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Real estate terms for first-time homebuyers

by John Wann 06/13/2022

For many first-time homebuyers, knowing common real estate terms can help prevent the feeling of information overload. Once you learn the language real estate agents use, you may feel much more comfortable in your quest to find your dream home.

Here are some helpful real estate terms to know:

Contingent

You’re likely to encounter the term “contingent” when house hunting on major search engines or a multiple listing service.

This word shows up as a status on listings where a prospective buyer or buyer’s agent has made an offer and the property owners, or sellers and seller’s agent, has accepted the offer.

However, contingent status indicates there are additional criteria for the closing of the sale, such as additional home inspections, appraisals or mortgage approval.

Escrow

Escrow refers to a third party temporarily holding on to a portion of money involved in the property sale. The money is typically held in a dedicated escrow account, and during this time the house might be referred to as “in escrow.”

Escrow accounts are a tool used to mitigate financial risk for both the homebuyer and home seller during the real estate transaction.

Earnest money

Earnest money is the money added to an escrow account or trust as a sign of good faith in the transaction. A seller might require earnest money as a way to ensure the buyer is sufficiently motivated and qualified to go through with the purchase.

While it’s often added to the third-party account early in the process, earnest money is entirely different from a down payment.

Appraisal value

There are many types of “value” in the real estate lexicon, but appraisal value specifically refers to the results of a professional appraisal.

The key difference between appraisal value and other property value terms like “fair market value” and “assessed value” is the appraisal value is based on a specific time point (typically during the sale or refinancing process). This means appraisal values can change over time and from one appraisal to the next.

Closing costs

Closing costs are the final expenses due at the end of the home-buying process. Some services you’ll need to pay for as part of the closing costs include credit reports, mortgage insurance, property taxes, homeowners association dues and legal processing fees.

Closing costs are separate from monthly mortgage payments, but are often paid to your mortgage lender.

While these are only a few important terms to know, they can be extremely helpful in understanding both complex and basic real estate concepts. The more you develop your real estate vocabulary, the better your home search experience will be.

For any other real estate terms you may have come across and have questions about, your real estate agent will be able to help break them down into more digestible tidbits.

About the Author
Author

John Wann

My name is John Wann. And I have never sold anyone a home. 

What I have done is introduce people to houses, a community and one of the most beautiful areas of the country that I think they will love.

Frankly, there is a lot to love in this mountain area west of Denver. 

Yes, I am in sales. Of course. I have been in professional sales for more than 30 years and, more importantly, I have lived in the Evergreen area for more than 27 years. 

In short, I know the territory. 

I moved here from Atlanta, Georgia and never looked back. Every drive back “up the hill” from Denver feels like I am about to go on vacation. Again. That’s not a feeling you can get in many places in this world.

To be sure, I have intimate knowledge of the real estate here. But more, I know this community. 

If you're looking for a great restaurant with a cozy, mountain atmosphere. Just ask me. If you're looking for something less sedate, well, I know those places too. And I also know a lot of great hiking trails.

I am a member of the Institute for Luxury Home Marketing and a Certified Mountain Area Specialist. If you're coming from another part of the country that may not mean much to you, but I can help you avoid the pitfalls and understand the quirks of buying a home in the mountains. 

For people who are new to the area, this can ensure that you can find real happiness in a home here.

Simply, buying a house in the mountains is not the same as buying a house in Kansas City or Chicago.

For example, it makes little difference if you buy a south-facing house in Texas. But in the mountains, it can make all the difference between whether you get to your garage in winter or not.

Paying attention to such things and 100 others can ensure that you love your mountain home. Love your new community. And love the joys of mountain living. 

For me, it’s a privilege to pass along such insights.