All About Selling

1. Can I sell my house myself?
2. What makes a house sell?
3. When is the best time to list a house for sale?
4. Is there any seasonality to the market?
5. What about market conditions — price trends, interest rates, and the economy in general? Should they have any bearing on when I list?
6. How long should it take to sell?
7. What if I can't sell my old house before I have to move?
8. How do I price my house?
9. What is "fair market value," and how do I determine mine?
10. What's the difference between fair market value and asking price?
11. Who can help me determine the right asking price?
12. How flexible should I be about the asking price?
13. Should I fix my house up before it goes on the market?
14. What is "curb appeal," and how do I create it?
15. What should I do to make the house show better?
16. Should I make any major home improvements?
17. Should I do the work myself?
18. Am I liable for repairs after I sell?
19. What about home warranties? Are they available to sellers as well as buyers?
20. How do I reach the right potential buyers?
21. What's an MLS and why do I need one?
22. How important is advertising?
23. What should I expect from an open house?
24. Should I try to avoid being at home when the house is shown?
25. Who actually sells my house — a broker or a sales professional?
26. Will my sales professional be present at the closing?
27. What makes a sales professional effective?
28. How do I find the sales professional who's right for me?
29. Do I have to pay a commission even if I find the buyer?
30. What is the advantage of an exclusive right-to-sell?
31. What if my sales professional doesn't produce?
32. Real Estate Terms Glossary

Many people believe they can save a considerable amount of money by selling on their own. They look at the average commission on a house and remember stories of friends or relatives who managed to get through the process with seemingly little trouble. "Other people have sold their own homes," they say — "so why can't I?"

Approximately 10 percent of American homeowners handle their own sales. But in order to do this, you'll need to realistically assess exactly what's involved. The routine parts of the job involve pricing your house accurately, determining whether or not a buyer is qualified, creating and paying for your own advertising, familiarizing yourself with enough basic real estate regulations to understand (and possibly even prepare) a real estate contract, and coordinating the details of a closing. These are serious responsibilities to take on, and they include the concerns that your house is only on the market when you're home, your marketplace is limited to those you can reach locally, and a mistake may cost you the money you're trying to save.

The best reason for working with a real estate broker is the enormous amount of information they have at their disposal — information that can help make your house sell faster and easier. Professionals know about market trends, houses in your neighborhood, and the people most likely to buy in such neighborhoods. They also know how to reach the largest number of people who may be interested in your house (both through old-fashioned sales skill and the Internet resources of a reputable real estate company), and are trained in areas like screening potential buyers and negotiating with them. Finally, they're always "on-call," and willing to do the things most of us don't: working on the weekends and answering the phone at all hours.

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A successful sale requires that you concentrate on six considerations: your sale price, your terms of sale, the condition of your house, its location, its accessibility, and the extent of marketing exposure your house receives. While some of these factors are beyond your control (such as the actual sale price), you can compensate by taking advantage of others (like a new paint job) to make your property as attractive to prospective buyers as possible.

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The "best" time to list your house is actually as soon as you decide to sell it.

If you want to get the best price for your house, the key is to give yourself as much time as possible to sell it. More time means more potential buyers will probably see the house. This should result in more offers; it also gives you time to consider more options if the market is slow or initial interest is low.

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Peak selling seasons vary in different areas of the country, and weather has a lot to do with it. For example, late spring and early fall are the prime listing seasons in many areas, including the Greater Boston area,  because houses tend to "show" better in those months than they do in the heat of summer or the cold of winter. And of course, people like to do their house shopping when the weather is pleasant.

But keep in mind that there are also more houses on the market during the prime seasons, so you'll have more competition. So while there is seasonality in the real estate market, it's not something that should dominate your decision on when to sell.

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Probably not. Even if you're under no pressure to sell, waiting for better market conditions is not likely to increase your profit potential.

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Average listing times vary from 30 to 180 days, according to market conditions in a particular region, town, or even neighborhood, and of course, price, terms, condition, location, accessibility and exposure play an even greater role. Selling in any market is easier if you keep time on your side. Most professionals will tell you that allowing yourself at least six months will put you in a position to get a better return from their marketing efforts.

