Skip links

Say What? Real Estate Terms (Part 1)

Effective Date

The date that the last party signed or initialed any terms and/or changes in the sales contract. This is frequently the date that starts the clock on the contract’s various deadlines.

Disclosures

These are conditions and facts seller has to tell a prospective buyer about the house.Responsible sellers err on the side of caution and disclose everything, since nobody wants a buyer to come back later with a lawsuit for not being told that the basement flooded last year and there is an ongoing mold problem.
As a buyer, take the time to actually read the list of disclosures yourself.

Typically, there are at least two disclosures:
1) A lead based paint disclosure informs the buyer that the house could contain lead based paint products if the home was constructed before 1978.
2) A property condition disclosure reveals to the buyer any and all adverse conditions of the property.

Contingencies

Contingencies are the conditions that must be met for the sales agreement to continue to be valid. Contingencies can be considered“escape clauses.” Some examples are:
1) Sale contingency – the buyer’s existing home must sell on or before a specific date before purchasing the subject property
2) Inspection contingency – the condition of the property, once subjected to a thorough, professional inspection, must meet the expectation of the buyer before purchasing the subject property
3) Appraisal contingency – the property must appraise for a value at least equal to the sale price before the buyer can purchase the property
4) Financing contingency – the buyer must obtain financing before he can purchase the property

Home Warranty

A home warranty is a service contract that will help protect against the cost of covered repairs or replacements to the major components of home systems and appliances that fail due to normal wear and tear. Common systems and appliances covered include:
1) Heating and cooling systems
2) Major appliances
3) Plumbing systems
4) Electrical systems

Be sure to sure to understand which items are included and excluded in the warranty.

Equity

Equity is the difference between the home’s fair market value, and the unpaid balance of the mortgage.

MLS

Agents refer to the MLS or “multiple listing service” as the database where they can search for properties or input new listings. Frequently, the local MLS in your area will have a REALTOR MLS version and a slightly different public MLS version. Typically, once a listing is placed on the MLS, it syndicates to Realtor.com and other national real estate websites.

CMA and Comps

A comparable property (or comp), is an individual property that is used to asses the value of a home. Ideally, comps are very similar to the subject property being assessed. A “CMA” or Competitive Market Analysis assesses multiple comps to achieve the best price for a subject property. During this assessment, the subject property is adjusted up or down in value compared to the comps condition, features, size, etc.