NEW YORK (TheStreet) -- Navigating the world of real estate can be a quagmire in and of itself without getting crippled by confusing terms. While most buyers and sellers can grasp the significance of a home's list price and the size of house, other terms might leave them scratching their heads.Whether you're a first-time homebuyer or a seasoned investor, below are five real estate terms you should know. 1. Sale-price-to-list-price ratio
In many ways real estate is a numbers game, and the better a person understands the numbers the more likely they will make a smart decision. The sale-to-list-price ratio is a way for people to gauge how well their agent understands a local market. What is the sale-to-list ratio? For the mathematically inclined, it is the final sale price(what a homebuyer actually pays for a home) divided by the list price and expressed as a percentage. If the figure is above 100%, the house sold for more than the list price. Conversely, if the figure is below 100%, the home sold for less than the list price. We know this can be difficult to understand, so here is an example: If a home was listed for $100,000 and sold for $80,000, the sale-to-list ratio would be 80% ($80,000/$100,000). The value of the sale-to-list ratio comes when you look at an agent's sale-to-list ratio. An agent's sale-to-list ratio should be near 100%. If the percentage is low, it means the agent routinely lists homes for more than they sell for. If the number is high, the agent might have a track record of negotiating for a higher price tag. A problem, however, is that it can be difficult to find this ratio, even in the information age. One valuable resource is neighborcity.com. In addition, your agent should be willing to provide you with information. Tip: A good agent will have a high sale-to-list ratio, meaning that they understand the local real estate market. 2. Median days on market
Speed is sacred in real estate. The faster a piece of property sells, the better it is for everyone involved. The buyer gets to move into their home, the seller collects funds and both real estate agents are paid.
When homebuyers begin their search, they will want to know the strength of the market. This will clue them into whether it is a buyers' or sellers' market, and ultimately save them money. One way to gain insight is to look at the median list price per square foot over time. If this number is down or flat it might be a good time to buy a home. If the figure has increased it can indicate demand is up and it is a good time to sell. In addition, the current median list price per square foot allows buyers to compare the relative cost of two homes in two different areas. You can see an example of this on our market statistics page for San Diego.
What are distressed properties? There are a lot of answers to this question, but it boils down to homes that are on the market because the homeowner has defaulted on their mortgage or tax payments. After a property becomes distressed, a variety of organizations such as a debt collector, government or bank try to sell the home to recuperate back mortgage payments or taxes. Homebuyers on the hunt for affordable homes should consider viewing distressed properties because they are typically sold at a much lower price than similar homes on the market. As the name suggests, the percentage of distressed properties, which can be viewed on any major internet brokerage, tells homebuyers what percent of a real estate market is made up of distressed properties. Tip: If you're a frugal shopper, you will be more likely to find cheaper homes for sale by looking at distressed properties. The smaller the figure, however, the harder it will be to find home deals.