The world of real estate is vast and can get confusing, especially of you are a first time home buyer. Just the language and terms alone in real estate can be enough to have the average person confused when buying or selling a home. When trying to purchase or sell a home there are some common terms you will probably hear that are good to be aware of.
Here are some real estate terms that are great to know.
Buyer’s Market: The current condition of the real estate market is to a home buyer’s advantage. There are more homes on the market than people looking to purchase, and homes tend to stay on the market for a long time.
Seller’s Market: The current real estate market is to a home seller’s advantage, the inventory of homes for sale is low and many home sales end up in bidding wars.
Comps: Short for comparable sales. These are prices of what similar homes in the same neighborhood sold for in the past six months. This number helps an agent to determine a fair market listing price for a home.
Appraisal: The actual value of a home reported by a licensed and certified appraiser. The value is derived from data about comparable home values in the area and a walkthrough by the appraiser.
Appraisal Management Company: Institution that orders an appraisal of a home after a request by a lender.
In Escrow/Under Contract: A period of time (usually 30 days sometimes longer) after a buyer has made an offer and it has been accepted by the seller, when the home is inspected, appraised, etc. During this time if an issue arises with the home the buyer can back out of the purchase.
Title Insurance: Insurance that protects buyers and lenders should an outside party come forward with a claim against the property that was in effect before the seller transferred legal ownership (title) to the buyer.
Closing: Final meeting where the legal ownership of a home is transferred from seller to buyer. Usually lasts a couple of hours and involves signing of papers.
Closing Costs: Fees that arise from the sales transaction of a home that are due at closing. This can include title search, printing of documents, notary fees, inspection fees, and more. These usually total anywhere from 1-3% of the purchase price.
Closing Disclosure: Document sent to the buyer three days before final closing that lists all the terms of the loan and the closing costs due.
Contingencies: Conditions written into a home purchase offer contract to protect the buyer should any issues occur, such as approved financing and passing inspection.
Days On Market: Number of days a home has been listed for sale.
Earnest Money: A deposit put down by the buyer to confirm their intent to purchase when an offer is made.
Home Owner’s Association: A governing body of a housing development or neighborhood that holds established rules for the greater good of all residents and collects dues to take care of common areas.
Multiple Listing Service: Commonly referred to as the MLS. This is a database that real estate agents use to publicly list homes for sale.
Short Sale: The sale of a home by an owner who owes more on the home loan than the loan is currently worth. The lending bank must approve the listing price at less than the value of the loan before it can be sold.
These are just a few of the most common terms you will hear when buying or selling a home.
Buying and selling homes are big life changes and can become confusing fast. The right real estate agent AND LENDER can help you through all the steps and answer all of your questions along the way, so that you feel you have a greater understanding and are complexly comfortable with the proc