Selling a home involves not only a list of steps, but plenty of industry jargon related to those steps, too. We thought you might be interested in learning the meaning of the real estate related terms that you will inevitably come across while selling your home.
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Comparative Market Analysis (CMA) - This is an evaluation of similar, recently sold homes in the same area as your home. A CMA provides the current market value of your home and is prepared by your Realtor® when pricing your home.
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Multiple Listing Service (MLS) - The MLS is a database of properties created for and by real estate brokers for the purpose of sharing listings with one another. Why is it important to you? When hiring a Realtor® that is a member of the MLS, you are ensuring your property will be listed in the database - meaning other members (brokers and agents) will be able to share your home with their customers, too. You never know who might be looking for a home just like yours!
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Broker Price Opinion (BPO) - Although BPOs typically take place when a seller is doing a short sale of his/her home, this is the estimated value of a property as determined by the real estate broker or another qualified individual or firm. A BPO is based on the characteristics of the property being assessed.
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Escrow - This is the "trust account" where all funds associated with the real estate transaction are held. These highly regulated accounts are created to ensure your funds are accounted for and protected at all times.
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Earnest Money Deposit (EMD) - This is the deposit the buyer will make when submitting an offer on your home. Sometimes referred to as a “Good Faith Deposit”, it is intended to show the buyer’s commitment to the transaction. This is also an important part of the transaction as the seller may have a claim to the deposit if the buyer defaults on the purchase.
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Title - When most people think of a "title", they think of President, Principal, Doctor, and so on... but in real estate, the term has a completely different meaning. You will typically hear it referenced when discussing your closing and the costs associated with title insurance. In short, it is referring to your ownership in the property and who has owned it prior to you.
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HUD-1 Settlement Statement - Often referred to as the “HUD”, this form is used to itemize the fees associated with your real estate transaction. The HUD is one of the last documents prepared in the closing process, but, as a seller, may be one of the most important as it shows the net proceeds you will walk away with after closing.
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Closing - The closing represents the conclusion of your real estate transaction. This will be the culmination of the entire process; it is when the money associated with the sale is transferred from the buyer to the seller, and the deed (ownership) of the property is transferred from the seller to the buyer.
Now that you have a better understanding of these real estate related terms, who's ready for a pop quiz!?
