Its not only first-time home buyers who feel confused by some of the real estate jargon that they come across, sometimes home buying veterans can be confused.  Here’s my attempt to demystify some of the Real Estate lingo for Frederick home buyers and sellers:

Backup Contract:  Sometimes sellers advertise that they will take a backup contract in case the contract they have on their home falls through.  If a contract is shaky for any reason, and the house has had a lot of interest, it can be an effective tactic.  If a buyer has the time to wait, they might be lucky enough to get the home.

Contingency Date:  When an offer is written with contigencies, like  a home inspection, financing contingency, radon inspection, etc., each of those contigencies have dates in which they must be met and answered.  If you look at the very first sentence in the MAR contract, it says “time is of the essence”.  These dates must be met or the contract is voidable.

Escalation Clause:  When a buyer writes an offer sometimes they add an escalation clause.  It will say something like, if another offer comes in that’s higher, we’ll escalate our offer to $X amount more than that offer, with a limit of $Y.  Personally, Chris and I don’t like escalation clauses.  First of all, when it comes to negotiating, the buyer is signalling to the seller how high they are willing to go, so the seller might as well just counter with that number.  Secondly, it is illegal for a seller’s agent to reveal the details of an offer to anyone other than the seller.  It seems like you would have to reveal those details to the buyer with the escalation clause, doesn’t it?  They just make things messy, in our opinion.

DOM, DOMP:  When you see listing information or market statistics you’ll see these terms.  DOM stands for Days on Market for a particular listing, DOMP stands for total days on market, including any other previous brokers who had it listed.   A property has to be off the market for 3 months to become an entirely new listing.

Excl. Right:  There are different types of listing agreements, exclusive agency, exclusive right to sell, modified exclusive, but most of the time you see ‘exlusive right to sell’.   This means that one agent has the exclusive right to sell the house. 

Fee-simple:  This is the most common and highest form of ownership.  We see this most often.  We have a couple of neighborhoods with ground-rent in Frederick, which is another form of ownership, more common in Baltimore County.  The other types of ownership are Co-op and Condominium.

Kick-out:  If any of the contingency dates are not met, the seller has the right to void the contract and take another.

LA:  Listing Agent

Pre-Qualification vs. Pre-Approval:  A prequalification letter takes about 5 minutes on a phone call to a lender.  It is common that an offer must be accompanied by a pre-qualification letter, and it should be from a reputable, local lender.  This says to the seller, “this buyer is capable of getting the money for this house.”  A pre-approval is something that takes a few weeks, and is not a bad idea in today’s market.  It says, “this buyer is already approved for the loan to buy this house.”

Short Sale:  When a property is sold for an amount “short” of what the owner owes on it.  Permission must be worked out with the lender.

Third-Party Approval:  This is when the negotiated contract must be then approved by a third party.   Most commonly nowadays it is a lender(s) approving a short sale.  But it can also include a legal approval for a business partnership or a trust, or another investor.  Lately, we’ve had some experience with HAP, Homeowner’s Assistance Program, which is a program to help our military personel who’ve been transferred and have to sell their home for less than they owe.  That is also a third-party approval.

Contact us with any questions about the Frederick County Real Estate Market, or use our free Frederick County Property Search:

                       The Highland Real Estate Group
                            Chris & Karen Highland *   301-831-9947
                                        Real Estate Teams, LLC
                                     email us: isell4u2@msn.com