First-time home buyers face a new language as they peruse listings and negotiate a real estate deal. If you need a crash course (or to brush up) on the terms you need to know, here’s a rundown that will come in handy.
4B/2B: Four bedrooms and two bathrooms. “Bedroom” usually means a sleeping area with a window and a closet, but the definition varies in different places. In some areas, laws define what a room needs to have in order to be called a bedroom.
Active: This means that a property is currently on the market and available for sale. It may have received offers, but none has yet been accepted, which means that the opportunity is wide open for you to make a proposal.
Active with contract (AWC): This means that even though there’s an accepted offer on the home, the seller is looking for backup offers in case the primary buyer falls through. While any seller can entertain backup offers as a precautionary measure as long as this is made clear in the contract, this term most often crops up with short sales, since they can often fall through, and it can be helpful if a second buyer is waiting in the wings.
Adjustable-rate mortgage (ARM): After an introductory period that could be three, five, seven or 10 years, the interest rate on an adjustable-rate mortgage will be adjusted by the lender in accordance with current interest rates. While the initial interest rate is typically lower than that of a fixed-rate mortgage, once that period is over, the rate could climb sharply.
ARM cap: Some adjustable-rate mortgages have a cap that limits how high the bank can raise the interest rate on your loan once the introductory period is over. You may pay a bit more for this option.
Assum. fin: Assumable financing.
Back on market (BOM): A property that has come back on the market after a pending sale. This means that the home fell out of escrow, perhaps due to contract issues, says Tania Matthews, an agent with Keller Williams Classic III Realty in Central Florida.
CMA: Comparative market analysis or competitive market analysis. A CMA is a report that shows prices of homes comparable to a subject home and that were recently sold. The sold prices, known as comps, can help homeowners determine how much their home is worth in the current market.
Closed (CL): The property is sold and no longer available.
Closing costs: On closing day, when you finalize the purchase of your home, you’ll have to pay for a variety of fees associated with the home-buying process, such as the brokerage commission and title insurance. Most are paid by the buyer, but the seller covers some. The buyer should get an estimate of these fees shortly after applying for a loan. While you can’t avoid closing costs, there are ways to reduce them.
Contingency: A provision of an agreement that keeps the agreement from being fully legally binding until a certain condition is met. One example is a buyer’s contractual right to obtain a professional home inspection before purchasing the home.
Contingent: A contingent status means that the seller has accepted an offer and the home is under contract. But the sale is conditional upon certain criteria being met by the buyer and/or seller before the deal can close. Examples of contingencies are home inspections, attorney review, buyer financing, appraisal, and title search, among other reasons.
Deal pending (DP): This means the seller has an accepted offer and an executed contract, and all the contingencies have been met, so the home is pending sale. This is the escrow period, when both buyer and seller are working toward a closing. The status will show as pending until the closing. Even though a sale is highly likely at this point, some pending properties may still accept backups. If your offer is accepted as a backup, you’re in line to go under contract if the first sale falls through.
Dk: Deck.
Down payment: The lump sum in cash that you can afford to pay at the time of purchase. Traditionally, down payments are 20% of the purchase price, so if you are buying a home for $500,000, your typical down payment would be $100,000. It is possible to put less than 20% down, but mortgage insurance would then be required. No-down-payment loans exist for veterans and others, and there are also down payment assistance programs for first-time buyers.
Expansion pot’l: Expansion potential means that there’s extra space on the lot or the possibility of adding a room or even an upper level—subject to local zoning restrictions.
EIK: Eat-in kitchen.
Expired: The property listing with the agent has expired and is no longer active, usually because it didn’t sell, says Matthews. That could mean the seller is still open to accepting an offer, so it’s worth touching base if your curiosity is piqued.
Fab pentrm: Fabulous pentroom, a room on top of the house—but under the roof—that has great views.
FDR: Formal dining room.
Fixed-rate mortgage: This mortgage’s interest rate will never change, even if the term of the loan is 30 years. This can be good or bad, but it will always be predictable. Interest on fixed-rate mortgages is almost always higher initially than on adjustable-rate mortgages. But you’ll also be protected against rate hikes, a pitfall of adjustable-rate mortgages.
Fixture: Anything of value that is permanently attached to or a part of real property. Fixtures include wall-to-wall carpeting, light fixtures, window coverings and landscaping. Fixtures are a frequent subject of buyer and seller disputes.
