A Beginner’s Guide to Real Estate Terminology: 8 Terms Homeowners Should Know
Reviewed by: Brandon Brown
If you’re listing or plan to list your personal property, you’re likely studying up on the home-selling process and real estate as a whole. If you are, you may have come across some new vocabulary.
Many real estate terms seem alien on the surface but are easier than you might think.
Real estate agents aren’t the only ones who can talk appraisals and contingencies. To help you navigate the market in stride, we’ve compiled eight commonly-used real estate terms and definitions that will have you talking circles around the experts in no time.
The term agent may seem self-explanatory enough, but there’s actually more to it than meets the eye—and that’s why it tops this list of common real estate terms to know.
According to the Cambridge Dictionary, a real estate agent is someone who arranges the selling, renting, or management of homes, land, and buildings for a property owner. Beyond this basic definition, however, a real estate agent also:
- Obtain state licenses to practice their craft2
- Are often freelancers, working for themselves and the highest bidder to net larger personal gains on each sale
- Take, on average, 5-6% commission after closing a deal—which translates to tens of thousands of dollars on most modern sales3
- Are not the same as realtors, though they serve many of the same functions
While many people may use the terms agent and realtor interchangeably, they’re not exactly the same. While both work to sell homes, only realtors belong to the National Association of Realtors (NAR).
The NAR is a group of high-level real estate property professionals who create and uphold a set of standards that dictate how business is done in the real estate world. In essence, they make the rules governing sales and enforce them amongst the individuals they see fit to join their ranks. Members of the National Association of Realtors may be:2
- Residential or commercial real estate brokers
- Property managers
If you’re considering selling, you may be wondering if you need an agent or a realtor. The short answer is: no. You can sell your home independently, saving you a hefty sum of money if you do. This is one of the most significant advantages of collaborating with an iBuyer vs realtor.
The term off-market is somewhat of a misnomer. So, what does it mean when a house is off-market? While it implies that such homes are not for sale, it really means they’re not listed on multiple listing services (MLS).
Also known as quiet or pocket listings, selling a home off-market means not being subject to the NAR’s terms of sale. While you can still work with an agent to sell an off-market home (if you so choose), qualified realtors must list any properties they’re responsible for on MLS within 24 hours of agreeing to represent a property owner.4
Listing a home off-market presents many advantages, including:
- Not having to comply with the NAR’s terms and pay exorbitant realtor fees
- Increased privacy during the home-selling process
- Buyers being unable to see your home’s Days on Market (DOM) and pitching lowball offers if they see it hasn’t sold quickly4
#4 Days on Market (DOM)
No collection of common real estate terms would be complete with Days on Market (DOM). As it sounds like, DOM is a measurement of how long a home has been listed for sale on popular real estate platforms.5
When you list your home on places such as MLS, a DOM ticker will appear alongside the listing to inform buyers if a real estate property is stagnating in its unsold status. If your home has spent a long time on listings, potential buyers may use your high DOM to:
- Gauge your desperation regarding how badly you want to sell your home
- Make rash judgments regarding the quality and price of your personal property
- Try to get away with offering figures below market value
If you’re planning to list your home on a professional real estate platform, you may want to consider some strategies to reduce your days on market beforehand. Doing so will not only move your property more quickly, but it can shield you from buyers who don’t want to pay a fair price for your home.
#5 Market Value
Market value, sometimes referred to as Fair Market Value (FMV), is the price a property would fetch on the open market under normal conditions.6 Normal conditions mean barring any extenuating circumstances, such as selling your home at a rock-bottom price because you’re moving across the country tomorrow.
Determining your home’s market value vs appraised value is important to your sale as it gives an idea of what to price your real property and what you can expect to sell it for. To get a ballpark figure for your home’s market value, you can use the sales comparison approach, the technique most agents use to decide how to price a home. To do so, try:7
- Looking at recently-sold homes in your area and seeing how much they went for
- Finding listings of comparable homes in your neighborhood and noting their selling price
- Gauging how your home measures up against these to get a rough estimate of what its value may be
While you’ll likely not come to an exact figure for your home’s value, you’ll find a good starting point to price it at if you’re selling independently. If you really want to involve additional parties and get a professional estimate of your home’s worth, you can always get an appraisal.
