Important Definitions in Real Estate

Whether you're entering into the market to either buy or sell a house, training to become a realtor or otherwise, it is important to have a decent handle on the variety of terms and definitions that make up the world of real estate. The fact is, however, real estate can be quite confusing, even for those who have been involved in the industry for many years. Fortunately, understanding the basics of a few important real estate terms doesn’t have to be difficult, and can go a long way in regards to helping you to get a better handle on how the industry functions.

Appraised Value

If you are interested in buying or selling a home, you will run into the term “appraised value” at some point. Generally speaking, the appraised value of a home or piece of property is what a professional appraiser generally feels it to be worth monetarily. Appraised value can depend upon a number of factors, such as condition, the real estate market and more. The appraised value of a home or piece of property usually has a direct effect on how much the final asking price ends up being.

Closing

Many people have heard the term “closing” in relation to an event that occurs towards the end of the sale and purchase of a home or piece of property, which is actually quite accurate. After the real estate has been sold and a price has been agreed open, a closing is held in order for all of the important paperwork regarding the sale to be signed and handed over to its respected party. Closings are generally viewed as being the final aspect of selling or buying a home, hence the definition of the word itself.

Commission

Commission is an important word for those who are selling their homes to understand. When working with a real estate agent, it is almost always the case that the agent will get a commission on the sale of the home. For example, if an agent is to earn a 5% commission on a home sale and the home sells for one-million dollars even, the agent will earn a fifty-thousand dollar commission after the sale has been completed. As a result, those who are selling their home often strive to strike a bargain with an agent in order to get the agent’s commission down as low as possible.

Depreciation/Appreciation

The terms depreciation and appreciation reference whether a home or piece of property has either decreased or increased in worth over time. For example, depreciation is common if a home has simply not been well-maintained and the housing market is in poor shape. Appreciation, however, occurs when it is a seller’s market, the home has been maintained well or even added onto, and the property is in a desirable area (ocean-front property, for example). Depreciation and appreciation can drastically affect the asking price of a home or piece of property.