A Glossary of Common Real Estate Terms (Continued)

As mentioned in a previous blog post, the world of real estate can be confusing! Our team at Hudler Homes is breaking down some of the most commonly used real estate terms for our clients. Be sure to check out our previous blog post here to catch up on the other terms we explained.

Offer

When a buyer finds the property they want to formally purchase, they put in what’s called an offer. This is a formal document stating that they’d like to purchase the property from the seller. The price they offer to pay should be comparable with other properties in that market area, based on the research of the buyer’s real estate agent. To submit an offer, the document needs to be put in writing, signed and then submitted to the seller’s real estate agent. 

Pre-Approval

It’s not just enough to want to buy a home. Potential buyers need to be pre-approved by a lender in most real estate transactions. This occurs when a potential buyer completes an application that includes many elements about their financial life, like debt-to-income ratio, credit scores and employment history. Once given to a lender, they will provide the buyer with a letter that states the exact amount of a loan the potential buyer can qualify for. Pre-Approval is helpful when starting the home buying process so that potential buyers know how much property they can afford before beginning their search. In most cases, an offer won’t be considered without a pre-approval letter.

Principal

The principal on a mortgage is the amount of money that a buyer owes to the lender that does not include interest on the loan. For example, if you buy a property and borrow $100,000 then the principal that you owe on the loan is $100,000 plus interest. When making payments on a mortgage loan, it’s very typical for the payment amount to go toward interest first, then toward paying down the principal.

Realtor®

A Realtor is an individual who holds an active real estate license in their state and is affiliated with the National Association of Realtors (NAR). They are required to uphold a Code of Ethics established by NAR and complete continuing education courses to stay active. Every Realtor® is a real estate agent, but not every real estate agent is a Realtor®.

Seller Disclosure

This is a disclosure made by the seller with pertinent information about a property that could potentially affect a buyer’s decision to purchase it. These can include things like property line disputes, leaks that can’t be seen when it isn’t raining, or other considerations the buyer should think about before purchasing.

Title Search

This is an extremely important step in the real estate transaction process. A title search looks through public records for the history of the home. It will tell buyers about past sales, taxes and any liens that may exist. Choosing a thorough title company is key.

This concludes our running list of some of the most commonly-used real estate terms in the industry! If you have additional questions, 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 home buying tips!