Do you understand the real estate terms?

There are several stages for buying a house: selection of an intermediary, loan approval, house viewing, make an offer, signing contract, house inspection, purchase of house insurance, final inspection before handover, property transfer and registration. Let us introduce some terms and their meanings that are often encountered in these processes.。

1. Different types of houses and facilities

• Real Estate Property：
• House:House is subdivided into Single Family House and Multi-Family House, the former is the most common. No property fees.
• Foreclosure：When a homeowner fails to make mortgage payments, lenders have the option to seize a home, a process known as foreclosure. Foreclosed homes are “bank-owned properties” that eventually go to auction, where the bank tries to recoup the money for the property.
• Short Sale:A short sale in real estate is when a financially distressed homeowner sells their property for less than the amount due on the mortgage. The buyer of the property is a third party (not the bank), and all proceeds from the sale go to the lender. The lender either forgives the difference or gets a deficiency judgment against the borrower requiring them to pay the lender all or part of the difference between the sale price and the original value of the mortgage. In some states, this difference must legally be forgiven in a short sale.
• Bank Owned (REO)：Real estate owned (REO) is property owned by a lender, such as a bank, that has not been successfully sold at a foreclosure auction.
• Townhouse:A townhouse or townhome is a single family home that shares one or more walls with other independently-owned units. They are often rows of uniform homes, two stories or taller. Residents own their interior and exterior walls, lawn, and roof, as well as the insurance for both their home and property. Maintenence costs for the home is determined by the community's homeowners association.
• Condominiums：A condo or condominium is a single building or a community of buildings with separate units owned by individual residents. Condos can vary in size or style, ranging from individual homes to high-rises, but they often share walls with adjacent units. Residents own and maintain the interior of their unit but don’t own the property on which it sits. The exterior, lawn, and shared spaces are maintained by the Homeowners Association or HOA. A shared insurance is factored into the dues paid to the HOA. However, residents are responsible for their individual homeowners insurance.
• Garage：A building for housing a motor vehicle or vehicles. It is divided into Attached: Attached Garage (Attached Garage: the garage connected to the house) and Detached: separate and independent.
• Bedroom：A room for sleeping in.
• Bathroom：A room containing a toilet and sink and typically also a bathtub or shower.
• Kitchen：kitchen equipment. Usually 7 types of equipment is included in the house price: 1) Cabinets; 2) Oven; 3) Dish-washer; 4) Stove; 5) Microwave; 6) Range hood; 7) Garbage Disposer.
• Pool&Spa：
• Front Yard：
• Backyard：
• Location：
• View：There are scenery, and you can see (houses) far away. Such as: Mountain View ; Ocean View; Sea View; No View.
• Lot Size：Lot size is the land you own according to the survey of boundary lines determined by the city (including front yard and backyard)
• Sq Ft(Square Footage)：Square feet, the net living area of the house, refers to the area that has temperature regulation (air-conditioning or heating or both! Function and suitable for human life when the builder designs a new house, not the building area). Balconies, garages, and basements are not considered residential area. Any rebuilt structures created by the buyer later are also not counted.
• Note: 1 square meter = 10.76 square feet, a rough calculation can be calculated with 10: a 2000 square foot house is equivalent to 200 square meters.

2、Professions and Organizations in Real Estate Industry

• Buyer：
• Seller：
• Real Estate Agent：A real estate agent is someone who has a professional license to help people buy, sell, or rent all sorts of housing and real estate.
• Realtor：A real estate broker is someone who has taken education beyond the agent level as required by state laws and passed a broker’s license exam.
• Real Estate Consultant：A consultant usually advises clients on building or investment activities in the market.
• Listing Agent：A listing agent is a real estate agent who represents a home seller.
• Buyer's Agent：A buyer's agents represent home buyers.
• Lender：A mortgage lender is a financial institution or mortgage bank that offers and underwrites home loans.
• Loan Broker：A mortgage broker acts as an intermediary who brokers mortgage loans on behalf of individuals or businesses.
• Escrow Officer：Escrow officers act as neutral third parties to accomplish the closing of a real estate transaction.
• Escrow Company：The escrow company acts as a neutral third party to collect the required funds and documents involved in the closing process from the initial earnest money deposit and loan documents to the signed deed.
• Title Company：serve as the closing agents for real estate transactions, which means they act as an agent for each party to the transaction. At the closing, the title company will gather signatures on all closing documents and also receives and distributes any payments related to the transaction.
• Home Inspector：A qualified home inspector assesses the condition of a property, including its heating and cooling systems, plumbing, electrical work, water, and sewage, as well as some fire and safety issues. In addition, the home inspector will look for evidence of insect, water, or fire damage or any other issue that may affect the value of the property.
• Appraiser：An appraiser is a professional who determines the market value of a real estate property.

