The last thing a client should focus on while buying or selling a house is confusion over vocabulary. With terminology and abbreviations abound in each unique real estate transaction this is an excellent place to start familiarizing yourself with the process as a client. In order to combat the confusion surrounding these quirky abbreviations take a look at these simplified explanations.
Homeowners and buyers are understandably nervous, excited, or a combination of both while entering into this journey. While it is possible to buy or sell a home without the assistance of a real estate agent there are important advantages in enlisting their help. The reduction of any unnecessary confusion or stress is included in this list of pros.
To get started, the listing stage of residential real estate. Common terminology for brokers and agents may not be so common in your line of work but they can be with a little review. The following are a sampling of words buyers and sellers would see on the data sheet for a home being listed to sell on the market:
TIL: Truth-in-Lending – This act of 1968 is United States federal law designed to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed.
NAR: The National Association of REALTORS® (or NAR) is America’s largest trade association, representing 1.3 million members, including NAR’s institutes, societies, and councils, involved in all aspects of the residential and commercial real estate industries.
HUD: Housing & Urban Development -The U.S. Department of Housing and Urban Development (HUD) administers Federal aid to local housing agencies (HAs) that manage the housing for low-income residents at rents they can afford. HUD furnishes technical and professional assistance in planning, developing and managing these developments.
REO: Real estate owned or REO is a term used in the United States to describe a class of property owned by a lender—typically a bank, government agency, or government loan insurer—after an unsuccessful sale at a foreclosure auction.
CCR: Covenants, Conditions & Restrictions (CC&Rs) are limits and rules placed on a group of homes or condominium complex by a builder, developer, neighborhood association, or homeowners association.
FSBO: For Sale By Owner, or FSBO, is the process of selling real estate without the representation of a real estate broker or real estate agent. Homeowners may employ the services of marketing or online listing companies or market their own property but do not pay a commission and represent themselves with the help of a lawyer.
BPO: A broker’s price opinion is the process used by a hired sales agent to determine the potential selling price or estimated value of a real estate property. A BPO is popularly used in situations where a financial institution believes the expense and delay of an appraisal is unnecessary.
FHA: The Fair Housing Act (Title VIII of the Civil Rights Act of 1968) introduced meaningful federal enforcement mechanisms. It outlaws: Refusal to sell or rent a dwelling to any person because of race, color, disability, religion, sex, familial status, or national origin.
Fixture: A fixture, as a legal concept, means any physical property that is permanently attached (fixed) to real property (usually land) Property not affixed to real property is considered chattel property. Fixtures are treated as a part of real property.
Escrow: A bond, deed, or other document kept in the custody of a third party, taking effect only when a specified condition has been fulfilled.
Title Insurance: Title insurance is indemnity insurance that protects the holder from financial loss sustained from defects in a title to a property. The most common type of title being lender’s title insurance, which the borrower purchases to protect the lender.
Contingency: A contingency clause defines a condition or action that must be met for a real estate contract to become binding. A contingency becomes part of a binding sales contract when both parties agree to the terms and sign the contract.
There are different sets of terminology surrounding investing, finance and contracts, and agent credential portions of real estate. Stick around to see more Real Estate 101 posts so you can be a confident buyer and seller for your next home. Real estate should be an adventure, not a mystery.
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