We are monitoring the Boston market very carefully and we developed the "Boston Real Estate Market Report". The report is also covering the average marketing time in the Boston neighborhoods. Click here to get the recent Boston Real Estate Market Report for Free.

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This situation can arise for any number of reasons. For instance, getting the job promotion you've been waiting for may mean having to relocate very quickly. Another example: you finally find your "dream home," and need to get it under contract before it sells to another buyer. Whatever the reason, don't panic. You have some viable alternatives to the worrisome possibility of double mortgage payments.

If you don't have to sell in order to buy a new home, consider the advantages and disadvantages of renting your old house. If you're being transferred before you've had a chance to decide on the new house, you may be able to obtain a short-term rental of your own while you're becoming familiar with the new area. Either way, a local real estate professional can usually help, by advising you how much you can expect to pay for rent in your new city, or what you need to charge for your current home to both cover your mortgage payments and take care of other costs you'll entail as a landlord.

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Always price your property sensibly.

It is important to be realistic about your home's value and price it accordingly. To determine the fair market value, a real estate professional can supply information on comparable homes that have sold or gone under contract in your area.

We are currently offering FREE Comparative Market Analysis. Click here to take advantage of our limited time offer - You won't be obligated to hire us as your brokers.

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Simply put, the fair market value of a house is the highest price an informed buyer will pay, assuming there is no unusual pressure to complete the purchase.

To get a FREE estimate (limited time offer) of fair market value, Click Here. The analysis will give you a realistic figure based on the most salient features of the local real estate market. It should provide information about recent sales of similar houses, including how much they sold for and how long it took. The real estate professional's price opinion is very helpful in determining the right asking price.

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You can assume that some negotiation will be necessary to reach an agreement with a buyer. The professional who presents you with the results of your CMA will provide all the data that establishes fair market value. Then, based on your own timing and marketplace variables, your real estate professional will be willing to help you establish a competitive pricing strategy. Generally speaking, the owner's asking price — the advertised price of a house when it goes on the market — is set slightly higher than fair market value.

In some case, you'd prefer to set your asking price below market value, in order to attract more buyers and to create a "bidding war".

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Real estate sales professionals suggest asking prices based on a wide array of information you may not have at your disposal, including recent listing and selling prices of houses in your neighborhood. If you're not completely confident in their suggestions, you may want to order an appraisal.

Next, establish clear priorities. If you had to choose, are you more concerned with selling quickly, or getting the best price?

Someone else — a neighbor, friend or relative — may point out advantages or disadvantages about your house that you hadn't thought about. Third-party views will help you start thinking of your house as a commodity, with positive and negative selling points. Then you should decide on a price that you feel is competitive and consistent with what other houses in your area have sold for.

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Generally, the first three weeks will be the test period of your initial asking price. If you see showings drop off and very few return visits, you may want to consider repositioning your asking price. Most buyers leave room for negotiation when they make an offer. Thus, a certain degree of flexibility is usually called for on the part of both the buyer and seller.

While it is ultimately your decision to accept or reject an offer, or present a counter-proposal, a good sales professional can be of great assistance to you during the negotiating process. In fact, negotiation is one of the valuable skills a real estate professional can offer you. As negotiations proceed — whether in writing, face-to-face, or by phone — your sales professional will inform you of your options in responding to each offer from the buyer, so you can make an educated decision as to how you want to proceed.

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Unless your house is nearly new, chances are you'll want to do some work to get it ready to market. The type and amount of work depend largely on the price you're asking, the time you have to sell, and the present condition of the house.

If you're in a hurry to sell, do the "little things" that make your house look better from the outside and show better inside. Read on for several specific ideas for making low-cost improvements.

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"Curb appeal" is a common real estate term for everything prospective buyers can see from the street that might make them want to turn in and take a look. Improving curb appeal is critical to generating traffic. While it does take time, it needn't be difficult or expensive, provided you keep two key words in mind: neat and neutral.

Neatness sells. New paint, an immaculate lawn, picture-perfect shrubbery, a newly sealed driveway, potted plants at the front door — put them all together, and drive-by shoppers will probably want to see the rest of the house.

