What are the Realtors® and Real Estate Agents talking about when they talk their work “lingo”? Acronyms, abbreviations… There are times when we forget that we are the only ones that generally know what these terms mean.
Here are a few Terms that we think you might find useful when interacting with Realtors®, Lenders, and Title Companies. If there are other words or acronyms you would like explained, we would love to hear from you.
CMA- Comparative Market Analysis
A comparative market analysis is when your agent under the direction and supervision of their Broker, compares your house with other houses in your area that are similar and comes up with a price range that in their expert opinion would sell for. You see, Real estate agents are not licensed appraisers. So, our legal scope is to do a market analysis. Some of the other terms that you may have also heard for CMA is Market Analysis. Realtors® and Real Estate agents do not generally charge for a CMA.
BPO- Broker Price Opinion
A broker price opinion is just like a CMA, but is generally referred to as a BPO instead of a CMA when being done for a Bank, Asset company, or even a relocation company. A BPO is to be done by a broker, or under the direction of a broker. It is usually on a form that looks similar to an appraisal, but isn’t an appraisal.
As quoted by the Texas Association of Realtors® .”BPOs and CMAs are not appraisals. Appraisals may only be completed by someone who is licensed or certified as an appraiser.:
LTV- Loan to Value
The Best way to describe Loan-to-value is this an example. Just like in the video above, if a lender says they will do an 80% loan-to-value loan, and you were buying a house for $100,000.00, then what that means, when the appraisal comes back at the contract price of $100,000.00, and the bank is offering to give you a loan, if you meet their lending criteria of $80,000.00 or 80% of the value of the home. In return for the loan, you would also be required to put a down payment in the amount of $20,000.00.
CCR’s- Covenant Conditions and Restrictions
Designed Communities where people live are subdivisions. They also include Condominium Complexes and Townhouse areas. When these subdivisions are first developed, a developer will meet with an attorney and they make up the rules that govern the subdivision. These rules are called the Declaration of Covenants Conditions and Restrictions. Also known as CC&R’s or CCR’s. Every homeowner who buys in a subdivision will have an opportunity to review the CCR’s. They are usually available online, or a title company or real Estate agent can show you how to find your subdivisions rules. These rules are usually governed by a committee called an HOA or Homeowners Association.
Point- 1% of the Loan value
Points are how lenders charge their clients. Points are calculated based on the loan amount and not what you are paying for the purchase as a whole. For Example on a $100,000.00 house, if there was an 80% LTV or Loan to Value, and the lender was charging 1 point then the cost to the lender would be $800.00. Our lender’s at insight loans have a glossary page of definitions and they describe a Point as “An upfront cash payment required by the lender as part of the charge for the loan, expressed as a percent of the loan amount; e.g., “3 points” means a charge equal to 3% of the loan balance. It is common today for lenders to offer a wide range of rate/point combinations, especially on fixed rate mortgages (FRMs), including combinations with negative points. On a negative point loan, the lender contributes cash toward meeting closing costs. Positive and negative points are sometimes termed “discounts” and “premiums,” respectively.”
Understanding what some of these terms mean can help you understand the real estate process. If you have other questions or need further explanation, please feel free to comment below or contact us privately. We are here to help.