Words that'll help you talk the talk while walking the walk
- Real estate professionals love acronyms and abbreviations—luckily, these terms aren't very difficult to decipher or understand once you have a solid foundation
- If you have a good grip on these terms already, consider testing yourself even more by taking the next step and creating a free Home Savi trial offer!
Just like a foreign language, real estate jargon can be tricky to understand if you don't have a solid foundation to help with interpretation. Terms like "CC&Rs" and "caveat emptor" can sound intimidating at first, but most of the time, real estate terms aren't very complicated at all. Below are 9 of them to keep in mind as you go through the home buying process.
Let's start off easy. The first thing you should know is that the real estate industry loves acronyms. MLS stands for "multiple listing service." The MLS is a regional online listing database created and maintained by real estate professionals. It's used to help agents find homes for their clients. Although you can't access it as a homebuyer, there are ways to view its contents. Sites like Realtor.com pull their data directly from the MLS. Other sites like Zillow and Trulia do not. Learn more about the MLS and today's home search sites.
Another thing agents like are abbreviations. Fortunately, most of them just take a little common sense to interpret. 4B/2B translates to 4 bedrooms and 2 bathrooms. Abbreviations like this are used to quickly describe a home in a lot of listings, so keep an eye out for them.
3) Caveat emptor
This is a Latin phrase meaning "let the buyer beware." Essentially, it's used in real estate to say that the homebuyer is tasked with completing their own due diligence before closing on the home. This is why it's so important to have a home inspected by a licensed home inspector before buying.
Read about how to hire the right inspector.
This one's a biggie, and you'll see it everywhere. These two terms are not the same!
Pre-qualified: A mortgage pre-qualification involves providing your lender with basic information, which is used to come up with an amount the lender thinks you can borrow based on your income and overall financial situation. While it’s certainly a good thing to have, it’s not nearly as comprehensive as a mortgage pre-approval. In today's market, you'll need a pre-approval to be competitive.
Pre-approved: A mortgage pre-approval requires completing a mortgage application and providing your lender with all appropriate income documentation and personal records. Despite being a much more in-depth process, getting pre-approved for a mortgage can actually save you time in the long run.
Save time with Better: We've partnered with Better Mortgage to make getting pre-approved as easy as pie (think spend-a-few-minutes-and-get-approved-in-24-hours easy). You’re all about the modern home buying experience. Shouldn't your mortgage provider be modern too? Better combines best-in-class tech with a dedicated support staff to bring you unparalleled control and transparency in the buying process.
Protip: Getting pre-approved by a lender usually requires a "hard pull" on your credit. Too many of these can end up hurting your credit score. To prevent this, follow these tips:
- Shop lenders within a 14-45 day time frame
- Know that credit reports are good for 120 days
An Assessor’s Parcel Number (APN) is a unique number given to plots of land to help with identification and precise recordkeeping. APNs are assigned by the county tax assessor and are also used to keep track of property tax information. You may also see the APN referred to as an Assessor’s Identification Number, Property Identification Number, Property Account Number or Tax Account Number.
You'll need to know the property's APN to make an offer with Home Savi. Learn more about APNs, including how to find them online or in-person here.
These two terms go hand in hand, and you'll encounter them if you're looking to buy in a planned development. An HOA, or homeowners' association, is an organization in a planned community that manages the financial and other shared assets of the community. Condominiums are often managed by HOAs. HOAs collect monthly fees or annual dues to pay for and maintain private areas only accessible to members of the association. These areas can include parks, gardens, roads, pools and tennis courts. The fees can be used for things like landscaping, leaf blowing, snow removal and pool maintenance.
But HOAs may also have restrictions on what you can and can’t do to the appearance of your home in order to protect the community’s overall curb appeal and value. These restrictions, called covenants, conditions and restrictions (CC&Rs), can prevent you from doing things like painting your exterior a different color, flying flags and even keeping your garage open during the day. Violating CC&Rs may result in fines, forced compliance or legal action.
CC&Rs often go overlooked and can be one of the last things addressed before closing, but it's important to be mindful of them as they're binding and you are subject to them whether you're aware of them or not.
7) Debt-to-income ratio
Also known as your DTI, your debt-to-income ratio is an important figure that lenders use to determine your ability to make monthly payments on loans. The ratio compares how much money you earn each month to the amount of debt you are liable to pay off each month. You should care about your DTI ratio because lenders do. Along with your credit score, it can make or break your loan application.
To calculate your debt-to-income ratio, add the totals of all your monthly debt payments and divide them by your monthly income. Need help? Read more about this topic on our Knowledge Base here.
8) Closing costs
If you didn't know about these already, boy are you in for a not-so-fun surprise. The typical closing cost of a home ranges from 3% to 6% of the purchase price. Your lender will give you a detailed estimate of closing costs. Most of the closing costs are the responsibility of the buyer. However, you may be able to negotiate with the seller to have them pay a portion of these costs. Common closing costs can include:
- Home appraisal
- Title insurance
- Escrow fees
- Inspection fees
- Recording fees
- Underwriting fees
- Discount points
- Home warranty
- Property taxes
Protip: Our contracts are set up to put you in control of your savings. One great way to use your savings is to put them toward your closing costs. Learn more about leveraging the Home Savi credit.
Read about other hidden costs that come with buying a home.
9) Buyer's/seller's market
All the terms "buyer's market" and "seller's market" refer to is who the market is better for at the moment. In a buyer's market, there are more sellers than buyers, which means there's a lot of inventory to choose from and sellers are competing for your attention, which is great as a buyer. In a seller's market, there are more buyers than sellers and inventory is tight. If you're in a seller's market, be ready for some competition.
Not to worry though—we've got your back. The great thing about using Home Savi to offer, close and save is that you can use the $$$ you get to keep in commission to make your offer that much more attractive to sellers (see protip above). Here are a few other ways to make your offer stand out from the crowd.
Felt like this list was easy-peasy?
You may have a home buying pro lying within you! Luckily, we've got just the thing that can help you unleash your inner superpowers and find out if self-representation is right for your next home purchase. Try create your own offer for free with Home Savi—all you have to do is sign in and get going.