Every industry has their own language. There terms they throw around like everyone knows what they're talking about but no one outside the industry really does. In most cases it's okay. I don't need to know what megabits and RAM are as long as my computer works. But in Real Estate, it's your money and your home we're talking about, so a little education can go a long way.
There are a LOT of Real Estate terms, so I'll break them down by category. Here are a few pre-house hunting terms to get you started.
Realtor (Pronouced Reel-tor)
According to the National Association of Realtors, "REALTOR® is a federally registered collective membership mark which identifies a real estate professional who is member of the NATIONAL ASSOCIATION OF REALTORS® and subscribes to its strict Code of Ethics."
In reality, a Realtor wears many hats, from matchmaker to secretary to therapist! It's so much more than unlocking doors and writing offers. The organization, the paperwork and the marketing are all most people see, but the behind the scenes is the majority of the job. My favorite part is helping process the emotions, both positive and negative, that come with buying or selling a home. A home is often the biggest purchase a person will ever make. It can be so exciting but also very scary, and I love to help clients through every step.
We're currently in a Seller's Market. There are more buyers than there are homes on the market. Consequently, sellers have the upper hand and are generally selling at very good terms, generally for above asking price and often even for above appraised value.
The opposite is a Buyer's Market, in which there are more homes on the market than there are people looking to buy. In that situation, buyers have the upper hand. Houses may sit on the market for weeks or even months. Sometimes sellers become desparate to sell, and settle for poor prices and poor terms.
A Realtor's goal is to work in a balanced market. This occurs when, if no new homes were to come on the market, it would take about 6 months to sell the current inventory. That's an extremely rare occasion, but it creates a wonderful opportunity where homes sell for their appraised value instead of over (seller's market) or under (buyer's market).
Pre-qualification v. Pre-approval
Pre-qualifying is the first step and gives you an idea of how much of a loan you may qualify for. Pre-qualification is vital because you don't want to look at (and fall in love with!) a home you can't afford.
Pre-approval is the second step, and is a conditional commitment to actually grant you the mortgage. In the current seller's market, many sellers aren't even looking at offers from buyers who aren't pre-approved. In this market, if you can't write an offer it's not worth looking.
Any Realtor worth your time will have a list of lenders she has a good working relationship with. Don't hesitate to ask for a lender referral, more definitions or any question you have.
Buying and selling your home can be stressful but knowing a few terms can help make the process feel so much less intimidating. If ever you need to know more, I'll be doing more posts like this to share more terminology. Or better yet, ask your friendly neighborhood Realtor (that's me)!