Frplc, fplc, FP: Fireplace.
FSBO: For sale by owner.
Full bath: A bathroom with a toilet, a sink and a bathtub. A “three-quarter bath” has a toilet, a sink and a shower. A “half bath” or powder room has only a toilet and a sink.
Gar: Garage.
Gard: Garden.
Grmet kit: Gourmet kitchen.
HDW, HWF, Hdwd: Hardwood floors.
Hi ceils: High ceilings.
In-law pot’l: Potential for a separate (“in-law“) apartment, subject to local zoning restrictions.
Interest: Nothing is free, especially when you are using someone else’s money. Just like your car or college loan, you will pay back the money you borrowed from your lender (most likely a bank) with interest—a percentage of the principal that you borrowed.
Large E-2 plan: This is one of several floor plans available in a specific building.
Listing: An agreement between a real estate broker and a home owner that allows the broker to market and arrange for the sale of the owner’s home. The word “listing” is also used to refer to the for-sale home itself. A home being sold by the owner (FSBO) without a real estate agent isn’t a “listing.”
Lo dues: Low homeowners association dues.
Lock box: Locked key-holding device affixed to a for-sale home so real estate professionals can gain entry into the home after obtaining permission from the listing agent.
LR: Living room.
Lsd pkg: Leased parking area.
MLS: Multiple Listing Service. An MLS is an organization that collects, compiles and distributes information about homes listed for sale by its members, who are real estate brokers. Membership isn’t open to the general public, although selected MLS data may be sold to real estate listing websites. MLSs are local or regional. There is no MLS covering the whole country.
Pot’l: Potential.
Nr bst schls: Near the best schools.
Pending, showing for backup: This means the property’s owners are actively taking backup offers in case the first one falls through.
Pending, subject to lender approval: The seller has an accepted offer but is waiting to see if the buyer’s bank will agree to it, says Realtor Dawn Rivera with Realty World-Viking Realty in Fremont, CA. If not, it could end up back on the market, so go ahead and inquire if you’re interested.
Points: You can buy discount points to reduce your interest rate. One point typically costs 1% of your loan (or $3,000 on a $300,000 mortgage), two points equal 2% ($6,000), and so on. However, the actual discount that you get for that point varies by lender, so review your options.
Principal: After you make a down payment, the rest of the money you owe on your home is called the principal. This is what you will be paying off, monthly, over the lifetime of the mortgage, which can last anywhere from five to 30 years—usually 30.
Pvt: Private.
Pwdr rm: Half bathroom or powder room.
Rate lock: An option to lock in an agreed-upon rate for a certain period, to protect you from short-term fluctuations in the mortgage market. A rate lock will remain in effect until closing, but only if you close by an agreed-upon deadline, typically 60 days. It typically costs a fee, but can save you money … run through some financial scenarios before deciding.
Real estate agent: Anyone who earns a real estate license can be called a real estate agent, whether that license is as a sales professional, an associate broker or a broker. State requirements vary, but in all states you must take a minimum number of classes and pass a test to earn your license.
Real estate associate broker: Someone who has taken additional education classes and earned a broker’s license but chooses to work under the management of a broker.
Real estate broker: A person who has taken education beyond the agent level as required by state laws and has passed a broker’s license exam. Brokers can work alone or they can hire agents to work for them.
Real estate salesperson: Another name for a real estate agent.
Realtor®: A real estate broker or sales associate who is a member of the National Association of REALTORS®, which means that he or she must uphold the standards of the association and its code of ethics. Not all real estate agents are Realtors.
Temporarily off the market (TOM): The owner has removed the property from the listings for an undetermined period, usually because work is being done on the house or because the home cannot be shown. It should return to active soon enough, so it’s certainly worth piping up if you’re smitten.
Title insurance: An insurance policy that protects a lender’s or owner’s interest in real property from assorted types of unexpected or fraudulent claims of ownership. It’s customary for the buyer to pay for the lender’s title insurance policy.
Under contract (UC): The seller has an agreed-upon contract with the potential buyer. That doesn’t mean that it’s a done deal, however.
Upr: Upper floor.
Vw, vu, vws, vus: View(s).
W/D: Washer and dryer.
Withdrawn: A property was withdrawn from the realty market. This might be for a variety of reasons: The sellers may have decided they want to stay put, or they may just not have received any offers they liked. So if you adore what you see in the listing, it certainly can’t hurt to inquire.
