Real Estate Vocabulary
AGENCY - An agreement creating a relationship whereby one party (the agent) REPRESENTS another party (the client or principal). The agent is obligated to completely look out for the best interests of the client.
AGENCY DISCLOSURE - A form that explains the various options the parties have concerning representation, and discloses to buyers and sellers whether they are being represented and what type of representation they are receiving. ALL real estate agents are required to present this form to ALL buyers and sellers of residential property at their first face-to-face meeting.
AGENT - In common usage this refers to the salesperson, however in reality, the agent is the broker that the salesperson works for. Both parties have the same level of responsibility to look out for the best interest of the client.
ASSOCIATE BROKER - Someone who functions as a salesperson, put has a higher level license. An Associate Broker has gone through a higher level of training and requires a minimum of three years experience.
BROKER - The top licensee in a company in each state. In Maryland they may also be referred to as the "Broker of Record". A company that operates in more than one state may have a separate broker in charge of the company in each state. A company may also have any number of "Associate Brokers," that operate as salespeople, but could become a broker of a company at any time, simply by applying for a broker's license.
BUYER'S AGENT - A broker or salesperson who is obligated to look out for the buyer's best interest. Generally, this requires the buyer to sign a contract which will obligate the buyer to work with that agent, but keep in mind, this is no different from what a seller is doing when they sign a listing contract, and will give the buyer the same advantage in negotiations that the seller has with their agent.
DOWNPAYMENT - The cash applied towards a purchase at settlement and the part of the purchase price that is not borrowed. For example, if a buyer purchased a house for $200,000 and got a $180,000 loan, their downpayment would be $20,000.
EARNEST MONEY DEPOSIT - Good faith money a buyer puts up to show that they definitely plan on purchasing a property. The deposit would be applied towards downpayment and closing costs at settlement. If the sale doesn't go through and its not the buyer's fault, they should get the deposit back. if it is the buyer's fault, they could lose the deposit.
PRESUMED BUYER'S AGENT - When no decision about representation has been made between a buyer and an agent in Maryland, the agent is presumed to be representing the buyer. Either party may end the presumed relationship at any time just by saying so. An agent may work as a presumed agent ONLY when showing houses listed with another company. An agent must also stop working as a presumed buyer's agent when the buyer wants to make an offer on any property, no matter what company it is listed with.
SELLER'S AGENT - A broker or salesperson who is obligated to look out for the buyer's best interest. Traditionally, all brokers and salespeople were considered to be looking out for the seller, even if they were working with the buyer. In many circumstances, an agent may still be working in this capacity, so a buyer must be careful what they do or say around the agent. Before a buyer reveals anything affecting negotiations, they should make sure the agent is representing them as a buyer's agent.