Then, for both the inside and outside of your house, if you're going to repaint, choose neutral colors, and keep clutter and personal knick-knacks, photos, etc. to a minimum. Remember, when a family looks at a house, they're trying to paint a picture of what it would be like as their home. You want to give them as clean a canvas as possible.

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First, make your house look as clean and spacious as possible. Remember, people may look behind your doors — closet and crawlspace doors, as well as those to the bedrooms and bathrooms. So get rid of all the clutter; rent a storage space if you need to, hold a garage sale or call a local charity.

After you've cleaned, try to correct any cosmetic flaws you've noticed. Paint rooms that need it, re-grout tile walls and floors, remove or replace any worn-out carpets. Replace dated faucets, light fixtures, and the handles and knobs on your kitchen drawers and cabinets if needed.

Finally, as with the outside of your house, try to make it easy for prospective buyers to imagine your house as their home. Clear as much from your walls, shelves, and countertops as you can. Give your prospects plenty of room to dream.

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Certain home improvements that are useful to almost everyone have proven to add value or speed the sale of houses. These include adding central air conditioning to the heating system; building a deck or patio; finishing the basement; doing some kitchen remodeling (updating colors on cabinets, countertops, appliances, panels, etc.); and adding new floor and/or wall coverings, especially in bathrooms. On the other hand, improvements that return less than what they cost are generally ones that appeal to personal tastes that not everyone may share, like adding fireplaces, wet bars and swimming pools, or converting the garage into an extra room.

The challenge that comes with any home improvement designed to help sell your house is recouping your investment. There's always the risk of over-improving your house — that is, putting more money into it than neighborhood prices will support.

So how much is too much? Professional renovators have found that, no matter how much you improve any given house, you're unlikely to sell it for more than 15 percent above the median price of other houses in the neighborhood, whether you do $1,000 worth of work or $50,000. That's why you might want to ask your sales professional's opinion about the viability of recouping the cost of any major renovation you have in mind before you start the work.

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If you have the time and talent, do-it-yourself improvements are the most cost-effective way to go. Painting, wallpapering, replacing cracked trim and old plumbing fixtures — the difference between work done by a competent amateur and a professional is usually time and money. Just make sure you don't tackle something you can't handle — this is no time for "on-the-job training." If you're not experienced, it may be worth calling in a professional.

Larger jobs involving mechanical systems (heating, electrical, plumbing, etc.), or work that must meet local building codes, are another story. Even if you or the family handyman know exactly what you're doing, it's not a good idea to engage in this type of work unless you're licensed to do so. Your attempts could make you responsible for more than you realize if something you worked on goes wrong after you sell.

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Yes. If the buyer's inspection reveals major problems with your house's structure or mechanical systems (heating, electrical, plumbing, etc.), the buyer may wish to negotiate the price downward on the basis of anticipated repair costs. So even though the repairs won't be made until after the sale, practically speaking, you'll be paying for them.

Sometimes, repairs may be required before the transfer of title takes place. This is especially true in sales that involve financing that's insured or guaranteed by the government (FHA/VA loans, for example).

You may also have heard about lawsuits involving sellers who failed to disclose major problems before the sale — like an addition to the house that wasn't built to code. Most states now maintain very specific disclosure laws that require sellers to disclose any pertinent information related to the condition of the property. For example, most states require sellers to notify buyers about the presence of any lead-based paint. It is important for you to be knowledgeable about your state's disclosure laws.

These are just a few good reasons to retain a lawyer or sales professional who know as much about the condition of your property as you do. It's also a good idea to get the buyer's written acknowledgment of any major problems when you accept their offer.

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Yes they are, and they're worth investigating. It's our belief that it is one of the best selling points you can add to your house. It's easy to see why. After a buyer has invested substantial funds in a down payment and moving expenses, the last thing they want to worry about is a costly home repair.

Most warranties offers protection for you and your buyer, covering repair or replacement costs for breakdowns to most major systems and built-in appliances for up to a year after the date of closing. In many states, there is no additional cost to sellers who provide coverage for their buyers, except for a small deductible if you make a claim. And when you consider the peace of mind that comes with knowing 24-hour emergency service is always just a phone call away, it's hard to imagine a better investment.

