Buying and selling real estate can be a confusing and scary process. It’s full of strange terminology, paperwork and complex contracts and arrangements. As with anything, a little education goes a long way. Here are 10 real estate terms you should know to help cut down on the confusion of your next transaction.
Buyer Agent and Listing Agent
The most basic real estate term: there are two agents involved in most transactions. The buyer’s agent represents the buyer, and the listing agent represents the seller. The buyer and seller work through their agents for most of the transaction.
Fixed vs. Adjustable Rate Mortgage
A fixed rate mortgage has the same annual percentage rate for the life of the loan (usually 30 years); an adjustable one changes with the market every few years after an introductory period.
Before buying a house you can apply to get “pre-approved” for a mortgage. This means that your mortgage broker says you’re okay to make offers and that they plan to loan you money when the time comes. It also serves as notice of how much you can borrow and can speed up and smooth the buying process.
A listing is a way of referring to a property for sale. Listings show information about the real estate: price, location, size, number of bedrooms, etc., and may include photos or a video walkthrough.
A home inspection is an important part of the purchase process. It will uncover problems with the home in things like plumbing, electrical systems, foundation, roof, heating/cooling, etc., before you sign the final sale and allow you to negotiate needed repair.
An appraisal is an estimate of a home’s value by a licensed professional who bases the estimate on comparable homes in the area as well as a thorough investigation of the real estate in question.
Contingencies are a fairly common means of putting conditions on a sale. A seller, for example, may have the ability to buy a new home as a contingency (you can’t buy unless the seller has somewhere to move). It could also be on the buyer’s end—that the home inspection comes out okay, for example.
Offer and Contract
You make an offer to buy a home—tell the seller what you’re willing to pay. When that offer is accepted, the home is “under contract” until the sale is complete. That means, in lay terms, that you’ve legally “called dibs” on the house, and nobody else can bid on it unless your sale falls through.
Real Estate Terms: Closing Costs
The sale price isn’t the “be all, end all” of what you’ll pay. You will have to pay fees, taxes and costs usually between 2 and 5% of the purchase price on top. These are called closing costs.
You will need to get a title search done on your home after it’s under contract. This helps to make sure that there are no liens against the house that you’re going to inherit. Title insurance protects you against unforeseen issues like back taxes owed that you may not have realized were there.
For more information about real estate terms, look at our information page, and give us a call for help today!