Frequently Asked Real Estate Questions

Conventional sale: When the property is owned outright and has no mortgage.

Conventional sales are often smoother transactions than those that require financing as there is no dependence on the buyer receiving a loan to purchase the property.

A conventional sale is not to be confused with a conventional loan. In this instance:

“Conventional” just means that the loan is not part of a specific government program. Conventional loans typically cost less than FHA loans but can be more difficult to get.

This may sound confusing, so just ask your Realtor to explain it to you if you’re not clear. ☺️

What is a Settlement Statement?

A settlement statement, also known as a HUD-1, is a document that lists all the costs associated with buying or selling a home.

It includes the purchase price, loan fees, taxes, insurance, and any other costs that need to be paid at closing.

This document will be given to the buyer and seller at the closing of the real estate transaction.

Really good agents will also send you a copy of your HUD-1 right before tax time to make sure you take advantage of any tax-deductible expenses from the purchase or sale of your home.

What does it mean when you are Underwater?

The phrases “underwater” and “upside down” refer to a situation when the amount owed on a mortgage loan is greater than the value of the property.

In simpler terms, a house is underwater when the owner owes more on the mortgage than the house is worth.

You have various options on what to do if you are in this situation.

An Active Property

The property is actively for sale and on the market. The sellers may have received offers but have not accepted any yet.

When an offer is accepted the property will become Pending the completed sale.

If the contract falls through, typically the property will go Active again.

A professional analysis used to estimate the current value of the home in the real estate market.

This is a necessary step in validating a home’s worth to you and your lender as you secure financing.

All parties to the transaction hope the appraisal will come in at the same amount as the listing price.

If the appraisal comes in low, your options include backing out of the sale, having your agent appeal the low value, paying the difference in value in cash, and renegotiating the offer.

What does As-is mean?

A contract or offer clause stating that the seller will not repair or correct any problems with the property. Also used in listings and marketing materials.

In other words, selling a house as-is means that a buyer will get the property in its exact, current condition without any additional repairs or upgrades.

What is a backup offer?

When an offer is accepted contingent on the fall through or voiding of an accepted first offer.

Sellers may accept backup offers if they are not confident about the offer they have accepted.

Consider it a safety net for the seller if the current offer does not close.

There are also benefits for buyers.

Although it might seem like a long shot, putting an offer on a house that’s under contract actually has a reasonable chance of scoring you a home. Deals fall through for all kinds of reasons, so if you’re in the backup position, you’ll lock things in and keep a home from going back on the market.

As usual, discuss putting in a backup offer with your Realtor.

Close of escrow is the final step in the real estate transaction. It is when the buyer pays the seller for the property and all the documents are signed.

After close of escrow, the title deed is transferred to the new owner and the keys are given to the buyer.

The escrow company then sends the money to the lender and all the parties involved in the transaction.

Closing: The end of a transaction where documents are signed, and funds are dispersed.

Closing costs are the fees that the buyer and seller will owe associated with the home-buying process, such as the real estate brokerage commission and title insurance.

Most are paid by the buyer, but the seller pays for some.

The fees will vary with each transaction. Your lender or title rep will let you know what the fees are and how much you will need at the close of escrow.

The fees required to complete the real estate transaction include points, taxes, title insurance, financing costs, and items that must be prepaid or paid through escrow.

Comparative market analysis or competitive market analysis, aka CMA, compares the sales price of similar properties in the area to help determine the price of a property.

A CMA estimates a home’s price based on recently sold, similar properties in the immediate area. Real estate agents and brokers create CMA reports to help sellers set listing prices for their homes and help buyers make competitive offers.

If you need more details about CMAs, read “What Is Comparative Market Analysis (CMA) in Real Estate?“.

Not to be confused with Country Music Awards. 🤓

What is a Contingency?

A provision of the contract that keeps the agreement from being fully legally binding until a certain condition(s) is met.

For example, the purchase of a home can be contingent upon the buyer selling their home first.