An appraisal is a licensed appraiser’s official estimate of a home’s value. Appraisers are trained to impartially determine how much a property is worth based on its features, condition, and the state of the market.8
Appraisers don’t work for buyers or sellers—though it’s usually one of those two that pays them. They simply give an estimate of FMV to better inform all parties involved in a sale and facilitate real estate transactions. Getting an appraisal for your real property can:
- Entice buyers to make more accurate offers on your place (i.e., less lowballing)
- Be required under the terms of certain agreements
- Net you a quick and fair offer from companies that buy homes at their appraised value
If appraising your home nets you interest from individual buyers, that’s fantastic! But, before inking the deal on any offers, be sure to pick through them with a fine-toothed comb to identify any contingencies.
Sellers often rely on agents and realtors because, by nature, a real estate transaction can be legally confusing. One of the things that makes sales contracts difficult to understand is contingencies.
Contingencies are, in essence, requirements that must be met after agreeing to a deal but before the property and money switch hands. Most often, they involve:
- The seller being able to produce the proper title or deed for the property in their name
- The prospective buyer securing the funds or financing for the purchase
- An inspector checking for housing code violations and and clearing a home
The last point is especially important because it can make or break a sale for a house in contingent. If a potential home buyer agrees to purchase a property contingent on passing a home inspection, they have full legal grounds to back out of the deal should the home not pass.
To avoid such situations, selling a house as-is can mitigate any potential problems from inspection-based contingencies.
As the name suggests, an as-is home is one sold in its current condition—flaws and all. When you list your home as-is, the buyer has no right to request repairs or kibosh a deal following a home inspection, whatever it may find.9
Like buying an open box or scratched merchandise at a discount, a buyer knows what they’re getting into when shopping for an as-is home. Sellers are still legally required to reveal any issues, but once the deal is inked, there’s no reneging. Selling a home as-is presents several benefits, such as:
- Not having to worry about contingencies or the prospective home buyer backing out
- A quicker sale than other forms of deals
- Not investing in repairing your house to bring it up to code
Selling as-is is a savvy way to move your property without putting in extra work to fix it up. On the other hand, it can open you up to lowball offers for buyers looking to take advantage of sellers seeking a quick sale.
To sell your home for a fair price without having to spring for repairs, there’s one more pertinent term to learn: FlipSplit.
Avoid Real Estate Jargon by Selling Your Home Simply With FlipSplit
Alright, FlipSplit is more of a company than a term—but, in reality, it’s also an idea about how to simplify property sales. While this glossary of real estate terminology may better equip you to participate in the real estate market, the best strategy is to ally yourself with FlipSplit.
FlipSplit eliminates contingencies and buys your home as-is for its FMV. To ensure impartiality, we don’t do appraisals or put up lowball offers. We simply purchase homes in their current condition and renovate them to drive up their value.
Then, after increasing your previous property’s worth, we sell it again and share the profits with you. With FlipSplit, you don’t need to worry about agents, realtors, or other complicated (and unnecessary) aspects of real estate sales. All you need to know is when you want to move.
Request an offer today and see how simple the real estate process can be when you cut out all the extraneous jargon.
- Cambridge Dictionary. Real Estate Agent. https://dictionary.cambridge.org/
- Investopedia. Realtor. https://www.investopedia.com/
- Investopedia. How Real Estate Agent and Broker Fees Work. https://www.investopedia.com/
- Investopedia. How to Find and Buy Off-Market Homes. https://www.investopedia.com/
- Wichita State University. Days on Market. https://realestate.wichita.edu/
- Investopedia. Market Value in the Real Estate Market. https://www.investopedia.com/
- New York State Department of Taxation and Finance. How to estimate the market value of your home. https://www.tax.ny.gov/
- United States Bureau of Labor Statistics. Property Appraisers and Assessors. https://www.bls.gov/
- U.S. News. How Does Selling a House As-Is Work?. https://realestate.usnews.com/