Common Real Estate Terms Explained

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Whether you are buying or selling a property, it is essential to have a basic understanding of the common terms and abbreviations you often hear in real estate. At Lysi Bishop Real Estate, we strive to ensure buyers and sellers are educated and prepared so they can navigate the process with confidence.

Here’s a list of some of the most commonly used terms we see in the industry:

• Intermountain Multiple Listing Service (IMLS)

The Intermountain Multiple Listing Service (IMLS) (also often referred to as “MLS”) is a secure database of properties for sale that is used by real estate agents in the Intermountain West region of the United States. You can use the public-facing search portion of their website to find homes for sale, and members (agents) can use the full IMLS access to conduct detailed property searches for their clients and to list properties for sale.

• Listing

A listing is simply a property that is for sale and is often represented by a “listing agent” or “seller’s agent.” When browsing real estate websites such as IMLS, or a real estate team, you are looking at listings of properties for sale.

View Listings on the Lysi Bishop Real Estate search page here

• Live VS On Market VS Active

“Live”, “On Market”, and “ Active” are all terms used when a property is for sale on the market.

• CMA 

A Comparative Market Analysis (CMA) is a detailed report that is prepared by a real estate agent or team that provides an estimate of a property's value based on recent sales of comparable properties in the area. This is NOT the same as an appraisal or an instant “home estimate” that many websites provide using an algorithm.

Request a Complimentary CMA on your property here

• Pending or Sale Pending

When a property is listed as pending, it means that the seller has accepted an offer from a buyer. This does not mean the property has been sold. During this period, the buyer is finalizing inspections and financing. Depending on the contractual agreement between the buyer and seller, the buyer can terminate the sale during the pending process and the seller can put the house back on the market as an active listing. The property may continue to be marketed during this time. Other interchangeable terms are “Under Contract” or “Offer Accepted.”

• Contingency

A contingency often refers to a clause in the purchase and sale agreement (PSA) that specifies terms that must be met before the sale can be completed. They protect the buyer and seller by giving them the right to terminate the contract if the terms are not met without penalty. 

We advise all of our clients to discuss with their agent what contingencies are available to them before signing a contract.

• Appraisal VS Inspection

Appraisals and inspections are commonly mistaken for each other when actually they are both very different:

• • Appraisal: A process by which a certified appraiser determines the value of a property based on location, condition, size, recent upgrades, and recent sales of comparable properties in the area also known as ‘comps’.

  • Inspection : An examination of a property's physical condition by a licensed inspector. This inspector will evaluate the condition of the property's working systems and structure. A quality inspector will provide a detailed report and feedback on every area of the property (including electrical, plumbing, and foundation). Some agents have a list of inspectors in their contacts, but it’s always good to conduct your own research to select a qualified inspector when selling or buying a home.

• Lien

According to Idaho law, a lien is a legal claim or right or charge against a property that is used as security (collateral) for a creditor or lender who expects payment from the seller. For example, if a homeowner has not paid their property taxes, a lien may be placed on the property to secure payment. 

There are many different kinds of liens, but be aware that most mortgage lenders will not approve a mortgage if a property has any outstanding liens. Most often, properties cannot be sold until the lien(s) have been paid. 

In the State of Idaho, liens are public information, if you aren’t sure if your property has a lien on it, you can search on the Secretary of State Office website.

• Earnest Money

Also called a “good faith deposit,” earnest money is a deposit of money from the buyer made in earnest to demonstrate their commitment to purchasing a property. It is often due within days of an accepted offer. It is typically held in escrow and will often be applied to the purchase price at closing.

• • Who Keeps the Earnest Money? : If the buyer backs out of a signed and accepted offer, the seller keeps the earnest money. However, if the seller backs out of the offer, the money returns to the buyer. Having clear contingencies in place will help protect the seller and buyer in these situations.

• Escrow

Escrow is where a neutral third party holds funds and documents related to a real estate transaction. This often includes the buyer's earnest money deposit, purchase and sale agreement, and title documents. These funds and documents are held in escrow (typically set up by a lender) until the sale is completed.

• Title Insurance

Title insurance is a policy that protects the buyer and lender against issues that might come up with the property's title. The State of Idaho does not require title insurance, but your lender may require you to purchase title insurance to protect the buyer and the lender’s own interests from liens or disputes over ownership. For example, if there is a claim against the property the title insurance will often defend the buyer and pay for covered losses.

If you have any additional questions or unique concerns not found here, please contact your real estate agent today.

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