Commonly Confused Real Estate Terms

Real estate has some unique industry terms that are easy to mix up or get confused by. At Motus, we believe that you as the buyer and/or seller should have a stress-free understanding of all things real estate, so we are breaking down some commonly confused terms for you and explaining the key differences.

The Four Types of Home Value: 

Did you know that there are actually four different terms in real estate that each means a slightly different value of your home? First, there is the estimated home value. This is the value that you will most often see calculated by a computer algorithm that reviews your square footage and recent home sales in your area. Click here to use our simple Motus tool and see what your estimated home value is. Then there is the true market value, which is calculated by a licensed agent who will take into account upgrades or unique selling features of your home. This value is the price that buyers are willing to pay for your home determining the listing price. The appraised value is calculated by a third-party appraiser. This number helps determines what the buyers will ultimately pay for the house. Lastly is the assessed value, which determines how much you will pay in property taxes. This value is calculated by a public tax accessor. Want to know more? Check out our blog that covers all things home value. 

Pending, Contingent, and Under Contract

When a for sale property receives and accepts an offer, the status changes from available to contingent or under contract. Just because an offer has been accepted does not mean that all of the requested provisions have been met yet. Commonly, this would a provision like a home inspection. When a home status is contingent, oftentimes the sellers will still be accepting backup offers, just in case all the provisions are not met in the agreed upon timeline. If everything goes well, and the provisions are met, the status changes to pending or pending offer. This means that it is set to close. 

Buyer’s Agent, Listing Agent, and Dual Agency 

In most real estate transactions, there are two agents involved, the buyer’s agent and the listing agent. The listing agent represents the best interests of the seller or sellers. They make sure photos of the property are taken and that the property gets listed. The buyer’s agent represents the buyer or buyers of the property. These agents split the commission paid by the seller. In rare occasions, there is only one agent representing both sides of the transaction and this is referred to as dual agency. 

Prequalified vs. Preapproved

Getting prequalified can be helpful as it allows you to identify a base budget for a home search. This process is exclusively based on data that the borrower submits to a lender. This basic ballpark estimate is the prequalification amount, meaning this is how much money the lender thinks that they could lend you. However, because they haven’t done a deep dive into your finances this is just an estimate and not a promise. That’s why before beginning the home search, we recommend getting preapproved for a mortgage. This means a lender will ask for more information to see what you truly qualify for. The preapproval will also include an interest rate, though this may change depending on when you put in an offer. 

Though these terms are common in the home buying and selling process, it is easy to get them confused. Still have questions? Our team of experts would love to answer your questions. Give us a call at 248.270.5999.