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Today, people are moving farther and more frequently than they used to; it's not unusual for upwardly mobile executives to relocate across the country more than once in a year. The result is that the pool of potential buyers for your house is much larger and spreads far wider than ever before, and the competition to reach them is fierce.

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A Multiple Listing Service, or MLS, is another resource to help ensure you reach a large number of prospective buyers and dramatically increase the exposure of a property.

Quite simply, it's a system under which participating brokers agree to share commission on the sale of houses listed by any one of them. So, for example, if you list your house with one broker and another broker actually sells it, they share the commission. The advantage to you is clear; more people have an interest in selling your house.

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Advertising remains an important component in the marketing process. Today, however, this means much more that an ad placed in the local newspaper. Today's real estate brokers have the knowledge and resources to market your home through an array of proven modern methods, including TV, magazines, radio, the Internet and direct mail in addition to traditional print advertising. They are trained to determine where the pool of buyers for your particular property might most likely be found and from that, can best determine the type of advertising that is best for your property

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The open house is another valuable part of the marketing process, offering prospective buyers the chance to view houses in a low-pressure, "browsing" atmosphere. With that in mind, you shouldn't expect it to generate a sale, at least not directly. What you should look for is interest expressed and requests for private showings made to your sales professional in the days following the open house.

Open houses are always valuable. If many prospective buyers attend, it shows you that the property is attractive and saleable. If very few people show up, it can indicate that the price is too high, and cause you to look for ways to improve Curb appeal. Try not to draw your own conclusions — your sales professional will give you a full report on open-house activity and offer a professional assessment of its results.

Sales professionals often hold an open house for other sales professionals shortly after a house is listed. This event, usually held mid-week when real estate people can give it their full attention, can be as important to your efforts as your listing in the local MLS. The more professionals who see your house, the more prospects you're likely to reach.

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You should definitely plan to be out of the house during any open house your sales professional has scheduled; the same goes for first showings to prospective buyers. People often feel uncomfortable speaking candidly and asking questions in front of current owners. You want them to feel as free as possible to picture your house as their "dream home."

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Both. In legal terms, a real estate sales professional is an individual trained and licensed to act for other people looking to buy or sell a piece of property. While that definition applies to both, the broker is permitted to collect fees and/or commission for such work.

Thus, the sales professional — with whom you have most of your day-to-day contact — works on behalf of, and is compensated by, the broker.

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If you wish. while the law does not require their presence, both the buying agent and the selling agent may attend the closing. Even though most of the procedures are handled by the lenders, title companies, and an attorney, you'll find that your sales professional can be a valuable source of information and counsel, especially if any last-minute problems arise.

Good sales professionals are also extremely helpful in the days immediately prior to the closing. They'll help you prepare by giving you a step-by-step preview of the entire process and what will be expected of you. And they'll make certain you bring all necessary documents and other information.

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We believe good training and experience make the best sales professionals. But the truth is, not every sales professional is right for every seller. That's why we suggest that you follow this simple formula to help you decide whether a particular sales professional will work well for you

COMPETENCE + COMFORT = CONFIDENCE

Competence: When you first meet with a real estate professional, they'll do their best to show you that they have what it takes to sell your house. You can expect to see a portfolio of credentials, past achievements, sales volume and letters of recommendation. Look for evidence that their background is relevant to your needs. The sales professional you choose should also be up-to-date on the current pool of potential buyers for houses like yours.

Comfort: The importance of being comfortable with your sales professional as a person cannot be overstated. You're going to be dealing with this individual on a regular basis, maybe for months, during a time that can be emotionally trying for you and your family.

It takes a unique combination of these two characteristics — competence and comfort — to inspire the confidence a homeowner needs to maintain peace of mind through the process of selling a house.

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A good place to start is by talking to friends, neighbors, and relatives — anyone whose recommendation you trust. You can also try responding to sales professionals' local advertising, direct mail, or Web site profiles. If they have the resources and initiative to maintain such a presence in your marketplace, it's a good sign that they may have the sales skill you're looking for.