Every real estate contract includes space for “contingency clauses,” or conditions put forth by the homebuyer and home seller that must be met for the transaction to close.

Here are some types of contingency clauses you might see in your next home sale…

📝 Home Inspection / Due Diligence
📝 Cost-of-Repair
📝 Appraisal
📝 Financing or Mortgage
📝 Sale and Settlement

Contingency clauses can be tricky to navigate, which is why it’s always a good idea to have a licensed real estate professional guide you through the process.

We know this lingo inside and out, so reach out if you’re thinking about buying or selling a home soon!

In real estate, a contingent offer is an offer made on a property, which says that certain conditions must be met in order for the sale to be completed.

A real estate contract is a legally binding agreement between two parties for the sale and purchase of a property.

It outlines the price, terms, and conditions of the sale. It also includes any other agreements that the buyer and seller have made, such as repairs that need to be done before the sale is completed.

All real estate contracts must be written and signed by both parties.

A counteroffer is a response to a buyer’s original offer on a house to make changes that better fit a seller’s goals.

A counteroffer is one step closer to an accepted offer!

A counteroffer shows that the seller is willing to work with the buyer, but on slightly different terms (usually a change in the price or contingencies).

Here’s how your real estate agent can help you navigate a counteroffer:

☑️ Buyers, we negotiate on your behalf and provide guidance on how to get your offer accepted.

☑️ Sellers, we help you stay clear of red flags and make sure you accept the right offer.

Negotiation is a BIG part of what we do as real estate pros! Connect with our team to learn more about how we provide 5-star representation for our clients.

Days on market (DOM) means the number of days a home has been listed on the market.

The number of days the property has been on the market may reflect the desirability and/or pricing of the home.

If the home has been on the market too long, the property may be stale.

What is a Disclosure Statement 🤔

Also known as a “Seller’s Disclosure,” this is a legal document that outlines any known flaws that a home seller is aware of that could negatively impact the home’s value 🏡

💡 TIP: Buyers should scrutinize this document closely with their real estate agent to fully understand the condition of a home.

Our best advice? When it comes to buying a home, make sure you get an inspection to confirm what has been disclosed is accurate and discuss any potential deal breakers with your agent.

Contact our team for a ✨ free consultation ✨ to learn more about what you must legally disclose if selling and how to ensure you don’t miss any important information if you’re buying!

The representation of opposing principals (buyers & sellers) at the same time.

That is, one real estate agent represents both the buyer and the seller in one transaction (sale of a home).

What is Earnest Money? 🤔

A deposit made to a seller that represents a buyer’s good faith to buy a home. It’s typically around 1% – 5% of the sale price.

Earnest money is a deposit from the buyer to the seller, made in good faith to show dedication to purchasing the property 🏡

IMPORTANT FACTS 👇

💰 The amount varies by market
💰 Goes towards the purchase of your home
💰 Protects the seller if a buyer backs out
💰 A buyer may get this money back – due to failed inspections or contingencies

💡 TIP: In a seller’s market, you may consider making your earnest money non-refundable.

Our best advice? When it comes to buying in a low inventory, competitive market, it’s essential to partner with a Buyer’s Agent who understands how to make your offer stand out to sellers 🥊

What is an escalation clause?

An escalation clause is a clause in a real estate contract that allows the purchase price of a property to increase if a certain condition is met.

For example, if the buyer and seller agree to an escalation clause and the market value of the property increases, the buyer will have to pay more for the property than originally agreed upon.

This clause is typically used when two buyers are competing to purchase the same property.

What is a Listing?

In real estate, the word “listing” is typically used to refer to the for-sale home or property itself, although it technically means the agreement between the broker and the owner of the home to market and sell the property.

This is not the same as listing the property on the MLS (Multiple Listing Service).

What is the MLS?

MLS stands for Multiple Listing Service. They collect, compile and distribute all information about homes listed for sale.

The MLS is the organization real estate brokers use to search for and list properties for their clients.

