Real Estate Terminology You Should Know

Navigating the world of real estate can be daunting, especially if you’re new to the industry. Understanding the terminology is crucial to making informed decisions and communicating effectively. Whether you're buying, selling, or investing in property, this guide will help you familiarise yourself with key real estate terms. Let's dive into the essential vocabulary every real estate enthusiast should know.

1. Appraisal

An appraisal is an unbiased estimate of a property's value conducted by a professional appraiser. It’s used by lenders to determine the amount of money they are willing to lend for a property purchase.

2. Closing Costs

These are the expenses, over and above the price of the property, incurred by buyers and sellers in transferring ownership of a property. Closing costs include loan origination fees, title insurance, escrow fees, and taxes.

3. Comparative Market Analysis (CMA)

A CMA is an evaluation of similar, recently sold homes (called comparables) in the same area. It’s used to determine a fair market value for a property and is often performed by real estate agents.

4. Contingency

A contingency is a condition that must be met for a real estate contract to be binding. Common contingencies include passing a home inspection, obtaining financing, and the sale of the buyer’s current home.

5. Equity

Equity is the difference between the market value of a property and the amount still owed on the mortgage. As you pay down your mortgage and property values increase, your equity grows.

6. Interest Rate

The interest rate is the percentage of the loan amount that a lender charges for borrowing money. It’s expressed as an annual percentage of the loan amount.

7. Fractional Ownership

Fractional ownership refers to the shared ownership of a property by multiple individuals, each owning a fraction or percentage of the property. This allows multiple owners to share the costs and benefits of the property.

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Ready to dive deeper into the world of real estate?