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That depends on the type of listing you agree to. If you sign an exclusive agency contract, you may sell the house on your own without paying a commission. In an exclusive right-to-sell agreement, you owe a commission even if you find the buyer. Which type you choose may largely depend on which sales professional you work with and how much trust you place in his or her abilities (as well as how much time and expertise you feel you have to devote to finding a buyer and negotiating a contract on your own.)

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Incentive — it lets sales professionals know that their time and effort will not go unrewarded. That's one reason the great majority of residential listings are marketed under exclusive right-to-sell agreements.

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Besides commission, the most important matter you negotiate at the time of listing your house with a broker is the duration of the listing contract. Terms vary, but listing agreements are seldom for less than three months or greater than one year.

But what if you find yourself dissatisfied midway through a nine-month contract? While the listing contract is legally binding, some brokers offer homeowners an "out" if they are unhappy with the services they are receiving.

We will sign a Commitment to Service document with you, to ensure satisfaction. If we don't deliver - we're fired!

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Abstract of title: A condensed version of the history of title to a piece of land that lists any transfers in ownership, as well as any liabilities attached to it, such as mortgages.

Acceptance: An acceptance is a promise by the offeree to be bound by the exact terms proposed by the offeror. The acceptance must be communicated to the offeror.

Acknowledgment: A declaration made by a person to a notary public, or other public official authorized to take acknowledgments, that the instrument was executed by him and that it was his free and voluntary act.

Acre: A measure of land equal to 43,560 square feet.

Adjustable Rate Mortgage (ARM): A mortgage with rates and terms that can change. The adjustable rate loan has become commonplace, with allowable ranges as to time intervals, percentage of increase or decrease and total increases or decreases likely to change as market conditions change.

Adjustments: Money that the buyer and sellers credit each other at the time of closing. Often includes taxes and down payment.

Agency: A relationship created when one person, the principal, delegates to another, the agent, the right to act on his or her behalf in business transactions and to exercise some degree of discretion while so acting. An agency gives rise to a fiduciary relationship and imposes on the agent, as the fiduciary of the principal, certain duties, obligations, and high standards of good faith and loyalty.

Annual Percentage Rate (APR): An expression of the relationship of the total finance charge to the total amount to be financed as required under the federal Truth-in-Lending Act. Tables available from any Federal Reserve bank may be used to compute the rate, which must be calculated to the nearest one-eighth of 1 percent. Use of the APR permits a standard expression of credit costs, which facilitates easy comparison of lenders.

Appraisal: An estimate of the monetary value of a property on the open market; an estimate of a property's type and condition, its utility for a given purpose or its highest and best use.

"As-is": Words in a contract intended to signify that no guarantees, whatsoever, are given regarding the subject and that it is being purchased exactly as it is found.

Asking (list) price: The price placed on a property for sale.

Assessment: The imposition of a tax, charge or lien, usually according to established rates.

Assignment: A transfer of property rights from one person to another, called the assignee.

Assessor: Municipal or county official who determines the value of property for taxation.

Balloon mortgage: A short-term loan, usually at a fixed interest rate, paid back in equal monthly payments, with a final "balloon" payment for the remaining balance.

Broker: Person licensed to represent homebuyers or sellers for a fee.

Brokerage: For a commission or fee, bringing together parties interested in buying, selling, exchanging, or leasing real property.

Building inspection: An overall inspection of a home or building performed by a qualified contractor or inspector. The inspection usually covers all major systems including foundation, plumbing, electrical, roof, heating and air conditioning.

Buyer listing: An agreement where a buyer agrees to pay a commission if a broker locates a property that the buyer purchases.

Buyer's agent: Agent who represents the buyer in the real estate transaction.

Buyer-agency agreement: A principal-agent relationship in which the broker is the agent for the buyer, with fiduciary responsibilities to the buyer. The broker represents the buyer under the law of agency.

Buyer's broker: A licensee who has declared to represent only the buyer in a transaction, regardless of whether compensation is paid by the buyer or the listing broker through a commission split.

Cap: The maximum allowable increase, for either payment or interest rate, for a specified amount of time on an adjustable rate mortgage.

