Real Estate Terms Cheat Sheet

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Real estate terms come naturally for real estate agents, mortgage lenders, and title insurance agencies. Not so much for clients. Serving your clients well means explaining some of the words they’re going to hear a lot throughout the buying and selling process. This will give them confidence in their understanding of what is going on during the process. Sometimes, you need a good cheat sheet of terms that clients often hear during the home buying or selling process, but often don’t fully understand. We’ve compiled a list of 15 terms with a quick, one phrase description to help your clients know the important lingo that can give them the knowledge to best understand the complicated process of real estate purchases or sales. 

Appraisal – the estimated value of a piece of real estate including the home and land it sits on

Buyer’s/Listing Agent – real estate agent that helps buyers find their new home

Closing Disclosure/CD – form that details and itemizes all costs and fees between buyers and sellers

Closing Costs – expenses associated with the sale and purchase of property

Contingencies – conditions written into a contract that must be met in order for the sale to go forward

Due Diligence – the period of time to research and inspect the home prior to final sale

Earnest Money – deposit paid by the buyer for the property after the seller agrees to the offer, usually between 1 and 3 percent of the contract price

Escrow – unbiased third party that holds all funds, documents, and instructions related to the purchase of the home

Equity – market value for the home minus remaining mortgage balance

Principal – amount of money owed to the lender

REO – real estate owned properties or foreclosed properties owned by a lender

Seller Concession – incentives offered by a seller, such as closing cost assistance, home warranties and other repairs

Short Sale – selling a home for less than the balance left on the mortgage

Title Search – examines public records to check for mistakes and errors in filing

Underwriting – the process by which lenders check buyers’ credit scores and ability to repay loans being issued

We hope that this cheat sheet of terms will help you and your clients to better understand the process of buying and selling property and houses. Please reach out to our team if we can help you through the process of purchasing or listing property. 

Make Closing On a Home Stress Free!

What’s one thing you can do to make closing stress free on you, AND turn your client into a repeat customer?

Make your closing as smooth and stress free as possible.

Even if you’ve got the best closing attorney, the greatest mortgage company, and had the easiest buyers of all time, here are three ways you can make your closing as smooth as possible.

1.    Plan Extra Time

Traffic. Misspelled names. Bad pens. Missing documents. You name it, it might go wrong, and cost you more time than you originally told your clients. They’ve already waited up to 45 days to get to this point, and an hour delay in the closing process can damage your repeat business. Help them (and yourself!) out and create a wide timeframe for your clients to expect to operate in. Tell them way in advance if they’ll have to plan a half day off work. If it goes short, they’ll thank you for it!

2.    Walk Your Client Through the Steps of Closing 

A first-time home buyer will need a crash course in what to expect at the closing. What types of documents are they looking at? What do those numbers mean? Are they supposed to bring ID with them? Even a veteran buyer needs a refresher course. Call them at least two days prior and give them the play-by-play of how the closing will go down. That way, when you get to the table, you can help them go in with confidence. But your job’s not done when you get there either. Pay attention to the looks on their faces when a new document is put in front of them, and be ready to speak up and say, “Remember this one says…” They don’t just depend on you to find them a home; they need you to walk across the finish line with them as well.  

3.    Develop a Solid Relationship with a Title Loan Company

You’ve got your go-to lenders on speed dial. The buyer might even have theirs ready to go before you can suggest one. You’ve got trust built in for the mortgage already. But what about a title loan company? Having a relationship with a title company can give your clients the extra peace of mind that the home they’ve dreamed about will be protected from all sides. They’re also not going to give this any thought beforehand. The more of your business relationships you can offer them throughout the process, the more appreciative they’ll be of how thorough you are, and the more likely they’ll be to refer you to others.

 

Four Reasons Realtors Should Invest in Continuing Education

After completing you begin your job or finish a degree or certification, you can’t stop learning. The most successful leaders in the world understand that lifelong learning is a critical component to success. Every industry knows that if you don’t keep growing and learning, you’re doomed to be stuck exactly where you are now, or hopping from career to career without advancement or true fulfillment. Becoming a life-long learner is a skill developed at an early age or stage in your career, and refined as time goes on.

Apart from the practical side of continuing education, there are so many great benefits. As a realtor, your clients may never understand the amount of time you invest in your career, but they will immediately notice if you’ve put in the effort to become the best, or if you’re ok to do the bare minimum. Knowing your stuff might get you a lead, but pushing yourself to be better will make your services invaluable to your clients. Here are just a few reasons why continuing education is so important.

  1. You have to do it to keep your license

You worked hard to get your license. Lots of hours, tests, and effort to be able to do what you love could be cancelled out if you fail to keep up with continuing education. Like many other industries, continuing education is a requirement to keep doing what you’re doing. Every state has different standards, and Tennessee requires that you submit a minimum of 18 continuing education hours every two years to maintain your license. The last thing you want is to start over and retest. Continuing education makes your life a whole lot easier and keeps you serving your clients.

