Realtor or Broker: Real Estate Terms Defined
Like any other industries, the real estate also has its own terminologies being used in transacting business. For ordinary people, some of these terms may actually ring a bell but other technical terms are really hard to define.
Here are some words that are commonly being used in the real estate. These are not the legal and complete definitions of these words; they are meant to give general guidelines only. If you need further explanation for each word, you can consult an attorney specializing in real estate before buying or selling a property.
This refers to the land and the buildings on it, and the rights and enjoyment to use the land, the property, and all the other natural resources included inside the perimeter of the land. The term “natural resources” includes all the plants and animals, bodies of water, and the mineral deposits beneath the soil. A real estate can be categorized as either residential, commercial, or industrial. Residential real estate includes houses, condominiums, and townhouses. Commercial real estate includes buildings and warehouses. Meanwhile, farmlands, minefields, and factories are examples of industrial real estate.
Real Estate Broker/ Real Estate Agent
A broker or an agent is the person employed by a real estate company or hired by buyers or sellers of the properties to represent their interests during the entire negotiation process. They are being paid in commission basis at the end of the contract, usually after closing the sale. Las Vegas real estate agent helps you with your property deals.
Fair Market Value
Fair Market Value is the price that is considered “fair” for both the buyer and the seller. This is the price that the seller experts for the buyer to pay for the property on sale.
Mortgage Insurance (or Private Mortgage Insurance / PMI)
This is the insurance that protects the lender should the buyer cannot pay their mortgages. The normal practice is that a borrower will shoulder the payment for mortgage insurance if his down payment is less than 20%.
A mortgage is a binding contract that describes the buyer’s pledge to the lender to use the property on sale as the collateral for a loan.The document also defines the terms of payment for the debt.
Escrow is the state important documents, legal rights, or a big sum of money is being held in the care of a trusted person of either the buyer or the seller, or both. This is being done to assure either the seller or the buyer that the other party will honor and follow what was agreed upon.