Real Estate is an on-going and every growing topic of conversation. When the pandemic first hit, many of us were left scrambling trying to sort out our “normal” life routines. Many people realized far too quickly how fleeting life is, and the importance of loving your home. This sparked a pretty big jump in the Real Estate world as people starting looking for new homes, or second homes to enjoy more vacation time. Real Estate is FULL of confusing jargon, so let’s go over some of the most common terms to help the already convoluted process a little easier to understand!
Common Real Estate Terms …
As-is | Usually indicating that the property is in “as-is” condition and the seller is unwilling to perform any or all repairs needed on the home/property. The condition of the home is considered as-is the moment the offer was written. If something should happen to the property between the accepted offer date and closing, the seller must bring the property back to its original condition when the offer was accepted.
Backup Offer | If a buyer is interested in purchasing a property that already has an offer in review, they can choose to submit a backup offer. This will be viewed if the first transaction falls apart. This backup offer must still be negotiated, and there can legally only be one backup offer in a transaction.
Buyer’s Agent vs. Listing Agent | Buyer’s agents represent the interests of their client’s while purchasing properties. Their job is to locate potential properties and negotiate on behalf of their client to obtain the best price and purchasing scenario. Listing agents represent sellers and their best interest while selling their home. They market their client’s property and negotiate to obtain the best price and selling scenario possible.
Buyer’s Market | This occurs when there are more houses on the market, than there are people interested in buying. The supply exceeds the demand. When the buyer has more control, this often leads to sellers going the ‘extra mile’ to ensure their property attracts people’s attention. This can mean anything from more relaxed conditions, flexible closing dates and more appealing sale prices (to name a few).
Closing | Closing days are when the home is considered final. All parties’ signatures should be obtained at this point and all monies are conveyed. Once the transaction is closed, the buyer is officially considered the new homeowner and takes possession of the property.
Conditional Offer | An accepted offer on a home that includes one or more conditions that must be met before the sale is final. IE. Getting a mortgage approval or home inspections are very common.
Down Payment | This is a percentage of the home’s sale price that is not financed by a mortgage loan. This must be paid by the buyer’s own savings before they can be approved for a mortgage.
Equity | The investment a homeowner has in their home. Calculating equity: market value of the home minus any mortgages against the property. The amount remaining is the equity.
Instant Equity: Buying a home for less than its market value. IE. Buying a home for $240,000 that is worth $260,000 you instantly have equity of $10,000.
HOA – Homeowners Association | A private association that manages the community or condominium where the property is located. When buying a property that is managed by an HOA, you are agreeing to abide by the rules and regulations set out by the HOA. As well as any HOA monthly/annual fees.
Inspection | Done by licensed professionals, this happens as part of the due diligence process in buying a home. The buyers can fully assess a home and prepare a report on any needed repairs before finalizing the sale. The decision to buy a home as-is can be made, or a request to the sellers to either complete or pay for repairs needing to be done.
Land Lease | When purchasing a home, the most common is land ownership and home ownership. However, there are circumstances in which the land is leased and the home is owned. This usually involves a fee to the landowner to “rent” the land, made weekly/monthly/annually.
Land Surveyor | This identifies the land boundaries and features to help determine ownership. In some circumstances, this may be a requirement in a purchase deal.
Seller’s Market | This occurs when there is a shortage of goods available and an increase in buyers. Low supply meets high demand. Seller’s have the majority of control, and can set higher sale prices, strict conditions and firm closing dates (to name a few). Seller’s markets often invite multiple bids, and it’s not uncommon for bids to exceed the seller’s asking price.
Trust Sale | The home/property is being sold by a trustee of a living trust. NOT a private party/persons. Most trust sales are due to the passing of the homeowner, or they have placed their assets in a living trust. The trustee then has the authority to make decisions regarding the sale of the home.
These terms, among MANY others are used on a regular basis in Real Estate transactions. Understanding the basics, and having a registered Real Estate Agent to represent you helps the process make more sense and go smoothly.
What terms have you seen that leave you questioning the world of Real Estate?