Understanding Important Real Estate Terms

Comparative Market Analysis (CMA)

A Comparative Market Analysis (CMA) is an analysis by an agent that helps create an estimate of a home's value. To prepare a CMA, an agent will first inspect a home. Then he or she will prepare a report about similar properties in the area that have sold, were listed, are pending sales or have expired. This information is usually compiled during the last 6 to12 months. CMAs can be beneficial to both home buyers and sellers. Sellers want to make sure their home is not priced too high, while buyers are concerned with paying fair market value for the home—and no more. It's important that an experienced Realtor® is completing the CMA.

For Sale by Owner (FSBO)

A common misunderstanding is that For Sale by Owner (FSBO) homes save the seller money because they don't have to pay a Realtor® commission. The truth is, trying to sell your own home can be difficult and time consuming. FSBO sellers often have trouble attracting buyers and preparing the home for sale, as well as getting the right price for their home. The average selling price for a FSBO home is $187,200, compared to $247,000 for a home that is being sold by a licensed Realtor®. Other possible obstacles for FSBO sellers include understanding the paperwork that comes with selling a home and having the time to advertise and show the house to potential buyers.

Federal Housing Administration (FHA)

The FHA is a government organization that aims to promote an adequate home financing system by providing mortgage insurance on loans made by FHA-approved lenders. Other goals include improving housing standards and conditions and stabilizing the mortgage market. The FHA encourages home buyers to find an FHA-insured mortgage that is tailored to their needs, thereby making the mortgage affordable.

The United Sates Department of Housing and Urban Development (HUD)

HUD works to increase homeownership and access to affordable housing, and to enforce fair housing laws. HUD supports homeownership for families by insuring loans and mortgages through the Federal Housing Administration. The HUD Web site has many resources for those who are thinking about selling their home, including how to pick the right real estate agent and tips on getting a house ready to sell. For more information and tips from HUD, visit www.HUD.gov.

For additional real estate definitions, see my Real Estate Glossary