6 REAL ESTATE AGENT TERMS YOU NEED TO KNOW
Real estate and real estate transactions are imbued with jargon and terms that can confuse anyone, especially those who don’t deal in real estate on a weekly basis. If you’re like most people, you buy and sell a home once or twice in your life and aren’t familiar with the language used to negotiate deals and contracts. To help you stay informed on the real estate process, here are 6 real estate agent terms you need to know:
When a property is in escrow it means a third property is facilitating the contract and holding the money until both sides have fulfilled their obligations. These obligations were set forth in the contract and the property will not change hands until they are done. When someone says they have a “30 day escrow” they are referring to the minimum number of days it will take for escrow to close.
When you are pre-approved, this means that a bank has pre-approved you for a certain loan amount based on information you provided. Being pre-approved makes your offer more desireable to sellers because it is an indication that you can secure the funding to purchase your home.
Pre-qualification goes one step further than pre-approval. When you are pre-qualified this means the lender has run your credit and has documentation to verify your assets, income, and debts. Pre-qualification is more appealing to sellers than pre-approval because it is verified that you can acquire that loan.
In real estate, contingencies are conditions that allow either party to walk away if they are not met. There are a number of contingencies but the most common ones are loan contingencies, appraisal contingencies, and inspection contingencies. Loan contingencies allow buyers to walk away from the deal if they cannot secure the loan, appraisal contingencies allow buyers to walk away if the house is not actually valued at the price they are purchasing, and inspection contingencies allow buyers to walk away if the construction does not meet certain standards.
EARNEST MONEY DEPOSIT
An earnest money deposit is an initial deposit that shows the seller you are a serious buyer. There is no set amount that it has to be; it can be $1,000 or even 20% of the asking price. The larger the deposit is the more seriousness it signifies to the seller. Earnest money deposits are given back to the buyer as long as they walk away from the sale within their contingency time frame.
Closing costs are fees you have to pay when you purchase a home outside of the cost of the home. They are typically about 2-5% of the purchase price and include excise tax, loan-processing costs, and title insurance.
A REAL ESTATE AGENT MAKES REAL ESTATE EASIER
In addition to these terms, there are dozens more that will be commonplace in real estate transactions. To make sure you aren’t being confused and making mistakes, you should work with a real estate agent when buying or selling a home. They are professionals with years of experience that can make your life much easier.
Our realtors have over twenty years of experience living and working in the South Bay that helps make us the premier realtors in the area.