Essential Real Estate Terms You Should Know

by Darrell G. Hamilton 09/09/2019

Home buying and selling can be a complicated process, especially for first-timers. The vocabulary involved will only compound your confusion if you jump right into it without knowing what they mean. Real estate, like other fields, has some terms that are peculiar to it. Before you set out to list your home for sale or seek to buy one, it is good to understand some valuable real estate terms you will encounter in the process. Here are some words you must know when involved in a home purchase:

Appraisal

In the real estate market, every property has unique qualities owing to its different conditions and structures. An appraisal determines the estimated value of a piece of real estate based on specific criteria. Appraisal reports by a certified real estate appraiser are used to resolve mortgage loans and taxation issues.

Contract

A purchase contract is a written document that contains the contract price and other terms of a property sale. The property is said to be 'under contract' when both the buyer and seller have reached an agreement and signed a formal offer and acceptance on the sales price and contingencies.

Listing agent

A listing agent is a real estate specialist operating with a license. They are in the real estate market to help home sellers advertise, market, and sell their homes. They represent the seller during negotiations and charge a commission on the sale.

Buyer’s agent

A buyer’s agent represents the interest of a buyer during negotiations on a home purchase. They usually charge commissions for bridging the gap between the buyer and the seller, but the seller pays the commission.

Debt-to-income ratio

Debt-to-income ratio, or DTI, is an essential factor that mortgage lenders consider before granting you a mortgage for your new home purchase. It shows how much your debt load is. You can calculate your DTI by dividing the sum of your debt expenses and your monthly housing bill by your gross monthly income, and then multiply by 100. Arriving at a percentage higher than thirty-six percent, after calculating your DTI, points to the need for adjusting your budget.

Escrow company

An escrow company functions as an unbiased third party that monitors the transaction process. They ensure that all parties involved follow proper procedures before closing the deal and hold the earnest money until buyers and sellers sign all paperwork.

Earnest money

After a buyer indicates an interest in purchasing a home, a percentage of the selling price is paid immediately to the seller but placed into escrow. This money is called earnest money and indicates the buyer’s serious intent to purchase. If the buyers decide to back out, a contingency in place can help them recover their money. However, when the transaction goes through successfully, the money becomes a part of the buyer's down payment. 

Contingencies

These are conditions that need to be fulfilled for the home sale to go forward. A home appraisal is a common contingency clause. Another is a financing contingency which is the required time frame for a buyer to raise funds to acquire the property. A popular contingency is the length of the closing process. 

Always ask your real estate agent to explain any terms you do not understand so that you can make the right decisions.

About the Author
Author

Darrell G. Hamilton

Darrell G Hamilton Denver Real Estate

For nearly three decades, Darrell has achieved success through hard work and an optimistic attitude. He is a consistent top producer, ranking in the top 5% of the Denver Metro Association of Realtors. His ability to seamlessly sell a modest one bedroom condo, a world-class penthouse or a multi-million dollar estate exemplifies his knowledge of properties in metropolitan Denver. And he is a true people person. Some of Darrell’s clients are buying or selling their home through him for the third or fourth time; their confidence in him is appreciated. Other clients are well-known personalities in business, real estate development, oil and gas, biotechnology, banking, medical, hospitality,communication/entertainment, society, philanthropists, and professional sports. He respects their privacy and safeguards their confidential information …he does the same for all his clients.

Darrell began his real estate career in Portland, Oregon. He has been a licensed Broker in the state of Colorado since 1990. He has two Bachelor of Science degrees, Sociology & Social Work, from Portland State University, Portland, Oregon. He was asked to join Rae & Company, Denver’s most prestigious boutique real estate firm; known for its pioneering efforts in saving historic buildings and residences from the wrecking ball in the 1970′s and 80′s. Consistently atop producer, Darrell was part of the original marketing team for the luxury condo conversion on Cheesman Park, Cheesman Gardens… among many others.

While with Rae & Company, Darrell was selected as the principle Marketing Broker for several residential developments. During this time, Darrell became known for his “hands-on” approach to the prospective Buyer and the needs of his developers.

When Rae & Company closed its doors in 1998; Darrell was sought after by all the top-producing firms in the city. He accepted an offer from the newly opened Moore Premier Properties in Cherry Creek. Ten months later NPR bought Moore &Company. The Principals of Premier Properties were asked to help create the expansion of The Kentwood Company into the inner city. Now, the brokerage house of The Kentwood Company has over 150 of the most successful Agents in the entire United States. After the first year of having its doors open in Cherry Creek –Darrell was given the recognition of being the top sales producer for five years!

During his years of living in Hawaii, Darrell managed the real estate portfolio of exclusive clientele of who’s who in the entertainment industry. He has traveled throughout Europe, The South China Sea, Africa and South America where he gained great knowledge of architecture and culture. During the last two decades, Darrell has maintained involvement in many community and charitable organizations which includes:

Mount Saint Vincent’s Home for Children
(One of the original charter members)
Project Angel Heart
Cancer Awareness drives, etc.
Denver Art Museum benefactor
Denver Art Museum Asian Art Association
Denver Board of Realtors
National Association of Realtors

Letter from Darrell:

My company has catered to Denver’s “carriage trade” real estate market since we opened our doors.  Through the years, the Kentwood principles Bill Moore & Peter Niederman have insisted that their associates cultivate the camaraderie and cooperation of other top brokerage firms in the Denver area, as well as other key cities across the country to draw prospects from a broader target market. Thus my marketing is always result-oriented, unique, quality and attention grabbing. Through my promotion expenses and methods, it invites, welcomes and even applauds other brokers who bring Buyers to the table. A good portion of my promotional efforts is directed at other brokerages and agents. In this context, I do not allocate a specific sum to be spent on marketing a particular property. I will spend whatever it takes to generate a sale in the form of media promotion, printed materials and select, exclusive, invitation-only receptions for my colleagues… and many other tailored techniques. This extra “service,” persisting beyond the fixed expense budget of other real estate brokers, has earned me the reputation for results and success I now enjoy.

What I bring to the company and the reason I was asked to join the firm, is my dedication to refined service. I always go above and beyond my obligations as a Realtor, to make the entire selling experience and process as effortless and as lucrative as possible for my clients.

I am known for not only how I set the stage before each showing, but for the fact that I even fold the toilet paper – seriously! I make sure that lighting is just right, the right background music is selected, etc., for each showing and open house that I can attend. All of which, I firmly believe, is so crucial to ensure that each Prospect’s first impression of the property is a positive impression.

One of the most important marketing advantages I can offer you is my sphere of past clients, colleagues and friends throughout the state and across the country. These people may be interested in your property or may know of someone who is. This is of utmost importance when marketing exclusive or unique properties, to have a sphere of influence as I do.

I firmly believe my strength is knowing the inner city real estate market. Not only the history of the buildings, homes and neighborhoods, but the residents, their families and the special characteristics of each residence or condominium and neighborhood block. After all, I have lived in the inner city for over 35 years! I also pride myself on knowing the “players” in the inner city real estate market, who is looking, who is selling, who the developers and investors are and what they are looking for. This is an attribute that no other Broker in the city can offer.

Please feel free to contact me about any real estate questions you may have or transactions you may be considering.

Darrell G Hamilton
Associate Broker