If you’re thinking about purchasing a new house or selling your current one, you may have come across some language you’re unfamiliar with. Having a basic awareness of a few key real estate phrases can make it easier to choose a broker or agent. It can also provide you peace of mind and confidence in the process. The terminology listed here are some of the most common real estate terms explained. They should serve as a starting point for questions you may have during your home buying or selling process.
The term “Realtor” can refer to a variety of things, believe it or not.
- Realtor is another term for a real estate agent.
- A real estate agent who is a member of the National Association of Realtors is also known as a Realtor.
- The term “real estate agent” can also apply to members of the National Association of Realtors.
In a real estate transaction, a buyer’s agent is a licensed realtor who represents the buyer. The buyer’s agent negotiates a Purchase and Sale Agreement with the seller’s agent on behalf of the property buyer.
The buyer’s agent is sometimes referred to as the selling agent. This is not to be confused with the phrase seller’s agent. The buyer’s representative is frequently referred to as the selling agent. The seller’s agent is referred to as the listing agent in real estate. The phrase “selling agent” refers to the person who keeps track of a real estate transaction in the Multiple Listing Service (MLS).
In a real estate transaction, the listing agent represents the seller. Their job entails advising a seller on how to set a fair price for their home and then bringing in potential purchasers to view it.
Once a price has been agreed upon, listing agents market the property, assist with staging and styling to ensure that it is presented in the best possible light. They often hire a professional photographer to take high-quality photos of the property for inclusion in the listing. Listing agents host open houses and assist in the evaluation of potential purchasers in order to ensure that their clients get all offers as they are received.
When an offer is received, the listing agent will assist the property owner with the discussions, as well as any paperwork, until the sale is completed. Listing agents usually negotiate a commission on the sale price in exchange for their services, which is split with the selling agency.
When a real estate agent works with both the buyer and the seller on the same transaction, this is known as dual agency.
A pre-approval letter is a document issued by a lender that specifies the exact loan amount that will be issued to the borrower. This letter can be given to the borrower’s agent and potential sellers to demonstrate that they are serious about purchasing a home. Obtaining a letter also informs the buyer of their financial capabilities. This allows them to concentrate on examining properties in their price range.
FIXED RATE MORTGAGE
A fixed rate mortgage is a house loan that has a fixed interest rate for the duration of the loan. This means that the mortgage’s interest rate remains constant from start to finish. Fixed rate mortgages have terms ranging from ten to thirty years. People who want to know how much their monthly payment will be prefer this sort of mortgage.
VARIABLE RATE MORTGAGE
An adjustable rate mortgage (ARM) is a form of loan in which the interest rate applied to the outstanding debt varies throughout the course of the loan’s term. The initial interest rate on an adjustable rate mortgage is fixed for a set length of time. The interest rate resets repeatedly after this initial period, at yearly or even monthly intervals. Variable rate mortgages, or floating mortgages, are also known as adjustable rate mortgages. Adjustable rate mortgages have an interest rate that is reset based on a benchmark or index plus an additional spread known as an ARM margin.
An agreement that grants a real estate agent or broker the authority to handle the sale of real property in exchange for a fee or commission.
There are multiple types of real estate listings:
- A general or open listing is a right to sell that can be assigned to multiple agents or brokers at the same time.
- An exclusive agency listing gives a single real estate agency the exclusive right to sell a property for a set length of time, with the exception of the owner. An exclusive authorization to sell listing gives one agency sole authority to sell the property for a set period of time. Even if the owner finds a buyer during the time period, the agency will be paid a commission. This is the most popular listing type.
- A multiple listing occurs when an agent with an exclusive listing provides information about the property to a number of members of a real estate association and splits the commission with the agent who is able to find a buyer.
- A net listing is one in which the seller sets a minimum price for the property and the agent’s commission is based on the amount that the property sells for over that minimum.
A house inspection is an evaluation of a real estate property’s condition. It usually occurs in conjunction with the selling of the property.
A qualified home inspector evaluates the property’s condition. Often including the heating and cooling systems, plumbing, electrical work, water and sewage systems, as well as some fire and safety issues. In addition, the house inspector will look for signs of bug, water, or fire damage. As well as any other problem that could lower the property’s value.
Before buying a house, a home inspection is not obligatory, although it is strongly recommended.
Appraisals are utilized in a variety of situations, including real estate transactions. Mortgage lenders may refuse to fund a contract if the home appraisal comes in below the purchase price. The deal will not proceed unless the prospective buyer is willing and able to cover the difference between the appraised value and the lender’s financing offer.
To estimate the acceptable value of a home, the appraiser can utilize a variety of methods, including comparing the current market value of similar properties.
When a buyer makes an offer on a home, he or she can include conditions that must be met before the transaction can be completed. These are known as contingencies. A buyer must ensure that he or she can receive the loan (finance contingency). That the inspection reveals no issues (inspection contingency). And that the appraised value is close to what is being asked to pay (appraisal contingency). These are just a few instances of contingencies. There are a variety of others that should be explored with a realtor.
OFFERS AND CONTRACTS
You’ll make an offer on a home with the help of a realtor or attorney once you’ve found the correct one. If the seller rejects your initial offer, it’s usually because they want more money or a faster closing date. In these cases you may have to haggle.
Closing fees typically range from 2% to 5% of the home’s purchase price, excluding the down payment. Excise tax, loan processing fees, and title insurance are all common fees. Before you are ready to close on a home, do your research on how much closing costs might be and which closing expenses are negotiable.
Ask your lender about all of the fees included in the Good Faith Estimate and see if you can search around for a better deal or negotiate a lower price. Homeowner’s insurance, wire transfers, underwriting, and settlement costs are all examples.
The buyer should obtain a house title report within a week after all of the discussions are completed and the seller has accepted the offer. The majority of mortgage lenders include title insurance in the closing expenses. Title insurance check public records to ensure that the house seller has legal ownership of the property and that there are no liens against it.
Summary: Common Real Estate Terms Explained
If you’re thinking about purchasing a new house or selling your current one, you may have come across some language you’re unfamiliar with. Having a basic awareness of a few key real estate phrases can make it easier to choose a broker or agent. It can also provide you peace of mind and confidence in the process.
If you have any questions about Common Real Estate Terms Explained contact me today.