Membership isn’t open to the general public, although selected MLS data may be sold to real estate listing websites, like Realtor.com or our own MLS listing search where the public can search the MLS at no charge.

See also the term “listing“.

What are Natural Hazards Disclosure Reports?

Natural hazards disclosure reports are reports that tell potential buyers about any natural hazards near a property.

These hazards can include things like flooding, earthquakes, and wildfires.

The report will also include information about potential risks associated with these hazards and what the buyer can do to protect their property.

The report is usually provided by the seller before the sale is finalized.

What is an offer to purchase?

Typically just an “offer”, is when a buyer proposes certain terms and presents these terms to the seller.

When you make an offer on a house, you and your agent will discuss the terms of your offer and submit the offer to the home seller’s agent.

Your offer may be accepted, or rejected, or the seller may submit a counteroffer.

What does Pending mean?

With a property that is pending, the property owner has accepted an offer from a buyer and they are under contract with that buyer.

Their agreement may be subject to a variety of contingencies: inspections, appraisal, financing, and more.

The home is not sold just yet. Typically if the sale does not go through, the house will return to “Active” status.

What are Property Taxes?

A levy or tax imposed by a municipality on real estate and personal property. The amount of tax varies depending on the property value.

Property taxes are an annual tax that local municipalities collect each year, based on the assessed value of your property (not on the appraised value of your home). These funds help pay for services that benefit the community, such as schools, roads, maintenance, etc.

First-time homeowners often forget to factor property taxes into the overall cost of their new home, which can come as a nasty shock come tax season. So let this be a reminder to all homeowners to calculate property taxes into their annual budget!

 BONUS TIP: If you own a rental property, your property taxes may be tax-deductible 

What is a Purchase and Sale Agreement?

Often just a “purchase agreement”, it is the written contract between the buyer and seller that outlines the terms of the sale.

 The completion and signing of a purchase agreement effectively places both the buyer and seller (as well as the property in question) “under contract.”

Does a real estate purchase agreement need to be notarized?

No, a real estate purchase agreement does not require notarization to be valid as it is not filed with county records.

What is a Real Estate Agent?

A licensed professional that represents a buyer or seller.

A real estate agent is a professional who helps people buy or sell property.

They will help you find a home that meets your needs, negotiate a purchase price, and handle all the paperwork that comes with buying or selling a house.

A real estate agent can also answer questions about the local housing market and provide advice on things like taxes and financing.

The agent may or may not be a Realtor®.

What is a real estate broker?

A real estate broker is a licensed professional that represents a buyer or seller – they can own and operate a brokerage with subordinate agents.

A real estate broker is a licensed professional who helps people buy or sell property.

They are more experienced than real estate agents and typically have additional training, including a broker’s license.

Brokers can help you find a home that meets your needs, negotiate a purchase price, and handle all the paperwork that comes with buying or selling a house.

They can also answer questions about the local housing market and provide advice on things like taxes and financing.

Real Estate agents work under the Broker of record for a real estate office.

An individual who provides services in buying and selling homes.

Real estate professionals are there to help you through the confusing paperwork, find your dream home, negotiate any of the details that come up, and so you know exactly what’s going on in the housing market.

There are several types of real estate professionals including Realtors^®, real estate agents, and real estate consultants.

What is a REALTOR®?

A designation that the agent is a member of the National Association of REALTORS®.

A Realtor is a real estate professional who is a member of the National Association of Realtors (NAR).

Realtors must have a license and have met certain standards for education and experience.

They help people buy or sell property, including finding a home that meets their needs, negotiating a purchase price, and handling all the paperwork that comes with buying or selling a house.

They can also answer questions about the local housing market and provide advice on things like taxes and financing.

Realtors® are held to a higher standard than non-realtors and agree to the Code of Ethics and Standards of Practice of the National Association of REALTORS®.

What are seller concessions?

They are incentives to motivate buyers to purchase a home.

Seller concessions, also known as seller contributions or seller-paid closing costs, refer to financial incentives that a home seller may offer to a homebuyer to help them cover some of the expenses associated with buying a home.

