MLS, FSBO, REO… OMG! LEARN THE MEANINGS BEHIND COMMON REAL ESTATE TERMS
Remember when you were in elementary school and you brought home that list of spelling or vocabulary words that your mom or dad would have to go over with you each night? Believe it or not, when you are preparing to buy or sell a home, learning the associated real estate lingo can be a bit like mastering those intimidating lists of new vocabulary and spelling words.
Since real estate transactions are involved enough, we’re throwing away the rule books and providing you with a little cheat sheet of some of the most important terms you may come across when you’re buying or selling a home:
Listings: “Have you checked the listings?” The term “listing” may carry the most literal meaning of all in the real estate world. A listing is just that… a list of information about a home that is available for sale. Included in a listing, you’ll find details like the asking price, number of bedrooms and overall square footage… among a TON of other information. You can find available listings on many websites, including the Multiple Listing Service or MLS.
MLS: Speaking of the MLS or Multiple Listing Service, if you’ve started doing any research on buying or selling a home, you’ve likely seen this acronym a time or two. The MLS is a database that includes all available homes for sale. When a home is listed, it’s added to the MLS database; when it is sold, it is removed. The MLS gives agents and their clients quick, convenient access to all available homes for sale.
FSBO: If you’re planning to sell your home, maybe you’ve considered it. If you’re planning to buy a home, maybe you’ve seen this FSBO on the “for sale” sign. FSBO is a commonly-used real estate acronym that means For Sale By Owner. In this situation, a seller has chosen to list their home without the aid of a real estate agent. So, while they forego realtor commissions, they assume all responsibility associated with completing the sale.
CMA: Another responsibility that a FSBO seller may take on is completing a CMA or comparative market analysis. Routinely when they are assisting clients, real estate agents evaluate similar area homes to see how they compare to a home that a seller would like to list or one that a buyer would like to purchase. These similar homes are called comparables and evaluating them helps a real estate agent to determine the current market value of a home that is to be bought or sold.
REO: Though many 80s music lovers may think that the word Speedwagon should always follow the term “REO,” in real estate, REO stands for “real estate owned” and it is the result of a foreclosure. An REO property is one that is owned by the bank and can be bought from the bank, but is typically sold “as is.” With an REO home, dealing with the bank may be a bit less negotiable than working with other sellers.
Foreclosure: If you read the last definition, but stopped with confusion after seeing the word “foreclosure,” read on. A foreclosed home is one that a lender is trying to sell in the hopes of recovering the balance of the home loan. Foreclosed homes are the only collateral that a bank has to regain lost funds. Though the real estate market has rebounded tremendously since crashing a few years ago, buyers are still likely to notice some foreclosed homes on their radar as they search for the perfect space.
Contingent: Another word that accompanies many real estate transactions is contingent or contingency. A contingent offer is one that has been made and accepted, but relies on meeting certain criteria throughout the closing process. Standard contingencies include passing a home inspection or appraisal. When a buyer makes a contingent offer, they have a safe way out of the transaction that will protect any money they’ve put down if any contingency is not met.
Lockbox: If you’ve started to browse available homes in the real estate market, you may have noticed a small, rectangular box hanging from the doorknob on the front door of a home that is for sale. These boxes keep a home securely locked throughout the sales process, but also allow real estate agents to access the home for showings. Inside the lockbox, sellers will keep a key that gives access to their home in their absence. The only way an agent can access that key is through a security code or swipe card that has been issued.
Real Estate Agent: It’s a real estate term that every buyer and seller has probably used, whether they decide to hire one or not. It’s a word that we’ve used several times throughout this article. The term real estate agent refers to a licensed professional who has taken classes and passed a state licensing exam to work in real estate. They’ve proven their knowledge of the real estate sales process, but are often required to constantly improve that knowledge through continuing education classes.
REALTOR®: Often used interchangeably with the term “real estate agent,” a REALTOR® is a real estate professional who belongs to the National Association of REALTORS®. Not all real estate agents do. Members of this association are held to the organization’s standards and code of ethics, which, above all, require those members to treat buyers, sellers and anyone else they deal with during a transaction with honesty. You want a REALTOR® – Trust me!
Some commonly-used real estate terms will continue to confuse buyers and sellers even with the help of their REALTOR®. If you’re planning to buy or sell a home and you’ve come across a few words time and time again that you just can’t seem to make sense of, I would be happy to offer you an explanation. As always, feel free to contact me at your earliest convenience.