A Glossary of Common Real Estate Terms

Navigating the world of real estate can be confusing, especially as a first time homebuyer. At Hudler Homes, we are here to help educate our clients on the many different facets of the real estate industry to make the home buying or selling process easier. We are licensed real estate professionals and want to share some of the industry terms you should be familiar with below:

Appraisal

We’ve written in-depth about appraisals before here, but for a quick synopsis: an appraisal is the estimated value of a property. An appraisal is required by almost all mortgage lenders before the purchase of a property. This allows the lender to determine if the amount they loan to a potential buyer is worth the value.

As-Is

A property that is categorized “as-is” on a listing sheet means that the seller is unwilling to do any repairs or improvements to the property before closing. Typically, a property listed as-is could be priced lower than other comparable properties in the area. 

Closing

When it’s time to officially complete the sale transaction of a property, this is called a closing or settlement. Generally speaking, a closing occurs when all documents are signed by all parties, all money is transferred to the right accounts and the buyer is given full approval from the lender. Once all steps are complete, the property is officially “closed” and access is given to the new owner.

Closing Costs

Real estate transactions have certain fees associated with them in the form of closing costs. These are charged from a number of sources, like the lender, title company, attorneys, insurance agencies, real estate brokers and more. These fees are typically paid at the time of closing and must be paid in-full at the time of closing.

Due Diligence

This period of a real estate transaction is a time frame when the potential buyer is allowed to fully examine the property. They often make this happen by hiring industry professionals to perform full tests on the property. Due diligence allows a potential buyer to fully understand the property they are buying before a closing. Maryland does not have an official due diligence period, but there are strict contract deadlines that must be followed.

Earnest Money

These are the initial funds that a potential buyer has to “put down” once the seller accepts their offer. The amount can vary anywhere from 1-5% of the total home sale price. An escrow company or broker holds the funds of an earnest money deposit until closing, and those funds are applied to the total amount a buyer will pay to purchase a home. 

Inspection

An inspection is a thorough examination of the home that a potential buyer pays for before a closing. An inspector is a licensed professional who will prepare an unbiased report on the home’s condition. It will include a list of any necessary repairs that the property needs. This is also a great time for the buyer to learn about the home and get excited!

Multiple Listing Services (MLS)

MLS is a crucial database where real estate professionals and brokers access or add property listings for sale. It’s also an important database to compare similar properties and what they sold for. 

This is just a short snippet of some of the most popular real estate terms. The right real estate professional can explain these terms in more detail. If you are looking for a real estate agent who knows the Baltimore area and can help you explore your options, I’d love to meet with you. Reach out to me through my website or give me a call at (302) 545-8569, and follow my blog for more real estate tips!