Real Estate Terms You Should Know

Basic terms that are often misunderstood

MLS, Multiple Listing Service

An organization that collects, compiles, and distributes information about properties 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. MLS’s can be local or regional. There is no “one” MLS covering the entire nation.

PITI

Principle, interest, taxes and insurance are the four components of a monthly mortgage payment. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing the money. Taxes and insurance refer to the amounts that are paid into an escrow account each month for property taxes and mortgage and hazard insurance.

CMA

Comparative Market Analysis. A CMA is a report that shows prices of properties that are comparable to a subject property and that were recently sold, are currently on the market or were on the market, but not sold within the listing period.

Closing Costs

The entire package of miscellaneous expenses paid by the buyer and seller when the transaction closes. These costs include the brokerage commission, mortgage-related fees, escrow or attorney’s charges, recording fees, title insurance, and so on. Closing costs generally are paid through escrow.

Contingency

A provision of an agreement that keeps the agreement from being fully legally binding until a certain condition is met. One common example is a buyer’s contractual right to obtain a professional home inspection before purchasing the home.

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.