Closing: The final transfer of the ownership of a house from the seller to the buyer, which occurs after both have met all the terms of their contract and the deed has been recorded.

Closing costs: Expenses of the sale (or loan refinancing) that must be paid in addition to the purchase price (in the case of the buyer's expenses) or be deducted from the proceeds of the sale (in the case of the seller's expenses). Some closing costs result from legal requirements; others are a matter of local custom and practice.

Commission: The compensation paid to a licensed real estate broker or by the broker to the salesperson for services rendered, usually a percentage of the selling price of the property.

Comparables: Houses and properties that are similar in style, appearance, construction quality, and usefulness to a particular property in a certain location.

Comparative Market Analysis (CMA): Realistic estimate of a home's current market value based on the most salient points of the local real estate market.

contingency: A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding.

contract: A legally enforceable agreement to do, or not to do, a particular thing for a consideration.

contract of sale: The agreement between the buyer and seller on the purchase price, terms, and conditions necessary to both parties to convey the title to the buyer.

Conventional mortgage: Mortgage not FHA-insured or guaranteed by the VA, known by this name because it is the most popular home financing method.

Counter-offer: Offer made by the buyer or seller in response to the other's bid.

Curb appeal: Common term for everything prospective buyers can see from the street that might make them want to take a closer look at a house for sale.

Deed: A written instrument, when executed and delivered, conveys title to or an interest in real estate.

Down payment: Buyer's payment to the sellers at time of closing for that percentage of the purchase price required by the buyer's mortgage loan.

Dual agency: Representing both the buyer and the seller in the same real estate transaction. By law, all states require that dual agency be disclosed to all parties in the transaction.

Earnest money: Money paid by the buyer, at the time of making an offer or entering into a contract to purchase, which is intended to show the buyer's good-faith intention to complete the purchase. Generally, earnest money is applied against the purchase price, but may be forfeited if the buyer fails to complete the purchase.

Equity: The interest or value that an owner has in a property over and above any indebtedness.

Escrow: The process by which money and/or documents are held by a disinterested third person (a stakeholder) until satisfaction of the terms and conditions of the escrow instructions (as prepared by the parties to the escrow) have been achieved. Once these terms have been satisfied, delivery and transfer of the escrowed funds and documents takes place.

Escrow account: The trust account established under the provisions of the license law for the purpose of holding funds on behalf of the principal or some other person until the consummation or termination of a transaction.

Exclusive Agency (EA): A written listing agreement giving a sole agent the right to sell a property for a specified time, but reserving to the owner the right to sell the property himself without owing a commission. The exclusive agent is entitled to a commission if he or she personally sells the property or if it is sold by anyone other than the seller. It is exclusive in the sense that the property is listed with only one broker. The multiple-listing service must accept exclusive-agency listings submitted by participating brokers.

Exclusive right to sell (ERS): A listing agreement which gives the listing agent the right to sell the property for a specified time, with the right to collect a commission if the property is sold by anyone, including the owner, during the listing period.

Fiduciary: The relationship of trust, honesty and confidence between agent and principal; the faithful relationship owed by an agent to the principal.

Fair market value: highest price an informed buyer will pay, assuming there is not unusual pressure to complete the purchase.

FHA: The Federal Housing Administration which insures mortgage loans made by approved lenders, in accordance with FHA regulations.

FHA-insured mortgage: A mortgage with low down payment requirements, insured by the Federal Housing Administration and made available through banks and other lenders.

Fixed rate mortgage: A mortgage with an interest rate that doesn't vary for the term of the loan.

For Sale By Owner (FSBO): Some owners choose to sell their own property without the aid of a real estate broker. "For Sale By Owner" properties can be a source of listings when the owner is unsuccessful in selling their property.

Home equity loan: A loan (sometimes called a line of credit) under which a property owner uses his or her residence as collateral and can then draw funds up to a prearranged amount against the property.

Homeowners' insurance: A type of insurance policy designed to protect homeowners from financial losses related the ownership of real property. In addition to covering losses due to vandalism, fire, hail, etc., most policies also provide theft and liability coverage. Flood related damage requires a separate flood insurance policy or rider.