These concessions are typically negotiated as part of the sales contract and can take a variety of forms, such as paying for some or all of the buyer’s closing costs, providing a credit toward the buyer’s down payment, or offering to pay for repairs or improvements to the property.

What is a Seller Disclosure?

A Seller Disclosure or Disclosures provide Information about the property about significant renovations, water damage, pest damage, etc.

The required disclosures vary by state, so be sure to talk about this with your agent.

What is a Settlement Statement?

A settlement statement, also known as a HUD-1, is a document that lists all the costs associated with buying or selling a home.

It includes the purchase price, loan fees, taxes, insurance, and any other costs that need to be paid at closing.

This document will be given to the buyer and seller at the closing of the real estate transaction.

Really good agents will also send you a copy of your HUD-1 right before tax time to make sure you take advantage of any tax-deductible expenses from the purchase or sale of your home.

The property is Sold

The property has been sold and is off the market. The transaction has been completed and the new buyers own the home.

The property is no longer available to purchase or take offers on.

Time to look for another home to buy. 

What does Temporarily off the market (TOM) mean?

The owner has decided to take the listing off the market for an undetermined amount of time. Typically, this is because work is being done, or the home is unavailable for showings at the time.

Usually, the home will be back on the market in the near future. If not, the listing status will go to Cancelled.

What does Withdrawn mean?

The listing was withdrawn from the market by the owner. This could be for various reasons: The owners may have decided they do not want to sell anymore, or maybe they didn’t like the offers they received.

An Active Property

The property is actively for sale and on the market. The sellers may have received offers but have not accepted any yet.

When an offer is accepted the property will become Pending the completed sale.

If the contract falls through, typically the property will go Active again.

A professional analysis used to estimate the current value of the home in the real estate market.

This is a necessary step in validating a home’s worth to you and your lender as you secure financing.

All parties to the transaction hope the appraisal will come in at the same amount as the listing price.

If the appraisal comes in low, your options include backing out of the sale, having your agent appeal the low value, paying the difference in value in cash, and renegotiating the offer.

What does As-is mean?

A contract or offer clause stating that the seller will not repair or correct any problems with the property. Also used in listings and marketing materials.

In other words, selling a house as-is means that a buyer will get the property in its exact, current condition without any additional repairs or upgrades.

What is a backup offer?

When an offer is accepted contingent on the fall through or voiding of an accepted first offer.

Sellers may accept backup offers if they are not confident about the offer they have accepted.

Consider it a safety net for the seller if the current offer does not close.

There are also benefits for buyers.

Although it might seem like a long shot, putting an offer on a house that’s under contract actually has a reasonable chance of scoring you a home. Deals fall through for all kinds of reasons, so if you’re in the backup position, you’ll lock things in and keep a home from going back on the market.

As usual, discuss putting in a backup offer with your Realtor.

Close of escrow is the final step in the real estate transaction. It is when the buyer pays the seller for the property and all the documents are signed.

After close of escrow, the title deed is transferred to the new owner and the keys are given to the buyer.

The escrow company then sends the money to the lender and all the parties involved in the transaction.

Closing: The end of a transaction where documents are signed, and funds are dispersed.

Closing costs are the fees that the buyer and seller will owe associated with the home-buying process, such as the real estate brokerage commission and title insurance.

Most are paid by the buyer, but the seller pays for some.

The fees will vary with each transaction. Your lender or title rep will let you know what the fees are and how much you will need at the close of escrow.

The fees required to complete the real estate transaction include points, taxes, title insurance, financing costs, and items that must be prepaid or paid through escrow.

What are Comparable Sales? 

Known in real estate as “comps,” comparable sales are the sales prices of similar homes and are based on the following:

 Lot size
 Condition
 Age & Construction
 Square footage
 Close proximity
 Time frame of the sale

When it comes to buying or selling, both place high importance on comps to determine a home’s value.

Contact our team for a  free consultation  to learn more about what homes are selling for in your area.

