Like any other industry, the real estate industry has no shortage of jargon. For people who are less familiar with real estate, having so many unfamiliar words tossed around can get confusing, and some people aren't comfortable asking questions. Of course, a good real estate agent will take the time to define and explain everything. But here are a few words you may need to know if you are considering buying or selling a home.
-Comparative Market Analysis (CMA)- A CMA is used to help create an estimate as a guide for pricing a home. This is usually based on current or recent market activity on similar homes. A CMA is used by both buyers, sellers and agents who are preparing to buy or sell a home.
-Collateral - An asset that a borrower offers a lender in order to secure a loan. For instance, if you get a mortgage the collateral is your house.
-Earnest Money - This shows that a buyer is serious about an offer an a home. This is normally submitted at the same time that you write the offer and not deposited until the offer is accepted. Typically earnest money is 1% of the offer price. This is sometimes also revered to as a Good Faith Deposit.
-For Sale by Owner (FSBO) - A home that is for sale by owner means that the home owner is selling a home themselves without using a licensed real estate agent. This means that the home also cannot appear in the MLS (Multiple Listing Service). However, these homes may appear on websites such as ForeSaleByOwner.com, Oodle.com and Craigslist.
-HVAC - HVAC stands for heating, ventilation and air conditioning.
-Loan-to-Value Ration (LTV) - This is the mortgage amount divided by the purchase price or the appraised value of the property (whichever is lower). The ratio is expressed in the form of a percentage. It is then used by a lender to help determine the mortgage loan the lender will make on the property.