  1. You’ll stay up to date with a changing industry

Regulations constantly change, and our industry never stays the same. Thanks to the internet, you might be able to get glimpses and snippets of these moves, but until you fully immerse yourself in a room with an expert, much of it can be lost. Plus, sticking to “the way things were” could be detrimental to your bottom line. If you want to be on your game, you have to know what’s going on. There’s no better way than learning from the best in the business. Continuing education will keep you current on all that’s moving in the real estate industry.

  1. You will serve your clients better (if you apply yourself correctly)

We know that the last thing you want to do is take hours away from your clients and sit through a boring informational session to simply check off the requirements. But if you’re really committed to serving your clients as best you can, you can take your new knowledge and increase your level of service. We’ve heard countless times that continuing education is what you make of it. If you put in minimal effort, you’ll get minimal value. Clients will trust a realtor’s judgement when they know you know your stuff, and your clients will be better off throughout the entire process of buying or selling. So do THEM a favor by soaking up all you can, and applying it directly to the care you provide.

  1. You’ll earn more money!

According to the NAR member profile, realtors who have an NAR continuing education certification earn on average $27,000 more per year. Do the math: that’s an average annual payoff of $1,500 per continuing education hour you complete. You’re not just doing this for your client’s interest; it’s also really good for your own business. On all accounts, continuing education is worth every penny and will do nothing but make you a better realtor.

Why You Still Need A Realtor in 2019

In the world of eBay, Amazon, and YouTube, anyone can become a DIY pro and an expert in a lot of things. More and more people are perfecting the art of a side hustle and entrepreneurship continues to be on the rise. Unfortunately, that means that many people think they can ignore the realtors of the world and do things themselves. You know your own value, but communicating that to clients and marketing yourself are more critical now than ever before. Here are three easy and concise reasons that you can lay in front of clients during that first meeting to reassure them of why they need your services.

  1. A good realtor will provide you with much needed counsel.

Imagine giving your clients a therapist, mentor, and market analyst all rolled up into one nice package. While they may not see it that way, you know the amount of advice, discussion, and information that you’ll be giving your clients throughout the buying or selling process. Unless they’re hiding a real estate license somewhere, they won’t have anywhere near the knowledge and experience you do. Remind your clients that your services go far beyond overseeing a transaction, and that you care about their family and making the right choice. Make sure to include past client testimonials on your website or marketing materials so that new clients know how far your services will go for them.

  1. Contracts can be tricky

As a real estate agent, you are bound by law to have a fiduciary relationship to your clients. But beyond that, they need to know more than your legal obligation and your competency. They want to know you have their best interests at heart, and showing them that you value more than the commission will go a long way. Walking them through every document and explaining all of the information clearly is one of the best ways to do that. Pay attention to their confused looks and be ready to clarify any concern or question they have.

  1. Clients will make more or spend less with a realtor at their side

Even if a home is fully owned, the temptation to skip using a realtor is greater now than ever before. The desire to maximize profits while skipping the commission pieces is a draw for anyone in today’s market. But there are so many things that these potential clients won’t think through. Information about the area, staging, showings, and paperwork can quickly derail those good intentions and cost them more time and money, or even incur a lawsuit. With a realtor, statistics show that clients will make more on a sale or spend less on a purchase. The value is truly there for your client. Reassure both new and existing clients that having you at their side is the very best thing for them throughout the entire buying or selling process.

Two Reasons You Should Be Cautious with School District Maps, and Two Reasons You Shouldn’t

A family looking to make a move is one of the most exciting and challenging client experiences. Kids are trying to pick out rooms during showings, while parents kitchen sizes and living areas on their mind. No doubt realtors already know that one of the first things parents know about a potential house is the schools their family will be zoned for.

While it’s not the only consideration for a client choosing or not choosing a home, it’s an important one for young families looking to settle down in a place long term. Seasoned realtors know the basics on where the good schools are, but taking the time to ensure your clients are empowered with information is tougher than just “what you’ve heard.” A lot of clients don’t know all of the ins and outs of choosing both a house and a school district. As you guide a family through this important territory, here are two reasons you should be cautious when discussing schools, and two reasons you shouldn’t let the rankings completely dictate what you show to a family.

They can change frequently. Almost every election cycle brings some kind of rezoning or redistricting along with it. Websites that clients check aren’t always accurate, and hearsay is even less reliable. We’ve seen directly that clients have purchased a home because of the proximity to a great school, only to find out that the district was redrawn and that they’re actually a large distance away from where their child was supposed to attend. Trust us, that makes for an awkward conversation! Make sure you give your clients the most accurate information about the district they could potentially call home.

