A Real estate transaction (like many things) comes with its own set of lingo and buzzwords that may seem confusing to someone who is new to buying and selling real estate. Frankly, even those people experienced in real estate dealings have an issue keeping certain terms straight. Check out some common real estate transaction terms below explained simply.

  • Contract: This is a term often used interchangeably in the real estate industry. This is due (in part) to most standard forms that real estate agents use being titled as some sort of “Contract.” It is important to note that (generally speaking) these “contracts” typically do not become a legally-binding contract until both parties sign the document. Therefore, if you are in the middle of negotiations and someone mentions a “contract,” be sure to clarify what (s)he means.
  • Real Estate Licensee/Broker/Agent/Salesperson/REALTOR®: In everyday conversation it is common for people to use each of these terms synonymously. However, each one has a nuanced meaning that may have an impact on your real estate transaction.  
    • Real Estate Licensee: This term refers to a person who is licensed to sell/buy/lease real estate in the state of Missouri. The Missouri Real Estate Commission is the state regulatory body that governs real estate licensees. This status can be broken up into two main categories: Broker and Agent/Salesperson. 
      • Broker: Refers to a real estate licensee who has a Broker license. Having a Broker license allows that person to conduct real estate brokerage activities without having someone else “hold” his/her license. A Broker can also “hold” licenses of Agents/Salespersons and supervise their activities.  
      • Agent/Salesperson: Refers to a real estate licensee who has a salesperson license. These licensees are also commonly referred to as “agents.” In order to perform real estate brokerage activities, an Agent must be under the supervision of a Broker. This type of the real estate licensee is the most common in the industry.  
    • REALTOR®:REALTOR® is a federally registered collective membership mark which identifies a real estate professional who is member of the NATIONAL ASSOCIATION OF REALTORS® and subscribes to its strict Code of Ethics.” This definition is straight from the National Association of REALTORS® website, and is pretty straightforward. This is a very particular definition that refers to a subset of real estate licensees. In addition to the National Association of REALTORS® there are State associations and multiple local associations of REALTORS®. 
  • Earnest Money: This term refers to the money that a Buyer typically deposits at the beginning of a real estate transaction (usually when an offer is submitted) to show (s)he is serious (“earnest”) about moving forward with the real estate contract. Depositing Earnest Money has become a common (and encouraged) practice in much of the state. However, it is not required to make a real estate contract legally binding. As a buyer, Earnest Money is simply another way to make your offer “stand out” to potential sellers. Talking with your real estate professional is a perfect way to determine what the “norm or custom” is in your particular area in this regard.  
  • Seller’s Disclosure: A “seller’s disclosure” is typically a form or statement provided by a seller that describes (to the best of his/her knowledge) all the “issues” with the property (s)he is trying to sell. It is important to note that a formal “seller’s disclosure” is not required to be provided in the state of Missouri (with a few statutory exceptions). However, it is typical practice that most sellers are encouraged to do so due to “risk management” reasons (as non-disclosure, misrepresentation, and fraud are common causes of action that arise from real estate transactions).  

Although some of these terms may seem “tricky” or “complicated,” RS Campbell Law, LLC is here to help you understand how these terms/concepts may affect your real estate transaction. Contact us today to see how we can work with you, and your real estate agent, to help guide you through your real estate transaction!