Comparative market analysis or competitive market analysis, aka CMA, compares the sales price of similar properties in the area to help determine the price of a property.

A CMA estimates a home’s price based on recently sold, similar properties in the immediate area. Real estate agents and brokers create CMA reports to help sellers set listing prices for their homes and help buyers make competitive offers.

If you need more details about CMAs, read “What Is Comparative Market Analysis (CMA) in Real Estate?“.

Not to be confused with Country Music Awards. 🤓

What is a Contingency?

A provision of the contract that keeps the agreement from being fully legally binding until a certain condition(s) is met.

For example, the purchase of a home can be contingent upon the buyer selling their home first.

Every real estate contract includes space for “contingency clauses,” or conditions put forth by the homebuyer and home seller that must be met for the transaction to close.

Here are some types of contingency clauses you might see in your next home sale…

📝 Home Inspection / Due Diligence
📝 Cost-of-Repair
📝 Appraisal
📝 Financing or Mortgage
📝 Sale and Settlement

Contingency clauses can be tricky to navigate, which is why it’s always a good idea to have a licensed real estate professional guide you through the process.

We know this lingo inside and out, so reach out if you’re thinking about buying or selling a home soon!

In real estate, a contingent offer is an offer made on a property, which says that certain conditions must be met in order for the sale to be completed.

A real estate contract is a legally binding agreement between two parties for the sale and purchase of a property.

It outlines the price, terms, and conditions of the sale. It also includes any other agreements that the buyer and seller have made, such as repairs that need to be done before the sale is completed.

All real estate contracts must be written and signed by both parties.

Conventional sale: When the property is owned outright and has no mortgage.

Conventional sales are often smoother transactions than those that require financing as there is no dependence on the buyer receiving a loan to purchase the property.

A conventional sale is not to be confused with a conventional loan. In this instance:

“Conventional” just means that the loan is not part of a specific government program. Conventional loans typically cost less than FHA loans but can be more difficult to get.

This may sound confusing, so just ask your Realtor to explain it to you if you’re not clear. ☺️

A counteroffer is a response to a buyer’s original offer on a house to make changes that better fit a seller’s goals.

A counteroffer is one step closer to an accepted offer!

A counteroffer shows that the seller is willing to work with the buyer, but on slightly different terms (usually a change in the price or contingencies).

Here’s how your real estate agent can help you navigate a counteroffer:

☑️ Buyers, we negotiate on your behalf and provide guidance on how to get your offer accepted.

☑️ Sellers, we help you stay clear of red flags and make sure you accept the right offer.

Negotiation is a BIG part of what we do as real estate pros! Connect with our team to learn more about how we provide 5-star representation for our clients.

Days on market (DOM) means the number of days a home has been listed on the market.

The number of days the property has been on the market may reflect the desirability and/or pricing of the home.

If the home has been on the market too long, the property may be stale.

What is a Disclosure Statement 🤔

Also known as a “Seller’s Disclosure,” this is a legal document that outlines any known flaws that a home seller is aware of that could negatively impact the home’s value 🏡

💡 TIP: Buyers should scrutinize this document closely with their real estate agent to fully understand the condition of a home.

Our best advice? When it comes to buying a home, make sure you get an inspection to confirm what has been disclosed is accurate and discuss any potential deal breakers with your agent.

Contact our team for a ✨ free consultation ✨ to learn more about what you must legally disclose if selling and how to ensure you don’t miss any important information if you’re buying!

The representation of opposing principals (buyers & sellers) at the same time.

That is, one real estate agent represents both the buyer and the seller in one transaction (sale of a home).

What is Earnest Money? 🤔

A deposit made to a seller that represents a buyer’s good faith to buy a home. It’s typically around 1% – 5% of the sale price.

