Why Should You Understand Terms a Realtor Uses?

Why Should You Understand Terms a Realtor Uses? Well, truth be known, there is no reason why any buyer or seller should understand the terms or abbreviations a Realtor uses. We, the real estate community, are so used to throwing the words around, that we forget that the terms are not in common use, but instead, used for conversation with a very limited number of people.

I have noticed sometimes people ask me what something means and sometimes they don't and sometimes they look puzzled. They do, however, often come back with the incorrect responses. I, in this situation, blame myself for the poor communication. So, I will try to list as many terms of which I commonly use and hear to clue you into their meaning so that you will know right off what they mean.

ACTIVE You will see ACTIVE used on the property listing or on the MLS (see definition below) or hear people use it. What it means is that the property is up for sale and available.

UNDER CONTRACT Generally speaking, you will hear this term used. It means that there has been an offer made, and an offer accepted. There is a contract in place, but the property has not closed or settled yet. It is possible that this property comes back onto the market.

PENDING You will usually see this term on the MLS or on property listings. It means the same thing as UNDER CONTRACT. It refers to a property awaiting completion of the contract. It is possible that the contract does not get fully executed, however, it is in process to go to settlement or closing.

WITHDRAWN You will hear this term spoken or on the MLS. Withdrawn means the owner(s)/seller(s) has(have) taken the property off the market and it is no longer for sale.

EXPIRED You will see this term used on the MLS or property listings. It means that the contract between the listing agent and the seller has run out of time. The seller is no longer obligated to sell the property through that specific listing agent. There are exceptions, however. If certain things went on during the contract and happened after the contract was completed, the seller could still be obligated to the listing agent.

SETTLED This word means that the Agreement of Sale has been fully executed, and the property has changed hands or has been sold.

SETTLEMENT This term refers to the meeting, where the sellers and buyers get together and complete the Agreement of Sale by physically signing the Deed from seller to buyer while the buyer pays the seller for the property. This description is an over simplified version of a settlement.

CLOSING This word is used as a synonym for SETTLEMENT.

SETTLEMENT SHEET A settlement sheet is also referred to as a HUD-1. The HUD-1 is a form used at settlement to itemize all charges for sellers and buyers to give a complete list of the sellers' and buyers' incoming and outgoing funds in a real estate transaction.

HUD-1 See settlement sheet.

CONTINGENCY A Contingency will be seen in an Agreement of Sale. It is a contractual item in the Agreement of Sale, which allows for a special exception to the contract. For example, we often write a contingency into the contract, which allows a buyer to do a home inspection, and get out of the contract if they do not like the results of the home inspection while retaining their deposit monies. Every contract, however, does not have contingencies.

COMP Short for Comparable. See COMPARABLE.

COMPARABLE or COMPARABLE PROPERTY You will hear the word "COMP" thrown around, and it is abused greatly in today's market place. A "COMP" or COMPARABLE or COMPARABLE PROPERTY is a property, which has sold very recently and is similar in nature to the property trying to be priced for sale. The subject property is compared to the "COMP". If a "COMP" has something like central air that the subject property does not have, then the cost of the central air is subtracted from the price at which the "COMP" sold. If the "COMP" does not have something that the subject property has then it is added to the price at which the "COMP" sold. It is using these comps and analysis, that allows your Realtor to price your property. Many websites run comps for the general public, but be warned, they are very sketchy at best. It really only somewhat takes neighborhood and size into consideration and not condition.

Many times people will ask me to send them COMPS. I can send what I think are COMPS, but without seeing the subject property it is very difficult. Remember, the COMPS are CLOSED properties. More than not, I get some kind of communication after sending these requested COMPS that they would like to buy or see these COMPS. The COMPS have just recently sold and are not available. Thus, when asking for COMPS, please realize that they are not available.

MLS The MLS or Multiple Listing Service is a computer-based service which provides real estate professionals with detailed listings of most homes currently on the market.

CMA A CMA is a Comparative Market Analysis. It is an in analysis of a homes worth in the current market. Your real estate agent or realtor will use this method to give you a price range for which your property should sell.

Of course, this is a small list of terms, which I have provided, but hopefully, if you are thinking about buying or selling a property this list may help you understand and communicate better in the process of dealing with your old or new or future real estate.