Real Estate Glossary Many industry specific terms are tossed around when buying and selling real estate.  Don’t be confused by the vernacular used by agents, brokers and lenders.  Your GMAC Real Estate Northwest Real Estate Agent is your best source in decoding terms or jargon that may be confusing at first. You can also use this guide as a reference to help you understand real estate lingo. Terms to know Abstract of title: A history of ownership of a property and any documents that affect the title during that ownership. (Same as Cloud on Title) Appraisal: An opinion by a licensed real estate appraiser about the fair market value of a home. This opinion is based on recent sales of similar properties within a close proximity of the subject property. Appraisers must follow guidelines set forth in the Uniform Standards of Appraisal Practice when determining value. Broker: A person who has a real estate broker’s license, who not only makes real estate transactions for others in exchange for a fee (or other consideration), but who may also operate a real estate business and employ sales professionals (sales associates), and other brokers. Buyer pool: The entire market of prospective home buyers in a specific area or looking for a type of home. Clear or marketable title: A title that does not have any liens or claims against it that would keep it from being transferred, or put the buyer in a position to sue for property rights, or be obligated for claims. Closing or settlement: The date that the buyer and seller exchange funds and property. Closing is also sometimes what it is called when a buyer or seller goes in to sign documents. Recording is when the sale is completed. Cloud on title: A history of ownership of a property and any documents that affect the title during that ownership. Deed: The legal document that is used to transfer the title from one owner to another. There are different types of deeds, a general warranty deed gives the most guarantee of ownership, the quitclaim deed gives the least. Earnest money: Money that is offered as a deposit by a potential buyer to show serious intent to buy.  Earnest money should be a minimum of 1% of the purchase price to be taken seriously, however it is negotiable.  When determining the amount of earnest money to offer, the buyer should keep in mind that: A) it should be high enough to prove to the seller the buyer means business; and B) it should not be so much money, that the buyer would be crushed if they lost the earnest money by default.   A buyer should never put earnest money on a property they don't intend to follow-through on (just to tie up the property so someone else can't buy it - that would be injurious to the seller). Equity: The amount of ownership that one has in a home. Equity is the fair market value of the property minus the remaining mortgage principal. Final Walkthrough: The opportunity the buyer has to walk through a property to make sure the property is in substantially the same condition it was in when the offer was made, and to make sure all agreements from the offer have been fulfilled. The final walkthrough is not a condition of sale, and if the buyer chooses not to walk through, they have accepted the property in the condition it is in upon recording.  Exclusive right-to-sell contract: A listing contract whereby the real estate broker has sole right to sell, and receives a commission, regardless of who produces the buyer. General warranty deed: The type of deed considered to provide the most protection to an owner, because the seller guarantees that he or she is the true owner of the property and that no claim will be brought against the property. Home Warranty: A policy that covers unexpected problems that arise through homeownership. A seller may opt to purchase a home warranty on their home upon listing to make their home more desireable than a home that doesn't carry a home warranty. Some home warranty companies will cover the home while it is listed when the seller pays for a policy to go into effect upon recording. It is a great way to cover unexpected problems that may happen while the house is on the market, and a warranty makes a buyer feel less apprehensive about purchasing. Listing agreement: A written agreement between the brokerage (including your sales associate or agent) that you have hired to represent you in the sale of your property according to the terms of the sale that you specify. In exchange for producing a ready, willing, and able buyer for you, the brokerage is paid a commission by you. Your sales associate is an independent contractor who will receive part of the commission you have agreed to pay to the brokerage.  Multiple Listing Service (MLS): A networking system, frequently on computer, in which a number of real estate firms cooperate with each other and share information about their clients’ houses that are for sale.  It is a way for real estate sales associates to locate active listings for their buyers to see and buy. Offer to Purchase / Purchase and Sales Agreement / Earnest Money Deposit Receipt: A document that lists the price, conditions and terms under which the buyer is willing to purchase the property.  Once signed by the seller, it becomes the binding contract between the buyer and seller. Offer to Purchase and Acceptance / Contract of Sale/ Sales Contract: A mutually accepted offer of purchase that has been signed by both buyer and seller. A firm contract that outlines all details of the property transaction. Radon:  A cancer-causing natural radioactive gas that you can’t see, smell or taste. Its presence in your home can pose a danger to your family's health. Radon is the leading cause of lung cancer among non-smokers. Radon is the second leading cause of lung cancer in America and claims about 20,000 lives annually.   GMAC Real Estate Northwest strongly suggests having a radon test as a regular part of your home inspection.   Realtor®: An active member of a local board of realtors. Local boards are affiliated with the National Association of Realtors®. Recording: After the terms agreed upon in the Purchase and Sale Agreement have been fulfilled, and the buyer's funds have been received by the title company or closing agent, the closing agent will go to the courthouse in the county in which the property sits, and check all recordings to make sure no new liens or encumbrances have been recorded against the property, and then the sale will be recorded. Upon recording, ownership of the property transfers from the seller to the buyer. Only then will any proceeds that are to go to the seller become available. Settlement Statement: The document that accounts for all the charges and fees, including pro-rated amounts, credited or debited to the seller and buyer and shows the bottom line of how much money either party needs to bring to the table to close the transaction, or how much money either party will receive after recording.  In compliance with confidentiality laws, neither the buyer, nor the seller will see the other's settlement charges. Title: The right to ownership in real estate, which is transferred by a deed. Title search: Checking all the records relating to the title. Title insurance: Insurance, usually paid through a single premium at closing, that insures the owner against loss because of a claim against the title that was not found in the title search.