Navigating Real Estate Listing Lingo

When you first start reading real estate listings, you're likely to encounter a few unfamiliar terms. It's important to understand the information presented in a real estate listing because it can prevent you from wasting your time and your agent's time looking at properties that don't suit you. Here are a few of those terms and what they mean.

Deferred maintenance - A nice term meaning that some aspect of the house has not been properly cared for over the years. These words can truly mean what they say, being something as simple as peeling exterior paint or old carpet that needs replacing, or they can be downright misleading, meaning that the house is trashed.

Bring your investors! - The ad is being directed at other real estate agents, not at potential owner-occupants. This property is not suited for the average retail buyer. It needs significant cosmetic improvements, if not structural improvements, before it will be a pleasant place to live.

Bonus room - It's not a bedroom, a living room, a sunroom, a bathroom, a dining room, a kitchen, a living room, or a den. It's an extra room that defies definition. Because it can't really be categorized, a bonus room can sometimes mean you'll get extra space without paying for the true value of that space. Of course, the bonus room could also be an awkward or poorly done addition to the house that you really wish wasn't there.

Outdoor living space - a porch, patio, or deck. Real estate agents like to tell you that these areas essentially add square footage to the home. However, this is only true if you actually like to spend time in your back or front yard. This area should not be included in the home's listed square footage.

Sliders – sliding glass doors, as commonly seen leading to a patio or deck.

HOA - Homeowner's association. If you live in a townhome or condo, you'll have to pay monthly dues to the homeowner's association so that there is money to maintain common areas like the exterior of the building, a community swimming pool, elevators, landscaping, and the like. Instead of correctly saying, "low HOA fees!" or "HOA dues are $250/mo.," listings will often be abbreviated to say something like "low HOA" or "HOA $250."

Foreclosure - When a homeowner stops paying his or her mortgage, the bank can seize the property. The entire foreclosure process tends to take 3-6 months or more. It is expensive for the bank, very damaging to the homeowner's credit, and should only be used as a last resort.

Short sale - When the mortgage on a home is worth more than the home can be sold for, the owner may get the bank to agree to accept less than the remaining balance on the mortgage and end the mortgage obligation. The lender can forgive the difference (and is required to in some states) or require the homeowner to pay back the difference. Commonly seen in today's down housing market. Also called a pre-foreclosure, this type of sale can be a financially distressed homeowner's last recourse before resorting to foreclosure.

REO - stands for "real estate owned," meaning real estate owned by the bank because the property was foreclosed on. Theoretically, banks want to get rid of these properties because banks are in the business of lending money, not owning real estate. There are holding costs associated with owning real estate, like property taxes and maintenance. In reality, banks often seem to drag their heels when selling a property. REOs tend to be priced below market, but since they have been abandoned, they will often have a lot of deferred maintenance. ;)

Photo by The Lebers

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