Home warranty: A policy purchased by a buyer or seller as an assurance against unexpected home repair costs.

House closing: The final transfer of the ownership of a house from the seller to the buyer, which occurs after both have met all the terms of their contract and the deed has been recorded. Also known as just "closing".

Impound account: Also known as an escrow account.

Inspection: A formal survey of a home's structure and systems, often performed by a licensed professional.

Inspection clause: A stipulation in an offer to purchase that makes the sale contingent on the findings of a home inspector.

Interest: A charge paid to a lender for borrowed money.

Lease-purchase agreement: An agreement between a tenant and landlord that a portion of monthly rent may be credited toward eventual purchase of the rental property.

Lease purchase: A contract in which an owner leases his house (usually for one to five years) to a tenant for an increased monthly rent, and which gives the tenant the right to buy the house at the end of the lease period for a price established in advance, with the incremental rent increase being used to form a down payment. Buyers should be wary of this type of contract since they may lose their extra rent/down payment money should the owner suffer financial setbacks before the purchase has been completed.

Lender's agent: A person who represents the lender holding the mortgage at closing.

Listing: A contract in which the seller agrees to pay a commission to the agent who finds a purchaser who can meet the specified terms.

Listing agreement: A written employment agreement between a property owner and a real estate broker authorizing the broker to find a buyer or a tenant for certain real property. Listing can take the form of open listings, net listings, exclusive-agency listings, or exclusive-right-to-sell listings. The most common form is the exclusive-right-to-sell listing.

Listing broker: The broker in a multiple-listing situation from whose office a listing agreement is initiated, as opposed to the cooperating broker, from whose office negotiations leading up to a sale are initiated. The listing broker and the cooperating broker may be the same person.

Market: A place where goods can be bought and sold and a price established.

Market analysis: A regional and neighborhood study of economic, demographic and other factors made to determine supply and demand, market trends, and other factors important to buying/leasing and selling real property.

Market value: The price that a willing buyer and a willing seller, both given full information, and neither under pressure to act, would agree upon. Also known as Fair Market Value.

Mortgage: A contract providing security for the repayment of a loan, registered against property, with stated rights and remedies in the event of default. Lenders consider both the property and financial worth of the borrower in deciding on a mortgage loan.

Mortgage broker/company: A person or firm that acts as an intermediary between borrower and lender; one who, for compensation or gain, negotiates, sells or arranges loans and sometimes continues to service the loans; also called a loan broker. Loans originated by the mortgage broker are closed in the lender's name and are usually serviced by the lender. This is in contrast to mortgage bankers, who not only close loans in their own names but continue to service them as well.

Mortgage insurance: A kind of insurance policy that will pay off the mortgage balance in the event of death, and in some policies, disability. Premiums are paid with the regular monthly mortgage payment.

Mortgage loan: A loan which utilizes real estate as security or collateral to provide for repayment should you default on the terms of your loan. The mortgage or deed of trust is your agreement to pledge your home or other real estate as security.

Mortgage note: A signed promise to repay a mortgage loan in regular monthly payments.

Multiple-Listing Service (MLS): A marketing organization composed of member brokers who agree to share their listing agreements with one another in the hope of procuring ready, willing and able buyers for their properties more quickly than they could on their own.

Offer: A proposal to enter into an agreement with another person. An offer must express the intent of the person making the offer to form a contract, must contain some essential terms — including the price and subject matter of the contract — and must be communicated by the person making the offer. A legally valid acceptance of the offer will create a binding contract.

offeree: The person to whom an offer is made — usually the owner.

offeror: The party who makes an offer — usually the buyer.

Open house: The common real estate practice of showing listed homes to the public during established hours.

Open listing: A listing given to any number of brokers who can work simultaneously to sell the owner's property. The first broker to secure a buyer who is ready, willing and able to purchase at the terms of the listing earns the commission. In the case of a sale, the seller is not obligated to notify any of the brokers that the property has been sold.

Origination fee: A fee charged by lenders, in addition to interest, for services in connection with granting of a loan. Usually a percentage of the loan amount.

Over-improvement: An addition or improvement in which the cost is greater than the increased value of the house.