3. Common terms in the process of buying a house (arranged in the order of process)

• MLS (Multiple Listing Service)：A Multiple Listing Service, commonly referred to as a MLS, is used by real estate brokers to market their listings to other real estate brokers. A real estate broker who belongs to a MLS submits their listings to the MLS and offers a commission to any MLS member agent that submits an acceptable offer that results in a closed sale.
• Listing：Listing simply means a property is advertised.
• Search Criteria：search criteria include your basic, but often most important factors when deciding on a new home.
• Open House：An open house is a scheduled period of time in which a house or other dwelling is designated to be open for viewing by potential buyers
• Caravan：Caravan is used to describe a method of selling a home in which a group of real estate agents are invited to tour a handful of different homes that are on the market.
• Make Offer：Buyers make a formal offer on the home they want to purchase.
• Purchase Agreement： A purchase agreement demonstrates a buyer’s intent to purchase a piece of property and a seller’s intent to sell that property. The document outlines the terms and conditions of a sale and holds each party legally accountable to meeting their agreement.
• Counter Offer：A counteroffer is a response given to an initial offer. A counteroffer means the original offer was rejected and replaced with another one.
• Addendum：If a buyer or seller want to change an existing contract, they might add an addendum outlining the specific part of the contract they’d like to adjust and the parameters of that change. The rest of the contract stays the same, regardless of the addendum.
• Earnest Money Deposit：Earnest money is a deposit (usually 1-2% of the home’s total purchase price) made by a homebuyer at the time they enter into a contract with a seller. Earnest money demonstrates the buyer's interest in the property and is generally deducted from your total down payment and closing costs.
• Down Payment：The down payment is the amount of cash a homebuyer pays at the time of closing.
• Interest Rate：loan rate
• Loan Amount：The amount the borrower promises to repay, as set forth in the loan contract.
• All Cash Offer：A cash offer is an all-cash bid, meaning a homebuyer wants to purchase the property without a mortgage loan or other financing.
• 30 Years Amortization：The longer the amortization schedule (say 30 years), the more affordable the monthly payments, but at the same time the most interest to be paid to the lender over the life of the loan
• Purchase Price：The purchase price is the price an investor pays for an investment, and the price becomes the investor’s cost basis for calculating gain or loss when selling the investment.
• Offer Accepted：Acceptance is the final agreement of both parties to consent to the terms of the offer.
• Open Escrow：After a purchase agreement is signed, the buyer’s earnest money and the seller’s deeds are deposited, in an “escrow account” with an Escrow Officer.
• Cancel Escrow：
• Contingency：The attached conditions include the following three: 1) Loan Contingency: loans have conditions attached, but cash purchases are not required; 2)Appraisal Contingency: conditions attached to Appraisal ; 3) Home Inspection Contingency: conditions attached to inspection.
• **Note: Generally speaking, the buyer has 17 days to remove All Contingencies after entering the transfer process, which means that if the loan is not available within 17 days, or the appraisal of the property is not accurate, or the house inspection is not satisfied, the buyer can cancel the contract and get the deposit back.
• Disclosure：A Seller Disclosure is a set of documents completed by the seller of a home, listing any known issues with the property and any remodel projects completed during the time they owned the home.
• How to Hold Title:People can own real estate for their primary residence or to hold as an investment rental property, and their ownership is determined through what's known as a title.:1 )Joint Tenancy: Joint tenancy occurs when two or more people hold title to real estate jointly, with equal rights to enjoy the property during their lives; 2)Tenancy in Common: With tenancy in common (TIC), two or more persons hold title to real estate jointly, with equal or unequal percentages of ownership.;3) community property: Community property is a form of ownership by husband and wife during their marriage that they intend to own together. Under community property, each spouse owns (or owes) everything equally, regardless of who earned or spent the money; 4) Tenants by Entirety (TBE): This method can only be used when owners are legally married. Tenants by entirety (TBE) is ownership in real estate under the assumption that the couple is one person for legal purposes; 5): Sole Ownership: Sole ownership can be characterized as ownership by an individual or entity legally capable of holding the title.
• Title Insurance：Title insurance is a form of indemnity insurance that protects lenders and homebuyers from financial loss sustained from defects in a title to a property.
• Preliminary Title Report：A preliminary report is a report prepared prior to issuing a policy of title insurance that shows the ownership of a specific parcel of land, together with the liens and encumbrances thereon which will not be covered under a subsequent title insurance policy.
• Home Inspection：The inspection is meant to identify major issues that might affect the value of the home and the stability of your and your lender’s investment and return.
• Termite Inspection：to find out if the house is infested with termites
• Termite Repair：to repair a house infested with termites
• Home Warranty：the buyer should require the seller to purchase a one-year house maintenance insurance.
• HOA( Home Owners Association)：It will charge for community management fee.
• Mello Roos：A Mello-Roos District is an area where a special tax is imposed on those real property owners within a Community Facilities District. This district has chosen to seek public financing through the sale of bonds for the purpose of financing certain public improvements and services.
• Property Tax：Property tax is a tax paid on property owned by an individual or other legal entity, such as a corporation.
• Home Owners Insurance：Homeowners insurance is a form of property insurance that covers losses and damages to an individual's residence, along with furnishings and other assets in the home. Homeowners insurance also provides liability coverage against accidents in the home or on the property.
• Loan Document：Loan Documentation prepares lenders to thoroughly and accurately evidence business and consumer loan transactions by collecting the appropriate documentation and properly executing subordination and security agreements.
• Close Escrow：Close of escrow means essentially that a real estate transaction has been completed and that the sale is final. The process is generally 30-45 days. The process can be shortened if the property is purchased by cash.
• Record：This is the filing of records to register with government agencies. Buyer will become the real home owner after that.