5 Real Estate Terms Clients Just Don’t Understand

1. Good-Faith Estimate

In a dream world there are no surprises on the way to closing. Here on planet Earth anything can change at any time. A frequent stress point where clients get caught in the cross-hairs of the sometimes inevitable is the good faith estimate.

Most clients see and save toward this magic number that tells them what they’ll need to close. However, make sure buyers are aware that best term to pay attention to is the last. These “estimates” can vary drastically when it comes to closing time and they should probably save with padding in mind to make sure their deal doesn’t fall apart at the end of the road.

2. Pre-Approval

A pre-approval is just that, a pre approval. Too often clients think that their pre-approval is as good as money in hand. And yes, it does give them permission to shop, but they need to be aware that changes in their habits or the market can affect their ability to close.

Yes, most people (hopefully) know not to buy a car while shopping for a home, but they may not be thinking about closing the deal fast to avoid getting caught on the downside of lending standard or market value changes. They need to be clear that they don’t have the loan until they’ve closed, and that means both being conservative with their credit and time.

3. The “Comp”

On the seller’s side, the most common catch phrase that trips clients up is the almighty “comp.” A “comp” is one comparable property; and yes, they are helpful when it comes to pricing.

Clients, however, need to understand the difference between the “comp” and a Comparative Market Analysis (CMA). The CMA takes into account a number of factors, and if not explained properly, clients will lean on sites like Trulia or Google as an authority for pricing advice.

4. MLS

In the mind of many seller clients, the MLS is a magic place where properties go to get sold.  A ton more goes into marketing.

To make sure clients don’t misunderstand what a multiple listing service is, show a entire property marketing plan. This has two major benefits. One, it keeps them from sounding like a dunce. Second, it shows the value of using a professional by showing them all of the resources and tools used to move their home.

5. Agent

The fact is that most people hire an agent without having a clue as to what agents actually do. If clients get this wrong, the deal  is at risk.

There’s a lot of conversation around whether or not agents earn their commissions. Showing off things like a marketing plan, positive recommendations and reviews, and other resources that break down can go along way.

Until next time….





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