For the past week, I’ve been sitting in on a Real Estate seminar a few hours every day. 40 Real Estate agents in 1 room.
Sounds like the beginning of a bad joke that might involve God and lightening.
If you see me walking around the grocery store donning a big name tag with my company logo, you’ll know that I’ve taken some advice to heart (check out the play by play on RealRVA’s facebook page).
But here’s the point, friends; hanging out with a bunch of agents this week has reminded me that Real Estate has it’s own language and mumbo jumbo to sort through. Terms get tossed around by Real Estate folks, and regular folks- folks who don’t wear a name tag to do their grocery shopping- aren’t sure what they mean.
How to speak Real Estate:
First of all, here are the ones we sometimes see in ALL CAPS accompanied by WAY TOO MANY EXCLAMATION POINTS!!!! in MLS (defined later)write-ups…
Fixer Upper=might collapse on itself causing serious injury/death
Many Original Features=still has Grandma’s shag carpet circa 1976 throughout
Massive Price Reduction!= we reeeaallly overpriced it the first time around!
Tons of Character=haunted.
Ellen shares some wonderful write ups from my R.E. peers around the country.
The Technical Terms are what you really need to learn if you’re going to understand the R.E. market. (some definitions taken from Trulia.com)
MLS- Multiple Listing Service. A marketing database set up by a group of cooperating real estate brokers. Basically, it means that even though your agent (me) works with Keller Wiliams, he can take you in to see houses for sale under Long & Foster or Century 21 or whoever.
REO- Real Estate Owned. Property owned by the bank/mortgage servicer, this acronym refers to homes that were foreclosed and repossessed by the former owner’s bank. It also signals that buying this property will involve doing a deal with the bank; possibly dealing with a different escrow timeline, offer process or contract forms than a non-REO sale; and almost always taking the place in as-is condition, among other things. Oh, yeah – and it might also involve one more thing: a great deal.
Foreclosure- You probably already know that this is a house whose owners haven’t been paying, and as a result, is bank owned. What you might not know is this: the first time you are late on your mortgage payment, you are technically in pre-foreclosure. If you live in Virginia, you happen to live in a state where the law allows banks to collect their collateral (your house) much faster and with less legal hurdles than in other states. Make sure you pay on time!
Short Sale- This does not mean in any way that the sale of the house will happen quickly. It’s usually the opposite. A short sale is a house whose net sale price will not cover the debt owed to the bank. When that is the case, the bank must approve the sale price of the house because they may be forgiving the seller of the remaining debt owed. Because there is a bank involved, you can plan on your short sale taking a long time.
Pre-approved short sale- Many knowledgeable agents say no short sale is truly “pre-approved” unless and until the bank looks at a specific buyer’s offer and the seller’s financials at the same time, but some listing agents designate a short sale as “pre-approved” when a previous short sale application was approved at a given price, but fell out of contract for some other reason.
FHA- Federal Housing Administration, which backs the popular 3.5 percent down home loan program. FHA guidelines also include somewhat strict condition and homeowners’ association dictates, so if a home’s seller notes that they are not taking FHA loans, they might be saying that the property has condition or other issues which disqualify it for FHA financing.
HUD- The federal department of Housing and Urban Development, which governs the guidelines for FHA loans, acts as a seller of homes which were foreclosed on and repossessed for non-payment of FHA-backed loans, and publishes the Good Faith Estimate and settlement statement forms every buyer and borrower will be provided at the time they shop for a loan and close their home purchase, respectively.
Sold “As-Is”- Most often when you buy a house, there will be a provision written into the contract that allows you to have a professional home inspection to uncover potential problems with the home and its mechanical systems. The home inspection clause allows a buyer a way out of a contract if the inspection uncovers a major issue, or if the seller refuses to fix or pay for it. A property being sold “as-is” means that you are still allowed to have a home inspection, BUT if it uncovers massive problems, you cannot back out of the contract.
Are there Real Estate terms that baffle you? Have questions about one? Leave a comment!