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First Time Buyer: 10 Essential Real Estate Terms to Know

First Time Buyer: 10 Essential Real Estate Terms to Know

So, are you thinking of buying your first home but feel a little lost in the real estate lingo? Learning some commonly used terms is a great way to kickstart your real estate journey. Whether you are looking to buy or sell a home, we have created a quick resource guide to help you better understand the real estate process and plan your next move.

General Real Estate Terms

Appraisal
An appraisal is the value of a property determined by an independent survey conducted by a lender based on the property’s condition and comparable listings to validate the purchase price. This ultimately helps lenders determine if the property is worth the loan amount the potential buyer is seeking.

Comparable and Comparative Market Analysis
This term refers to the part of the appraisal process which identifies recent sales of similar homes (comparable) close in proximity to estimate a more precise value for the property in question

Acquisition Cost
The acquisition cost refers to the total price, including all fees (mortgage, closing costs, inspection fees, etc.) required to purchase an investment property

Inspection Contingency
A term in the purchase agreement that grants the buyer to conduct an inspection of the home through the hire of an independent inspector, receive an inspection report about the property’s condition and issues, and negotiate costs with the seller or terminate the purchase agreement based on the content in the report and get the deposit returned

Turnkey Property
A turnkey property is a term used to describe a that does not require any repairs or renovations to rent out to tenants—it is updated to current market standards

Rehabilitation
The term rehabilitation in real estate refers to the repairs that need to be completed on an investment property to make it tenant-ready or ready for resale at a higher value. These repairs can range from minor work such as repainting or installing upgraded fixtures to large-scale renovations such as replacing a roof or gutting a kitchen. The investor should be notified of necessary repairs prior to purchase and should be initially listed on the inspection report.

Loan-To-Value Ratio (LTV)
This is basically the ratio lenders use to measure the amount of the loan compared to the value of the property and to determine overall risk

Dollars Per Square Foot ($/sf)
This refer to the way in which buyers can compare properties of different sizes to one another after factoring in acquisition costs, loan costs, and operational costs.

Multiple Listing Services (MLS)
An MLS is a database that allows real estate agent and broker members to access and add information about properties for sale in an area. When a home is listed for sale, it gets logged into the local MLS by a listing agent. Buyer’s agents often check the MLS to see what is on the market and what similar homes have sold for.

Closing Costs
Closing costs are an assortment of fees, including fees charged by a lender, the title company, attorneys, insurance companies, taxing authorities, homeowner’s associations, real estate agents, and other closing settlement related companies. These closing costs are typically paid at the time of closing a real estate transaction.

Ready to buy?
If you are ready to start using some of these terms, contact one of our agents. At MGR Real Estate, we want to help you achieve all your property goals. Whether you are looking to buy a home, investment property, or commercial space, we provide guidance through the entire real estate search, buying, and selling process.

 

By |2020-12-02T16:24:16-08:00November 30th, 2020|Blog|0 Comments

About the Author:

The MGR Review is designed to bring you the top news and tips regarding property management and real estate in Southern California. Our near forty years of experience in these industries give us a keen insight on how best to succeed. Let us know if there is a topic you would like us to discuss!