Real Estate Terms Every Seller Should Know

When it comes to selling your home, there are many real estate terms that will be thrown around during the home selling process. While your real estate agent will explain a lot of things to you, it’s important to do your homework so you can be as informed as possible while your home is on the market.

 Here’s a list of real estate terms every seller should know prior to putting their home on the market.

 Appraisal: The appraisal is completed by a qualified and licensed third-party appraiser to determine the value of your home. This report is completed to benefit the buyer and their lender to ensure the property is worth what they are paying. Appraisers will pull comparable properties in the area and look at the condition of the property to determine the value.  

 Closing Costs: Closing costs are expenses associated with the home sale and apply to both the buyer and the seller. These include title and lender fees and real estate agent commissions.

 Comparables: To determine the price of your home, real estate agents will often pull comparable homes within a certain radius of your property that are similar to yours. This includes the same number of bedrooms, bathrooms, square footage, and more. As mentioned above, appraisers will also pull comparable homes to help them determine the value of your home for their reports.

 Contingencies: Contingencies are conditions that must be met in order for the home to successfully close. This includes inspections, repairs, and home sale contingencies, where a buyer needs to sell a home prior to purchasing another. 

 Days on Market: Often referred to as DOM, days on market refers to the number of days your home is on the market from the date the property is listed. Low days on market indicate a strong real estate market that favors sellers, whereas high days on market indicate a slower market that favors buyers. 

 Earnest Money Deposit: Often referred to as EMD or a “good faith deposit”, earnest money is the initial funds provided by the buyer once their offer is accepted to show they are serious about buying the home. The earnest money deposit can vary between 1-5% of the sale price and is usually held by the escrow company. 

 Equity: Equity is the market value of your home with any mortgages or liens against the property subtracted from it. The leftover amount is the amount of equity you have in the home. Building equity is an important financial asset you can leverage for home repairs, future down payments, or to pay off higher interest debt. 

 Multiple Listing Service: Often referred to as MLS, the multiple listing service is a database where real estate agents and brokers can advertise their listings and access listings that are on the market. 

 Seller Concession: As a seller, you are able to incentivize buyers to purchase your home with seller concessions. Essentially, seller concessions are where you contribute money towards the buyers’ closing costs (up to a certain amount and as approved by the lender).