When you enter the world of real estate, you will soon realize that we have our own language.  Once you decide to buy or sell, our language will become yours.  Here are a few of the more common words you might hear.  Please keep in mind that some of this information may vary in different areas of the country:

  • Real Estate Agent, Buyer’s Agent and Realtor®:  Real estate agents are licensed professionals that will help you with your real estate transaction.  A buyer’s agent is also licensed and generally represents buyers , while a listing agent represents sellers.  A Realtor® is someone who is a member of the National Association of Realtors and follow a strict code of ethics and other standards.  Yours truly is a Realtor®, and I also have a Buyer’s Agent (Amanda Walker) as part of my team.
  • MLS:  This stands for Multiple Listing Service, which is a online, searchable database with detailed information for each listing.  This is different from some of the other online real estate websites, like Zillow.  I actually use HAR (Houston Association of Realtors ®), which is a MLS-linked searchable database specific to Houston and the surrounding areas.
  • Pre-Approval Letter:  This is a letter from a bank or lender basically giving you an estimate for lending purposes once you have provided them with information regarding income, assets, debts, etc.  There are some listing agents that insist on all potential buyers wanting to look at a property be pre-approved, and they will definitely want to see your letter if you decide to go under contract (make an offer) for a house.
  • Offer/Contract:  This is your official offer to purchase (or sell) a property.  I always advise my clients to read these contracts carefully.  If you don’t understand some of the conditions, I am here to explain them to you.  You also have the right to have an attorney review a contract if you wish.  An offer does not become a contract until it is signed by all parties.  A seller can choose to accept, reject or make a counter-offer.  Buyers can counter a counter-offer.  This is when it really can pay to have an experienced Realtor® (like me) to help you with these negotiations. 
  • Option Fee:  This is a non-refundable fee (can range from $10 to $25 a day or higher) given to a seller by the buyers to compensate the seller while the home is undergoing inspections.  Generally, when a property goes under contract, the status in MLS is changed from “active” to “option pending.” The property can continue to be shown, but most realtors pass by these listings unless their clients insist on seeing.  This fee is usually credited back to the buyer at closing.
  • Earnest Money: This is paid in addition to the option fee.  Earnest monies generally amount to one percent (1%) of the purchase price.  You might have heard this also referred to as a good faith deposit.  It shows the seller that you are serious about purchasing the property, and these funds are held by an escrow agent at a local title company.  Beware—if you back out of a contract without good cause, the seller may have the right to keep you earnest money.

There are many other terms you might hear and wonder about.  Stay tuned for my next blog post and I’ll discuss a few more.