If you’ve decided to take the plunge and buy a house, you’ll notice the world of real estate can be hard to figure out. Real estate listings and contracts are full of industry-specific terms that might make it seem as if you’re encountering a different language. Understanding some of the vocabulary will help you make sense of the process.

5 Essential Real Estate Terms

1. MLS

This often-used acronym stands for Multiple Listing Service. An MLS compiles real estate listings into one database and distributes the information to agents and brokers. The only way to gain access is to purchase a membership, and hiring a broker who is a member of several MLS organizations will work to your advantage.

2. Closing Costs

The list price is your focus as a buyer, but there also are closing costs to consider. These are miscellaneous expenses that occur during the completion of the transaction, such as taxes and fees from the lender, appraiser, title company, and attorneys. They usually range from 2% to 5% of the selling price. The home buyer and seller must negotiate who pays them.

3. Home Inspection

A home inspection is an evaluation typically done on behalf of the prospective buyer by an independent professional service to determine the condition of the property. An inspector will look at the plumbing, electrical system, foundation, and every other element of the structure that could affect a buyer’s investment.

4. Contingency

Many real estate listings come with a contingency that affects whether the sale will go through. It’s an understanding that stated conditions must be met for the deal to be finalized. For example, a buyer’s offer might be contingent on satisfactory results of a home inspection.

5. Pre-Approval Letter

Most sellers won’t consider an offer unless the bidder is pre-approved for financing. A pre-approval letter comes from a bank stating the prospective buyer has been authorized to take out a home loan. This document proves someone has funds to purchase a house, and every buyer should obtain mortgage pre-approval before they start house hunting.

Buying a home can be a long and tedious process. Having an experienced real estate professional on your side will ensure you understand every element of the transaction and make the best choices in accomplishing this life milestone.

If you’re looking for help finding the perfect property in the Coon Rapids, MN, area, call EXIT Realty Nexus at (763) 757-3948 to arrange a consultation with a real estate agent. Visit their website to learn more about their houses for sale and schedule of open houses. Like them on Facebook and follow them on Twitter to stay up to date with their brokers.