“We need more real estate acronyms,” said no real estate professional or consumer – ever.
Historically, the real estate industry has been a bastion of Alphabet Soup. Think about how long we have been saying “NAR” (50 years), “FNMA” pronounced as Fannie Mae (84 years), and “MLS” (~100 years)!
Integrating technology into the daily lives of real estate agents has accelerated the proliferation of acronyms. Thank goodness for Google – but then again, some of these acronyms are sometimes even hard to Google because they are specific to real estate.
So here is a modern little list of 10 real estate and tech acronyms every real estate agent needs to know:
- ARV: After-repair value. With the advent of a new category in real estate called “Concierge Services,” the use of ARV is becoming commonplace. Concierge startups such as Revive Real Estate and Curbio can help sellers quickly renovate now and pay at closing to maximize their home sales.
- AVM: Automated Valuation Model. Zillow and its zestimates may have popularized the term AVM, but today, there are dozens of alternative online estimates. Some are leveraging computer learning and artificial intelligence to estimate home values better and inching closer to the values created from a full in-person appraisal. As a result, the term AVM will only get more popular.
- CoCR: Cash-on-cash return. The recent rapid increase in real estate values will likely result in more of your sellers becoming interested in real estate investment. In real estate, CoCR calculates the cash income earned on the cash invested in the property. This is a math calculation: divide the net cash flow by the total cash invested. Here’s a great example of how it works on Investopedia.
- DeFi: Decentralized Finance. The metaverse, crypto, and blockchain may be down, but they are not out. Even traditionalists see value emerging from blockchain use, and DeFi is one of them. For example, instead of a traditional bank providing a loan to purchase real estate, DeFi potentially offers the ability to finance a real estate transaction, either paid by bitcoin or providing a mortgage. The difference is that the review for approval and funding would be nearly instant. And unlike a traditional mortgage, one could potentially sell off fractional shares of their property to pay off the mortgage. That may seem far-fetched but consider that the second home firm Pacaso is modeled after 1/8th fractional share ownership. Read more about DeFi here.
- LLC: Limited Liability Corporation. Real estate investors have embraced LLCs since their creation in 1977. Today, the term is becoming more mainstream as creative real estate startups are using the LLC structure to help sellers buy their next home before selling their current home. Other firms are using the LLC structure to create their 1/8 ownership model, allowing eight different sets of buyers to own real estate.
- NFC: Near-field communications. If you have seen others share their contact info with a tap of their phones, you have witnessed NFC in action. For real estate, NFC potentially has more opportunities than delivering a digital business card. For example, marketing-enabled NFC “smart signs” allow shoppers to interact with your For Sale sign from their mobile phones. In the UK, agents give out branded, NFC Enabled Keyrings for a listing. Then, as they tour, the NFC technology can share floor plans, photos, and more – before they even leave the property. Think of it as a wireless thumb drive.
- NBIC: Nanotechnology, biology, information technology, and cognitive science. Researchers look at NBIC as “converging technologies for improving human performance.” In a nutshell, advancement in these areas is overlapping more and more. NBIC’s goals are to enable human populations to be stronger, healthier, and more capable. Relevance to real estate? Sustainability issues that impact housing and other real estate development. For example, the Bartlett School of Architecture at the University of London is modeling coursework for systems architecture that uses NBIC to address sustainability challenges. Among the direct impacts: a new generation of smart materials used to construct buildings and, eventually, homes.
- NOO: Non-owner occupied. Most agents are familiar with this lender classification, which means the owner does not occupy the property as a primary residence; it is considered a rental property. Effectively, risks are higher with non-owner occupied property, meaning lender interest rates are higher than those for a primary residence. The increase in NOO property, especially in single-family homes, has exploded with the growth of both individual and institutional investors.
- RESO: Real Estate Standards Organization. Think of these folks as real estate’s “Rosetta Stone.” RESO makes it possible for all the data collected from hundreds of different Multiple Listing Services to be standardized. For example, their work makes MLS data usable in the national mobile apps consumers use to search for properties. RESO is to real estate as the IEEE is to Bluetooth. RESO may be invisible to most agents and their clients, but real estate transactions are improving from the standardized data work that RESO volunteers – it’s a nonprofit – are doing.
- SaaS: Software as a Service. You can thank the internet, or the “cloud,” for the massive proliferation today of SaaS firms and the subscription services you now pay to use your favorite software. SaaS caused the death of the software CD. Today, the most popular software is delivered and accessed through the cloud. In real estate, most technology is SaaS, from transaction management platforms to Comparative Market Analysis (CMA) solutions.
What’s your favorite real estate or technology acronym? Please share yours with us for a potential future story by emailing us at [email protected]. And if one of tech-specific acronyms is causing you some difficulty, feel free to reach out and ask us for help at techhelpline.com.