Had I not already been a real estate agent when I bought my first house, I would have needed a copy of Real Estate for Dummies to help me understand the documents I was about to sign. If you’re thinking of becoming a homeowner I suggest brushing up on a few important real estate terms. Then, when it’s time to look at a house or apply for a loan, you won’t sound like… well.. a dummie.
In this blog I’ll explain what I consider to be the top 10 real estate terms you need to know as you foray into the world of home ownership. I have comprised this list based on my 20+ years hands-on experience as an owner/broker of Pleasant Valley Real Estate. Read on, and by all means if you have any questions feel free to email me or call me at 802-858-9193.
1. Real Estate Agent
A real estate agent (sales person) is someone who has taken the mandatory educational requirements and passed a licensing test for both state and federal regulations. An agent is required to take 12 hours of continuing education every two years.
A Realtor is a person who is all the above, and, in addition, has joined an organization with a set of rules, principals, and ethics which govern them. All Realtors are bound by these rules and regulations, and risk losing their license if they break them. A real estate agent who is not a Realtor is not bound by a code of ethics.
Brokers can open their own offices and have real estate agents working for them. To be a broker you must first be a licensed real estate agent under another broker until you meet certain requirements. You must also take a separate licensing exam. Brokers have more education and qualifications than real estate agents. In addition, they are required to take 16 hours of continuing education every two years.
For example, Pleasant Valley Real Estate is a real estate office and the broker is me, Lea Van Winkle. I am also a real estate agent and a Realtor. I can have other real estate agents working for me.
4. Buyer’s Agent
A buyer’s agent represents and works in the best interest of someone who wants to buy a property. A buyer (someone who is shopping for a house) and an agent will have a signed contract.
A seller’s agent works in the best interest of someone selling his or her property. A seller (someone who has listed their house for sale with an agent) and an agent will have a signed contract.
Often people don’t realize that unless they have signed a contract with a real estate agent, Realtor, or broker, they are not being represented and there is no confidentiality. For example, if you want to look at a house that I have listed for sale (I am the seller’s agent), and you ask me to show it to you, I am under no obligation to keep anything you say about the house confidential. So you probably should not say, “I love this house and would pay anything to get it,” because I will be required to tell this to the seller.
6. Limited Agent
Sometimes an agent has been representing a buyer and the buyer decides he really likes one of his agent’s listings. This creates “dual agency,” which is not allowed in the state of Vermont. Either one of the parties (seller or buyer) may be released from their contracts, OR, both parties may agree to work with their agent as a limited agent. Both parties then agree that this agent serves to complete the transaction, but in a limited capacity. The agent may not give one party an advantage over the other. The agent is, as the name suggests, limited.
This is the acronym for Multiple Listing Service. It’s a forum in which participating real estate agents can list properties they have for sale. So, when I put a listing of your house on MLS, that means over 8,000 Realtors in Vermont and New Hampshire can see your listing (aka your home) and bring prospective buyers to the table. Since it’s the most sophisticated marketing tool a real estate agent can use, anyone working with an agent should be sure the agent is an MLS member. Nowadays, with the evolution of internet marketing, MLS feeds to other powerful worldwide listing venues, such as your own agent’s website, Trulia, Zillow, Realtor.com, Facebook, and others.
8. P & S
In the real estate world, this does not come at the bottom of a letter as an afterthought. P & S is a purchase and sale agreement. It is signed after an offer has been accepted and all home inspections have taken place. It lists the sellers’ and buyers’ responsibilities during the time period when the property is taken off the market and the actual closing. It also might include certain conditions that need to be met in order to close, such as the pending sale of a buyer’s previous home or the buyer qualifying for a loan.
9. Escrow Funds
In Vermont, escrow funds generally refers to a deposit the buyer makes for the agreed upon contract and it acts as a credit for the buyer at closing. In the contract the buyer typically has conditions or contingencies but once all of these conditions have been satisfied then the buyer is committed to the purchase. Once any contingencies/conditions have been met, if the buyer fails to purchase the property the deposit is released to the seller.
10. Water Potability Test
This is a simple water test that checks to see if water is potable based on the presence (or, more importantly, lack of presence) of E. coli or other bacteria. The state of Vermont allows for no bacteria or E. coli in the water to consider it potable.
Here’s an extra term, a reward for making it through the list!
11. Gross Alpha Test
This test looks for minerals, radon, and any other substances that could be harmful to humans.
So that’s it, the top 10 real estate terms you need to know, plus one! If you need any more information about residential real estate, please feel free to give me a call at 802-858-9195, or email me.
Thanks for reading!