7 Real Estate Terms For Buyers & Sellers

As REALTORS®, we are often asked: What is a short sale? Should I buy a foreclosure? What is the MLS and why do I need to use it? So we put together a quick article to help you better understand some of these commonly-used real estate terms!

 

Check out the terms below for a quick definition and a few pros and cons:

1. SHORT SALE

A short sale is when the seller owes more on the mortgage than what the current market value is, or the sales price of the home when they are trying to sell. Short sales are sold for a price less than what is currently still owed on the mortgage by the previous owner. For sellers, a short sale is usually done to avoid a foreclosure.

Pros:

• Sellers can avoid a foreclosure, while buyers can get a great deal on a home!
• There is usually less competition with short sales than with foreclosures.

Cons:

• Short sale purchases can be a lengthy process and involve more paperwork than a normal sale.
• Special approval from lenders is required, adding to the lengthy process.
• The property is most likely sold as-is, which may mean the house is not in great condition. 

 

2. FORECLOSURE

A foreclosure is a home that is that the previous owner defaulted on (stopped paying their mortgage) and the bank took possession of the property. Similar to how a car gets repossessed if someone stops making payments. These properties are often in a wide range of conditions and historically take more time to close on with banks, lenders, etc. While there are risks with purchasing a foreclosed home, there is also an opportunity to own a home for a very affordable price!

Pros:

• Buyers can purchase below market value.
• Banks often willing to give financing.
• Higher return on your investment, as you re purchasing a home under market value
• There may be an option to purchase in a "pre-foreclosure stage" - purchase from the seller at an affordable price, instead of the bank, before the bank reposesses the home. 

Cons:

• Homes are sold As-Is, which can often mean the home has been neglected and not very well-maintained
• Investors love foreclosures, so there can be a lot of competition for these types of properties in a desired area.
• The process to purchase a foreclosure is usually a bit longer and requires more paperwork.

 

3. REVERSE MORTGAGE

A reverse mortgage is essentially a loan against the equity you've already built on your home. In other words, you can borrow from your home's equity. These types of mortgages are designated for the elderly who need cash, but do not want to, or cannot, sell their home. 

 

4. FOR SALE BY OWNER

A for sale by owner is a property that is being sold by the owner, without a real estate agent. In this scenario, most people think they can save a lot of money by not using an agent. However, what sellers don't know is that there are a lot of costs associated with selling your home, and agents can actually save you a lot of money AND time. There are also a lot of risks for the seller and buyer as they take on liability and don't know the legalities involved.

Food for thought - would you show up to court to represent yourself after googling "how to practice law?"

 

5. A "COMP"

A comp is a home that is comparable to the specific property you're looking to buy.  Comps include recently sold homes that are in the surrounding area and are similar in size, layout, condition and features as the home you're trying to buy (or sell). Finding comps helps sellers price their home accurately, and it also gives buyers an idea of what a home for sale is worth. 

 

6. THE MLS

All REALTORS® use the MLS, or Multiple Listing Service, which is the database that provides information on properties for sale. Every property that is listed in the MLS is given its own identification number. When a listing has been uploaded into the MLS database, the MLS then shares its data (the listing) with EVERY real estate website that allows you to search its properties.

 

7. MLS NUMER

Ever wonder why almost every home that is listed by a REALTOR has an MLS number? Every property that is uploaded into the MLS is given its own identification number, or MLS number, to organize and identify properties. When a property/home is purchased/sold, that MLS number is then considered "used up".

 

So, what's the best website to use to search available properties?

This answer is easy, it’s www.Keelerfamily.com 

In all seriousness, we are often asked what the best website is to search for available listings. In reality, all real estate websites use something called an IDX. Some IDX’s are better than others, but the IDX establishes a direct data connection between the MLS and the website using it. This allows you to search the MLS database on your website. It’s like using a search engine to help you sift through what you want to find on the Internet, but in this case, it's only properties.

Our IDX is ideal, and I like to consider keelerfamily.com the “GOOGLE” of real estate websites, but I could be bias!