Especially if your clients are new to the Chattanooga area, YOU are their trusted resource. You are the gatekeeper of impartial information. Local family members or colleagues, if the client has any of these, are certainly important, but clients typically look at these opinions as biased. You have the opportunity to provide unbiased, fact-based opinions. A client might ask for your opinion, and you certainly should be helpful, but make sure all of your statistics and data are solid. Make sure you know how to navigate the Hamilton County Schools website and keep up to date with what schools are doing. It’s also helpful private school information ready so clients can consider all of their options.

HOWEVER…

School districts aren’t the top item for everyone. You may have a family that chooses to homeschool their kids or have already chosen private school. Or, a client might already love the community they live in and the schools they would potentially be zoned for, no matter what. In that case, your comment or opinion might be considered insulting. Getting to know your clients from the first meeting is critical so you know how to best serve them as their realtor. That way, you can prioritize their needs and get them in the perfect home in the area they desire.

Chattanooga has great magnet, charter, and private school options. When a client gets stuck on a house in a district they’re not crazy about, it’s important to reassure them of all the options they have. Especially if they’re new to the area, they might have limited information about schools outside of a quick internet search. Chattanooga magnet schools like Center for the Creative Arts, Normal Park Museum Magnet School, Chattanooga School for the Arts and Sciences, and many more are some of the top performing schools in the area, and our private schools have a long history of excellence as well. Be prepared to give a family all of their options, so that choosing a home doesn’t limit their school choices.

The more you know about our area, the better you can serve families looking to settle down in our great city!

Do I Need to Renew My Title Insurance?

As a realtor, you will have clients reach out to you after the sale or purchase of a home for a variety of reasons. Sometimes it’s to get a copy of important paperwork for tax purposes, or (hopefully) to refer you to their friend who wants to sell their home. One question you can avoid getting later has an incredibly easy explanation: “Do I need to renew my title insurance?

This is a great question a client will have at some point. After all, every other kind of insurance has a renewal or continuing premiums. All insurance protects against risk, and most insurances protect against future risk. As those risks increase or decrease, the needs and premiums of the insurance increases or decreases along with it. Car insurance is the most common example of this type of premium fluctuation.

However, title insurance is different. Title insurance protects against past risk of the property compared to future risk. A title insurance agency will make sure there are no errors in the records, deeds, and financials of your property. If someone tries to collect a debt on the property you didn’t agree to, the insurance policy will cover you. They will even take care of your legal fees if someone disputes your ownership of your property. The policy doesn’t cover the equity you may have in your home, but it does cover the value of your home and property so you don’t take a loss.

Unlike other insurance policies, title insurance is paid once at the closing, and the policy is effective as long as ownership remains in the name of the insured person or their heirs. Information about title insurance will be given to you in the closing documents. Knowing the differences between title insurance and other insurances going into the closing can reassure your clients and give them the peace of mind to know that their investment will be protected. It’s an easy conversation that will give you more credibility and build trust throughout the buying process.

Help Your Home Buyer Prepare for Closing Day

The finish line is in sight, and the hard work is almost over! You helped your clients find the perfect home in the perfect neighborhood at the perfect price. And now that the contract is signed, the closing starts. Do your clients know what’s coming for the next 30-90 days? Here is a quick list to give your home buyers the confidence they need going in to the closing.

  1. Introduce Them to Anyone They Need to Know 

You’ve done a lot of the heavy lifting up to this point. Now, let your clients know the folks they’ll be meeting next, especially if they work with a different company. Buyers often associate new people with more money, so it’s helpful to take the lead so that there are no surprises. Byers should also know who will be handling their information, their money, and the steps you’re taking to make sure everything is secure and happens in a timely manner.

  1. Explain Escrow if They’re a New Home Buyer 

New terms like escrow might be common place to those of us in the real estate industry, but they can be stressful and confusing for first time homebuyers. Don’t assume that your clients know what you’re talking about. Use it as an opportunity to teach them about the process and empower them with information. It will go a long way into reducing their stress and ensuring that they become lifetime clients!

  1. Explain Title Insurance 

Be sure to explain to your clients the difference between a lender’s policy and an owner’s policy. If you have a preferred list of agencies for them to choose from, go through the pros and cons of each. Also let the buyer know of the importance of protecting their investment with such a policy. If you’d like help with this, check out our site, or we’d be more than happy to provide you with printed materials!

  1. Get your Closing Disclosure 

Just a few days before closing, the lender or closing agent should give your clients their closing disclosure to understand everything associated with their closing. Anything from fees to transactions to monthly payments will be in this document. Also let your clients know when and how any changes can and should be made to this document.

  1. Prepare for the Close! 

Once you’ve ensured that all disclosures have been finalized, let your clients know how exciting the closing can be. It’s easy to let this process become stressful, so ensure that they feel prepared so that this can be a positive day. Confirm the times with your clients and the other party, make sure you have any gifts prepared, and ensure that you’ve given yourself plenty of time on your calendar.

Feel free to reach out to our office if we can be helpful to make closing day a wonderful experience!