Even if you have experience buying or selling homes, there are some real estate terms that just don’t make sense. Ready to cut through the jargon? We’ve decoded some of the most confusing real estate lingo to help you stay in the know.
The Most Confusing Real Estate Lingo Everyone Should Know
Here’s a list of more challenging real estate lingo that every buyer or seller needs to know. If you have a question or don’t see a definition here, feel free to reach out to our team with your questions—we’d love to offer you our expertise!
Adjustable-rate mortgage (ARM)
A type of home loan that has fluctuating interest rates and payments. Because ARMs change according to current market conditions, you won’t always have a predictable monthly payment.
This term describes how your mortgage payments are spread out over time. A typical mortgage is broken down into monthly payments over a 15 or 30 year period.
A broker is a real estate agent that has received more education and is now licensed to to supervise other agents. Typically, brokers have more knowledge about buying or selling homes, as well as real estate law.
This is a blanket term that describes all the costs associated with closing on a home. Closing costs often include legal fees, title fees, taxes, agent commission, home inspections, and much more.
You should expect to pay around 2% to 5% of a home’s purchase price in closing costs.
Commission is what you pay your agent for their services. This amount varies depending on the home’s sale price, and most agents charge a rate of 5% to 6%. Sellers usually pay commission for both agents involved in a transaction.
When a listing is contingent, that means a home is under contract, but the buyer or seller is waiting to meet certain conditions before proceeding with the sale. These conditions are often called contingencies.
Common contingencies include home inspections, financing, or appraisals.
This is a deposit that buyers put down when making an offer to show a seller that they’re serious. If they end up buying the home, the earnest money goes towards closing costs. If they back out of the deal, the seller gets to keep this money.
A type of home loan that has a set interest rate and monthly payments. This is the most common type of mortgage and is favored due to its predictability.
An acronym for “For Sale By Owner.” This involves a homeowner selling a home without the help of an agent, usually to avoid paying commission fees. Going FSBO is generally not recommended, especially if you want to make the most of your home’s equity.
An acronym for “Multiple Listing Service.” This is a network of global databases that compile homes for sale in a specific area. Buyers can access the MLS for free to browse the latest listings, and sellers can work with their agents to promote their home on the MLS.
Pre-approval & pre-qualification
If you’re pre-approved for a loan, that means a lender has checked your credit and approved you for a specific loan type and amount. Most agents won’t work with a buyer if they don’t have a pre-approval letter.
This term is different from pre-qualification. Pre-qualification is more of a rough estimate of what you can afford to spend on a home, and it doesn’t require a hard inquiry into your credit.
A Realtor® is an agent or broker that has joined the National Association of Realtors® (NAR). Realtors undergo vigorous training and must follow a code of ethics outlined by the NAR.
Ready to Make a Move?
If you’re thinking about buying or selling a home in Northeastern Mississippi, J.Morris Realty is here to help! We can help you navigate every step of the real estate process, so just contact our team via phone, text, or email to get started.