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Real Estate Terms You Need To Know
Whether you are buying or selling real estate there are many different terms that you will hear. You may not need to know the definition of each and every one of them by heart but having some familiarity with them help you through the process of a real estate transaction. Listed below are many terms you likely encounter and what they mean.
Appraisal--The estimation of a property's value performed by a licensed appraiser. The bank uses the appraisal to help determine the amount of money they are willing to loan on a piece of property.
Back Up Offer--A back up offer is an offer that is received on the property that will only be considered in the event that the pending offer on the property falls through.
Buyer's Agent--The real estate agent who is representing the buyer and their interests.
Certificate of Title--A document that ensures the property is legally owned by the person who claims it.
Closing--When the real estate property that is being sold is transferred to the new owner. The transfer usually happens after all financing, valuation and inspection activities have taken place and the buyer, seller and lenders are happy with the numbers related to financing and Closing Costs. The seller and buyer will sign paperwork related to the new and old mortgages and also sign paperwork to transfer the title of the property into the new owners name. After the closing is done the title company that is involved in the closing process will have the new deed recorded with the County government.The Closing date is usually set for in the purchase offer contract. The date is usually selected to allow enough time for the mortgage lender, appraiser, home inspector and others to do their work prior to the property title changing to the new owner.
Closing Costs--Fees paid by the buyer at closing. In some cases the seller will pay the some or all of the fees incurred by the buyer at closing. These fees include but are not limited to loan origination fees, attorney fees, title fees, appraisal fees, survey fees, escrow deposit, recording fee and a number of other fees depending on the lender and closing company.
Comprables--Other homes in the area with similar qualities that have recently been sold or listed.
Contingencies--Conditions that must be met in order for the offer on a home to proceed.
Contract--A legally binding agreement to fulfill some sort of obligation--in real estate buying, selling, or leasing property. The contract helps to guide the transaction with important dates for due diligence, contingencies, and timelines.
Counter Offer--A proposed change to the initial offer.
Dual Agency--When an agent or brokerage represents the buyer and seller in a real estate transaction.
Due Diligence--Reasonable steps taken by a person in order to satisfy a legal requirement, especially in buying or selling something. In real estate this typically refers to the period when they buyer has appraisals and inspections done.
Earnest Money--A payment that is made from the buyer to the seller in good faith to show they intend to complete the purchase of the property.
Good Faith Estimate (GFE)--An estimate provided from the lender to the buyer of what closing costs (fees the buyer will pay) will be and what will be provided in the loan (amount, rates, etc.).
Homeowner's Association--A management organization within a community, subdivision, or neighborhood that creates and enforces rules for properties within its jurisdiction.
Home Inspection--An examination of a home and it's systems performed by a qualified professional (usually during due diligence). Inspections are meant to help educate the buyer about the property. The buyer may request the seller fix certain issues or give money back at closing for the issue.
Loan to Value--The risk assessment ratio used by lenders. It is calculated by dividing the mortgage amount by the appraised amount.
Mortgage--A loan used to help purchase real estate property.
Multiple Listing Service (MLS)--A database for real estate agents to list and market for sale homes and properties.
Open House--An event hosted by listing agents to showcase a property.
Pre-Approval--The lender has already approved that a certain amount can be borrowed.
Pre-Qualification--The lender is likely to loan.
Post Inspection Repair Request--After a Home Inspection has been completed there may be a list of items the home inspector noted as needing repair or replacement. The buyer has the option to submit a request to repair to the seller and have those issues replaced or repaired at no cost to them. In order to keep the home sale from failing the seller should complete the repairs, or the seller could offer to reduce the price accordingly if they are unable or unwilling to complete the repair. The buyer and seller must agree in writing to any changes or repair requests that are requested as a result of a Home Inspection. If the seller refuses to complete the repairs the buyer can walk away from the deal and cancel the offer provided the purchase contract had language in it which covered the home inspection and repair requirement.
Purchase Offer--A Purchase Offer is the initial document in which a buyer will list out the terms and conditions of their contract to purchase a home. A Purchase Offer will become a contract only if the seller has accepted all terms as presented. While the Purchase Offer can be made verbally the actual contract to purchase real estate must be in writing.
Quitclaim Deed--Deed transferring property rights without any validation of ownership. This typically happens between spouses and family members.
Seller Agent--The real estate agent represent the seller.
Seller Disclosure--A document completed by the seller disclosing the property's history and any defects.
Under Contract--When the buyer and seller have entered into the contract but have not closed on the property yet.
Walk Through--The final inspection conducted before a home sale is final.
You may hear all of these real estate terms and then some or you may only hear a handful, either way at least you'll be prepared and know what's going on.
Skye Streppa is an Asheville native who holds a wealth of local knowledge and a depth of character found only in the mountains of North Carolina. His attentive advocacy to his client’s needs creat....