Chris Heller
Chris Heller, Keller Williams RealtyPhone: (800) 800-2978
Email: [email protected]

8 Essential Real Estate Terms You Should Know

by Chris Heller 08/04/2019

Home buying and selling can be a complicated process, especially for first-timers. The vocabulary involved will only compound your confusion if you jump right into it without knowing what they mean. Real estate, like other fields, has some terms that are peculiar to it. Before you set out to list your home for sale or seek to buy one, it is good to understand some valuable real estate terms you will encounter in the process. Here are some words you must know when involved in a home purchase:

Appraisal

In the real estate market, every property has unique qualities owing to its different conditions and structures. An appraisal determines the estimated value of a piece of real estate based on specific criteria. Appraisal reports by a certified real estate appraiser are used to resolve mortgage loans and taxation issues.

Contract

A purchase contract is a written document that contains the contract price and other terms of a property sale. The property is said to be 'under contract' when both the buyer and seller have reached an agreement and signed a formal offer and acceptance on the sales price and contingencies.

Listing agent

A listing agent is a real estate specialist operating with a license. They are in the real estate market to help home sellers advertise, market, and sell their homes. They represent the seller during negotiations and charge a commission on the sale.

Buyer’s agent

A buyer’s agent represents the interest of a buyer during negotiations on a home purchase. They usually charge commissions for bridging the gap between the buyer and the seller, but the seller pays the commission.

Debt-to-income ratio

Debt-to-income ratio, or DTI, is an essential factor that mortgage lenders consider before granting you a mortgage for your new home purchase. It shows how much your debt load is. You can calculate your DTI by dividing the sum of your debt expenses and your monthly housing bill by your gross monthly income, and then multiply by 100. Arriving at a percentage higher than thirty-six percent, after calculating your DTI, points to the need for adjusting your budget.

Escrow company

An escrow company functions as an unbiased third party that monitors the transaction process. They ensure that all parties involved follow proper procedures before closing the deal and hold the earnest money until buyers and sellers sign all paperwork.

Earnest money

After a buyer indicates an interest in purchasing a home, a percentage of the selling price is paid immediately to the seller but placed into escrow. This money is called earnest money and indicates the buyer’s serious intent to purchase. If the buyers decide to back out, a contingency in place can help them recover their money. However, when the transaction goes through successfully, the money becomes a part of the buyer's down payment. 

Contingencies

These are conditions that need to be fulfilled for the home sale to go forward. A home appraisal is a common contingency clause. Another is a financing contingency which is the required time frame for a buyer to raise funds to acquire the property. A popular contingency is the length of the closing process. 

Always ask your real estate agent to explain any terms you do not understand so that you can make the right decisions.

About the Author
Author

Chris Heller


Chris Heller has built one of the most successful real estate teams in the United States. From his selection as Rookie of the Year in 1989 to being the top-producing agent in San Diego County and the #1 Keller Williams associate in all of North America, Chris has earned the respect of colleagues and clients for the exceptional results he delivers.

Under Chris' leadership, the Chris Heller Team has sold literally thousands of homes. In fact, he has sold more than 100 homes a year every year for the past two decades. During a five-year stretch of one of the most challenging real estate markets in history, his sales volume totaled more than $450 million.
Chris has succeeded in a highly competitive marketplace through his leadership, drive and ability to assemble and empower high-performing teams. The specialized members of the Chris Heller Team provide unrivaled market knowledge and client service.

Chris also serves as the owner and operator of several Keller Williams market centers and has helped build Keller Williams into one of the largest and fastest growing real estate franchise operations in the world. In 2011, Chris was asked to lead Keller Williams Worldwide. Under his leadership, Keller Williams has expanded into more than a dozen countries, including Dubai, Indonesia, Mexico, Portugal, Turkey, South Africa, the United Kingdom and Vietnam. Chris' deep connections to real estate leaders throughout the world provide his clients with a unique global perspective and exposure to international buyers and sellers.