When buying or selling a home there are Common Real Estate Terms You Should Know, it is very likely that you will hear terms that are not very familiar to you. Your real estate agent will most likely use terms they are used to and familiar to them, while you might not. Here are some of the terms that you can find while buying or selling your home:
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Appraisal:
Estimated value of a property as determined by a qualified appraiser. The lenders need an appraisal of the property before they can provide a mortgage loan to the buyer.
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Appreciation:
How much a property has increased in the value over time.
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Closing:
Scheduled day when the sale of the property is finished. The buyer will sign the mortgage documents and paid the closing costs and the seller will complete the transaction with the buyer.
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Closing costs:
All the costs related with the final sale of the property, it must be made by the closing date. They include the agent fees, origination fees, lawyer fees, titles insurance fees, survey fees and taxes.
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Contingency:
It must be met before the contract between the buyer and the seller will become legal binding. A common contingency can be the home inspection. If there are any problems, then the contingency can allow the buyer to walk away from the contract without losing their money.
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Depreciation:
The amount that the property has declined in value over time.
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Down payment:
The amount of money you must pay toward a property out of pocket before the lender will provide you with the mortgage loan in order to cover the rest of the property’s price. It will vary depending on the type of the mortgage you take out as well other factors. It can vary from 3% of the total cost to 20%.
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Earnest Money Deposit:
The money you can provide with your offer on a house as a show of good faith. It usually accounts for 1 – 2% of the property’s purchase price. The escrow agent holds the earnest money deposit until the sale will go through. If it does go through the deposit will go toward the down payment. If the seller decides to reject the offer, the money will go back to the buyer.
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Escrow:
Is the deposit of the funds or documents, just like the earnest money deposit, they are both held by a neutral third party until the sale will go through.
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Listings:
Homes for sale can be listings. They can include information about the home, like the price, number of bedrooms, bathrooms and the square footage.
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Mortgage pre-approval letter:
The buyers can get an approval for a home loan before they can find the property they want. This way the buyer can know how much they can borrow. They can use the letter to show the sellers that they have the financing in place to purchase the home, which can give them a competitive advantage to other competing buyers.
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Multiple listing service (MLS):
A large database that the real estate agents use where they can find detailed information about most the properties that are currently on the market.
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Realtor:
It is not the same thing as a real estate agent, not all real estate agents are realtors. Only if they are members of the National Association of Realtors (NAR) they can be a realtor.
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Title insurance:
It can help protect the lender and the buyer against any losses that can occur due to a dispute over the property’s ownership.
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