Real Estate Lingo Definitions
The home buying and selling process is complicated enough to start with. Real estate lingo can make it further complicated, especially if you are a first time buyer. In this article you will find definitions on popular real estate lingo on Massachusetts North Shore. This may help simplify the home buying and selling process.
Popular Real Estate Lingo: Massachusetts North Shore
Comparative Market Analysis (CMA)
A CMA is a document that compares your property to closely matching homes sold within the last few months in the same town or neighborhood. It traditionally produces a target price for which your home might sell in the existing market.
The reason a CMA is important is it tells a seller what buyers are willing to pay to live in their neighborhood. We know when sellers price too high, buyers will choose to purchase from the competition. Or, go to a competing neighborhood all-together.
In residential real estate this is probably the most accurate estimator. Many websites offer computer generated home value estimate. These tools are fairly inaccurate. They may not account for neighborhood boundaries. And they certainly don't look at the condition of the home.
This can be a huge issue in New England. And Massachusetts specifically. A 100+ years old home is very common here.
...And the level of maintenance over those years can vary greatly.
Having an experienced real estate agent perform a CMA makes a big difference.
MLS stands for Multiple Listing Service. This is a database where real estate professionals submit homes for sale.
States commonly have different MLS databases, and some regions can have multiple. In MA we use MLS Property Information Network - more commonly known as MLSPIN.
Only real estate professionals are not given direct access to MLSPIN data. Consumers can obtain information through real estate agents like us.
Assessments are the value placed on homes by a public tax assessor and used to determine real estate property taxes. Assessed amounts have no bearing on the market value of a home.
Walk-thrus commonly are scheduled immediately before closing. It permits the buyer to take a final look at a property and to confirm that the condition has not changed from the last time they visited it.
This walk through is important. It's added security and peace-of-mind. It can be months between the initial home inspection and closing. Many bad things can happen in that period.
A contingency is a condition required for an individual to proceed with a property sale or purchase. For instance, the purchase may be contingent upon the sale of their existing property.
Most real estate offers include several contingencies...
A buyers offer will almost always have a contingency for satisfactory inspection. Even if the home is being sold "as-is." These inspections are usually for informational purposes. So the buyer knows what problems they will have to fix. Even though the seller isn't crediting the buyer for issues. The buyer can walk away if there are any unsavory surprises.
A contingency for receipt of a loan commitment is in almost all offers. Most buyers need a mortgage. And the buyer can't control every aspect of the financing process.
...A seller could deny this kind of contingency. But doing so seriously reduces their pool of potential buyers.
Banks that own foreclosed houses sometimes disallow the loan commitment contingency. Their focus is on getting the property off their books fast. With the least amount of effort.
They might not know the property's condition. Don't want to rehab the property. Won't wait for the lender to approve the buyer. Or deal with the property not qualifying.
This comes at a price for the Bank. They are limited to a buyer who can pay cash. This is usually an investor. Investors are savvy and expect steep discounts.
Earnest money applies to money submitted by a buyer as part of a agreement to purchase real estate. It indicates that a buyer is serious. Deposits are traditionally retained by a listing company for an owner and credited to a buyer at settlement.
A high earnest money deposit (EMD) indicates a strong commitment to purchase. Buyers can use this to their advantage in competitive bidding situations. Greater EMD means higher risk for the buyer.
A smart seller will recognize this.
It won't help you win if your offer is far less than others. But will make your offer look better compared to similarly priced offers.
Real Estate Closing
A closing is when paperwork is completed, funds are exchanged, and real estate legally changes hands from the seller to the buyer. Purchase and sales agreements always indicate a closing date and place.
Closings can be very complicated. Money is being exchanged and dispersed. Titles change hands. Mortgages are given.
In Massachusetts closing involves attorneys. Most states can just use title companies.