Real estate lingo can be hard to decipher because, well, there’s so much of it! It might even seem like your Realtor is speaking another language.
From fancy acronyms to words like “escrow” and “riders,” there are a lot of terms out there that might seem totally foreign. But that doesn’t mean you don’t have to know what they mean!
If you’re in the process of selling your home, here are a few real estate acronyms you really should know.
CMA: Comparative Market Analysis
A comparative market analysis is a great way to research the market and find out what homes in your neighborhood are selling for. It’s an in-depth report that lists the prices of sold homes that are similar to your home (otherwise known as “comps” or “comparables”).
CMAs provide information about homes that were recently sold, home that are currently on the market, and homes that were on the market but were not sold within the listing period.
FSBO: For Sale By Owner
Home sellers who opt not to use a Realtor will list their home as For Sale By Owner. This simply means the homeowner is selling their home without the help of a Realtor and is taking on all the responsibilities of selling their home.
When you choose to sell without a Realtor, you may be saving money on their commission fee, but you’re taking on a lot of additional work and responsibility. Plus, you may end up losing money in the long run if you don’t know how to stage and photograph your home, market it effectively, or price it correctly and competitively.
Escrow refers to a number of documents, payments, and other material that are held by a third party. Once you’ve negotiated the sale of your home with a potential buyer, you’ll want to make sure there’s a proper escrow set up.
Basically, when a buyer makes an offer on your home, they’ll write you a check for “earnest money” (kind of like a security deposit or holding fee). This money is held by a neutral third party until you and the buyer negotiate a contract and close the sale.
Since you can’t use the money and neither can the buyer, the money is considered to be in “escrow”.
When you’re negotiating the contract of your home sale with the buyer, there are likely to be a few contingencies in your contract. Contingencies protect the buyer if they fail to qualify for a loan, if they are dissatisfied with the results of the home inspection, or if something else falls through.
Carefully consider all terms of the contract, including specific contingencies, when reviewing offers. The more contingencies an offer contains, the riskier it is to accept the offer, as there are more ways it could potentially fall through. Work with your Realtor to negotiate a contract that benefits you and the buyer.