Could you define each term below?

You might be able to rattle off a explanation worthy of the best real estate textbook out there, but can you actually communicate in a way that your client understands? An easy way to lose rapport and trust with a client is talk over their head. They’ll usually feel like either a) you think you’re much smarter than them, or b) you’re using big words because you’re trying to pull the wool over their eyes on something. A great way to establish trust and rapport is to be able to explain all the paperwork, laws and new concepts that come along with our profession in a way that makes sense to them. They’ll feel much more comfortable with the transaction because they’ll be making educated choices, and will associate that comfortable feeling with you, their agent.

So here’s your challenge – take the definitions below and see if you can’t find a way to explain them in layman’s terms that works with your personality. Why not have a little fun with it? Personality just deepens your connections with clients!

Appraisal: a written report by a state-licensed professional that includes an unbiased analysis of the property’s value and the reasoning that led to that opinion. An appraisal report is required for any property sale.

Broker: an agent who brings together a buyer and a seller, or a landlord and a tenant, in a real estate transaction. All brokers must be licensed by the state in which they work. Most work on commission, and the landlord or seller usually pays the fee.

Build-to-suit: a method of leasing property in which the landlord makes improvements to a space based on the tenant’s specifications. The cost of construction is generally factored into the lease terms. Most build-to-suit provisions apply to long-term (10-year) leases.

Concessions: benefits or discounts given by the seller or landlord of a property to help close a sale or lease. Common concessions include absorption of moving expenses, space remodeling, or upgrades (also called “build-outs”), and reduced rent for the initial term of the lease.

Escalation clause: a clause in a lease that allows the landlord to increase rent in the future. Rent increases dictated under an escalation clause may be charged in various ways, including:

• A fixed increase over a definite period
• A cost-of-living increase tied to a government index, such as the tax rate
• An increase directly related to increases in operating the property

HVAC: an acronym for “heating-ventilation-air-conditioning” system. In a commercial building, the landlord generally is responsible for maintaining the HVAC.

Lease: an agreement by which the owner of a property (the “lessor”) grants the right of possession to a tenant (the “lessee”) for a specific period of time (the “term”) for a predetermined amount of money (the “rent”). A “leasehold estate” is the space occupied by the tenant. Common types of leases include:

• A straight, or flat, lease, which stipulates that the same periodic payment (usually monthly) be made for the entire term of the lease.
• A percentage lease, which uses a percentage of the net or gross sales to determine the monthly rent. This is most often used in retail properties and with a minimum base rent.
• A net lease, which requires the tenant to pay maintenance, taxes, insurance and so on, along with a fixed rent. This is also called “net-net-net” or “triple net.”

Lien: a legal claim filed against a property for payment of a debt or obligation. If a property owner fails to pay a creditor, for example, the creditor can place a lien on the property. A lien can halt the sale of a property.

Sale-leaseback: a transaction in which an owner sells a property to an investor, who then leases the property back to the original owner under prearranged terms. Sale-leaseback deals offer the original owner freed-up capital and tax breaks and the investor a guaranteed return and appreciation.

Sublease: a lease given by a tenant for some or all of a rented property. For example, if a tenant rents 20,000 square feet but only ends up needing 10,000 square feet, they may want to sublet the extra space for some or all of the remaining term of the lease, providing they continue to occupy and pay rent for the property.

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When your clients get to know and like you, it follows very closely that they will begin to trust you as well. Most people don’t like to be “sold”. So, it makes sense to take the time to give them value in every interaction. When was the last time you did something unexpected for your clients? Do you keep in contact regularly?

Why not send a personalized greeting today?

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Don’t mistake the reduction of a home’s listed price as a signal that something is wrong with the home.

In many parts of the country — the supply of homes for sale is outpacing the demand for homes.  When supply exceeds demand, there is a downward pressure on price until a balance point is reached.

During the recent boom in real estate, this economic equation was reversed, creating upward pressure on prices.

Supply and demand in today’s market can be illustrated by a seller listing their home at a price and finding few potential buyers.  When the price drops, however, more buyers suddenly show interest in the home.

Further price reductions, of course, bring even more interested buyers until a deal is made and the home goes under contract.

When supply exceeds demand over a long period of time, prices tend to drop and that is why a market like this one is called a “Buyer’s Market”.

Price reductions don’t signal problems with a home, but merely that it was priced too high to find a buyer given the current market’s supply and demand.

(Image courtesy: Biocrawler)