – here is a list of important real estate terms that everyone should be familiar with.
- Buyer’s Agent
- Listing Agent (Seller’s Agent)
- Dual Agency
- Pre-Approval Letter
A buyer’s agent represents the ones who want to buy a house in a real estate transaction. They often meet their clients at houses to show them around, and they help prepare the offer letter when the buyers are ready to purchase a home.
A listing agent represents the ones who want to sell a house in a real estate transaction. They usually make their listing presentation at the home for sale, and then monitor the open houses. They tend to also market the home from their office through their network of contacts.
Dual agency is representing both the buyer and seller in a real estate transaction. For example, if you were representing the seller, and the buyers did not have an agent, you could serve as the agent for both parties and earn double the commission.
A pre-approval letter (different from a pre-qualification letter!!) is an official letter from the lender stating that the borrower’s credit has been run, all information has been verified, and that they are approved to borrow ‘X’ amount of money, based on the appraisal.
A pre-qualification letter means that, only based on the verbal information the borrower has provided, they are approved to borrow ‘X’ amount of money. This is taken less seriously than a pre-approval letter because the income and assets have not been verified by the lender and therefore the loan might not be approved if the buyer doesn’t realistically qualify.
A contingency is a sentence put in the offer letter that states the offer is valid ONLY IF certain conditions are met. Think about it as a form of ‘protection.’ If the conditions are not met, the offer becomes void and open to renegotiating. Some of the most common contingencies are:
- Loan Contingency
- Inspection Contingency
- Appraisal Contingency
This is a Contingency based on the buyers obtaining financing for the home. This usually depends on the letter and can be greatly hurried along by getting a pre-approval letter from the lender.
This is a Contingency based on the home inspection report coming back without any major problems in the home. If any problems are discovered, the offer is open to negotiation based on the cost to repair the issues. If there’s a huge problem, the buyers may even want to back out of the deal and not purchase the house at all!
This is a Contingency based on the appraisal coming in “at value” – that means, at or above the agreed-upon purchase price. This is often waived on cash-only deals so that the buyers can save money and time on the appraisal.
This is a standardized form from the CAR (CA Association of REALTORS) that contains the purchase price, information, and names of both parties on multiple pages. It specifies exactly how and when funds will be paid for the specific deal, the amounts and dates, and all agreements and concessions made by the buyer and/or seller.
An appraisal is a third-party opinion of value, as we covered in our appraisal blog recently. This is usually based on comparable sales within the area of the “subject property” (the house for sale).
If you have any questions regarding any of these terms, please do not hesitate to contact us via email at email@example.com or by calling us at 888-317-8740.