Payment cap: protective device included in some adjustable-rate mortgages that sets a maximum amount monthly payment may rise in any given year.

PITI: Principal, Interest, Taxes, and Insurance, the four main parts of a monthly mortgage payment.

PMI: Private Mortgage Insurance, which protects the lender in case of default by the borrower. PMI is often used to allow buyers to obtain financing with less than a 20 percent down payment.

Points: Where one point equals one percent of the total mortgage loan amount. Buyers often pay lenders a supplemental fee, calculated in points, to get a better mortgage interest rate.

Pre-approval: An actual decision on a home loan, involving the obtaining of a credit approval and an agreement to finance a home, with specifics on the total mortgage amount available to the buyer.

Prepayment: Paying off all or part of the mortgage before the scheduled date.

Pre-qualification: An informal determination by a lender or broker of how large a mortgage a buyer can afford.

Principal: Money borrowed from a lender, not including any fees or interest.

Purchase offer: A document that lists the price, terms and conditions under which a buyer is willing to purchase a property.

Qualify: The ability to meet a lender's mortgage approval requirements.

Rate cap: A protective device in some ARMs that sets a maximum amount that interest rates may rise or decrease annually over the life of the loan.

Real estate: The physical land at, above and below the earth's surface with all appurtenances, including any structures; any and every interest in land whether corporeal or incorporeal, freehold or nonfreehold; for all practical purposes, the term real estate is synonymous with real property.

Real estate agent: A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.

Real estate brokerage: A Real Estate Brokerage is a business in which real estate license-related activities are performed under the authority of a real estate broker.

REALTOR®: A registered trade name that may be used only by members of the state and local real estate boards affiliated with the National Association of REALTORS® (NAR). The term REALTOR® designates a professional who subscribes to associations of REALTORS® to govern real estate practices of members of the board. The use of the name REALTOR® and the distinctive seal in advertising is strictly governed by the rules and regulations of the national association.

Referral: One agent's recommendation of a potential buyer or seller to another cooperating agent.

Refinance: To obtain a new loan to pay off an existing loan, or to pay off one loan with the proceeds from another. Properties are frequently refinanced when interest rates drop and/or the property has appreciated in value.

Return on investment: The net annual income divided by the original cash investment equals a percentage return on investment.

Sales contract: A real estate sales contract contains the complete agreement between a buyer of a parcel of real estate and the seller. Depending on the area, this agreement may be known as an offer to purchase, a contract of purchase and sale, a purchase agreement, an earnest money agreement or a deposit receipt.

Sales professional: A licensed representative who assists buyers and sellers with information, advice, and assessment of current market conditions.

Seller's agent: An agent who represents the seller of real property.

Settlement disclosure statement: A list giving a complete breakdown of costs involved in a real estate transaction, prepared by the lender's agent at closing.

Title: The right of ownership and possession of a property

Title insurance: Protection for lenders or homeowners against financial loss resulting from legal defects in the title.

Underwriting: The process of evaluating a mortgage loan applicant's credit, collateral value and the risks in making a loan.

VA loan: A government-sponsored mortgage assistance program administered by the Department of Veterans Affairs. Under the Servicemen's Readjustment Act of 1944, eligible veterans and widows or widowers (who have not re-married) of veterans who died in service or from service-connected causes may obtain partially guaranteed loans for the purchase or construction of a house or to refinance existing mortgage debt.

Walk-through: A final inspection of a property just before closing. This assures the buyer that the property has been vacated, that no damage has occurred and that the seller has not taken or substituted any property contrary to the terms of the sales agreement. If damage has occurred, the buyer might ask that funds be withheld at the closing to pay for the repairs.

Warranty: A promise that certain stated facts are true. A guarantee by the seller, covering the title as well as the physical condition of the property. A warranty is different from a representation in that a representation is a statement made in the course of negotiations leading up to the sale, but not incorporated into the contract. A warranty, on the other hand, is a statement in the contract asserting the truth of certain things about the property.

Zoning: The regulation of structures and uses of property within designated districts or zones. Zoning regulates and affects such things as use of the land, lot sizes, types of structure permitted, building heights, setbacks and density (the ratio of land area to improvement area).

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