Earnest money is a deposit from the buyer to the seller, made in good faith to show dedication to purchasing the property 🏡

IMPORTANT FACTS 👇

💰 The amount varies by market
💰 Goes towards the purchase of your home
💰 Protects the seller if a buyer backs out
💰 A buyer may get this money back – due to failed inspections or contingencies

💡 TIP: In a seller’s market, you may consider making your earnest money non-refundable.

Our best advice? When it comes to buying in a low inventory, competitive market, it’s essential to partner with a Buyer’s Agent who understands how to make your offer stand out to sellers 🥊

What is an escalation clause?

An escalation clause is a clause in a real estate contract that allows the purchase price of a property to increase if a certain condition is met.

For example, if the buyer and seller agree to an escalation clause and the market value of the property increases, the buyer will have to pay more for the property than originally agreed upon.

This clause is typically used when two buyers are competing to purchase the same property.

What is a Listing?

In real estate, the word “listing” is typically used to refer to the for-sale home or property itself, although it technically means the agreement between the broker and the owner of the home to market and sell the property.

This is not the same as listing the property on the MLS (Multiple Listing Service).

What is a Listing Agent?

The real estate agent who represents the home seller during a real estate transaction.

What is the market value of a home?

The highest price in terms of dollars that a property will bring in a competitive and open market.

What is the MLS?

MLS stands for Multiple Listing Service. They collect, compile and distribute all information about homes listed for sale.

The MLS is the organization real estate brokers use to search for and list properties for their clients.

Membership isn’t open to the general public, although selected MLS data may be sold to real estate listing websites, like Realtor.com or our own MLS listing search where the public can search the MLS at no charge.

See also the term “listing“.

What are Natural Hazards Disclosure Reports?

Natural hazards disclosure reports are reports that tell potential buyers about any natural hazards near a property.

These hazards can include things like flooding, earthquakes, and wildfires.

The report will also include information about potential risks associated with these hazards and what the buyer can do to protect their property.

The report is usually provided by the seller before the sale is finalized.

What is an offer to purchase?

Typically just an “offer”, is when a buyer proposes certain terms and presents these terms to the seller.

When you make an offer on a house, you and your agent will discuss the terms of your offer and submit the offer to the home seller’s agent.

Your offer may be accepted, or rejected, or the seller may submit a counteroffer.

What is an Open House?

During an open house, a seller’s real estate agent or broker holds open hours during which the home is available for the public to view.

Potential buyers may drop by anytime within the scheduled hours, without an appointment, to look at the house.

You’ve probably seen real estate signs on the corner promoting an open house. These typically are seen on the weekend.

The seller’s agent may also add the home to a Brokers’ Tour.

A brokers’ tour is a regularly scheduled weekly event hosted by brokers for brokers featuring newly active properties in an “open house” format. It provides Realtors the opportunity to visually inspect properties included in the tour and to gain first-hand knowledge of them. – SF Gate

What does Pending mean?

With a property that is pending, the property owner has accepted an offer from a buyer and they are under contract with that buyer.

Their agreement may be subject to a variety of contingencies: inspections, appraisal, financing, and more.

The home is not sold just yet. Typically if the sale does not go through, the house will return to “Active” status.

What are Property Taxes?

A levy or tax imposed by a municipality on real estate and personal property. The amount of tax varies depending on the property value.

Property taxes are an annual tax that local municipalities collect each year, based on the assessed value of your property (not on the appraised value of your home). These funds help pay for services that benefit the community, such as schools, roads, maintenance, etc.

First-time homeowners often forget to factor property taxes into the overall cost of their new home, which can come as a nasty shock come tax season. So let this be a reminder to all homeowners to calculate property taxes into their annual budget!

 BONUS TIP: If you own a rental property, your property taxes may be tax-deductible 

What is a Purchase and Sale Agreement?

Often just a “purchase agreement”, it is the written contract between the buyer and seller that outlines the terms of the sale.

 The completion and signing of a purchase agreement effectively places both the buyer and seller (as well as the property in question) “under contract.”

Does a real estate purchase agreement need to be notarized?

No, a real estate purchase agreement does not require notarization to be valid as it is not filed with county records.