There are several industry specific terms used in real estate that are crucial to have an understanding of when looking into becoming a first-time home buyer. When the lingo is unfamiliar to you it is easy to become overwhelmed which leads to added stress to an already stressful situation. To prepare yourself for a fast and efficient transaction we have compiled a list of terms you are sure to hear throughout your transaction.
Appraisal: This is the estimate given by professionals that values the home, property, or combination of. An appraisal is sought by lenders when looking to verify that a property is worth the amount of money the buyer is seeking to purchase it for.
Buyer’s Agent: A buyer’s agent is a real estate professional that works on behalf of the person buying a home. They seek to represent the buyer’s best interest throughout the entirety of the transaction.
Contract: A sales contract is a legally binding document between the buyer and seller that states the terms of the sale.
Closing: This is the moment the sale of the home is final.
Closing Date: This is the date that is set in place as a marker for when ownership of the home occurs. It is the expected date that the home inspection is to be completed, a mortgage obtained, and keys exchanged.
Contingencies: Conditions within the contract that need to be met for the sale to move forward.
Counter Offer: Once an offer has been received if it is not deemed acceptable to the seller they can respond with an offer they deem acceptable.
Debt-to Income Ratio: This is a number that is used my mortgage lenders to determine how much outstanding debt you have including the mortgage vs how much income is coming in. Debt is divided by income times one hundred.
Due Diligence: This is the process in which a person takes reasonable actions to satisfy legal requirements of a contract.
Earnest Money: This is the financial portion of the initial contract, typically 1 to 3 percent of the cost of the home, that is held in escrow and is applied to the buyers down payment when the sale goes through or is paid to the seller if the contingencies are not met and the buyer reneges on the contract.
Escrow: Money that is kept in the custody of a third party until certain conditions are met such as paperwork is signed, or taxes are paid.
Equity: The market value of the home minus the liens against it equals the money left over. Equity refers to the money that is left over as “profit” from the sale of the house.
Inspection: This process involves a professional that is hired by the buyer to assess the homes condition.
MLS: A database of properties that are up for sale.
Offer: The initial agreement that is made with conditions that the buyer gives to the seller with terms in which they would like to purchase the home under.
Principal: Is the amount of money the buyer needs to borrow to purchase the home.
Seller Concessions: These are incentives offered by the seller to make the home more desirable to buyers.
Title Search: This is the process that is taken to determine proper ownership of the home. It assures buyers that the seller has the legal ability to sell the home free of outside obligations.
Learn more about C21 Lady of the Lakes Realtors and the numerous services they offer including: buying a new home, selling a home, or renting a home at www.ladyofthelakes.com. To contact one of our real estate agents call 734-426-6060 today.