Whether you are buying or selling, real estate terms and jargon can get a little overwhelming and confusing. When you’re talking about the good faith estimate and credits and debits to buyer or seller, it can be a jumbled mess. But, we want you to know about five of the most important real estate terms when it comes to buying or selling.
#1. Appraisal.
You probably realize what this term means but the appraisal is necessary to gather an estimated value of your real estate property. Whether you are the buyer or the seller, and appraisal must take place if the buyer is financing the home. The mortgage lender will hire an appraiser to provide an expert opinion of the value of the property. They will take a look at similar properties that have sold within the last 3 to 6 months and determine the value of the property in question. This is so the lender is not loaning more money than the home is worth. The appraisal will come in before closing and the fees will typically be tacked on to the closing costs. An appraisal can run anywhere from $300-$900.
More: Best Projects for Adding Value to a Home
#2. Listing agent and buyers agent.
In a real estate transaction, there are typically two agents involved, the listing agent, who represents the seller and the buyer’s agent, who represents the buyer. Both are qualified and licensed real estate professionals in both charge a percentage of the sale price of the home, however, the buyer’s agent gets paid from the seller, not the buyer. When a listing agent takes on a property to sell, the seller and listing agent negotiate on a percentage of the sale price as the commission. That price is typically 6%, which is then split between the buyer’s agent and the seller’s agent.
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#3. Purchase and sale contract.
Also called the real estate offer or real estate settlement, this is the contract on which everything between buyer and seller is negotiated and signed off on. This is a legal contract and it will list out the terms of the sale. Once the house is under contract, it means both the buyer and seller have agreed on the contract price and terms. Terms in the contract can be negotiated at a later time but must be agreed upon and signed, not just verbally.
#4. Closing costs and closing.
Closing costs are paid at the end of a real estate transaction. These fees include title search and title insurance premiums, property taxes, the appraisal, processing fees, loan fees, courier fees, and all the other fees and details associated with the transaction. These are typically split between the buyer and the seller as both will have their own closing costs. Closing costs can be built into the purchase of the home as long as the home appraises for the higher amount. Otherwise, the buyer and seller will need to bring these fees to the closing table for the final signing. The seller will typically sign first and then the buyer will come in second and sign all the documents finalizing the transactions.
Read More: 20 Added Costs to Buying a Home
#5. Mortgage officer.
A mortgage officer or loan officer also called a mortgage broker, either works for a specific bank or works for a mortgage group that has access to hundreds of different mortgages. If you go through one bank or credit union for your home loan you have limited access to the type of programs and options out there. By going through mortgage officer with a specific group, you have hundreds of more options, programs, terms, and rates to choose from. Mortgage officers tend to be a little bit more expensive upfront but in the long run, can save you hundreds of dollars.
For more information on real estate terms or to get started with a mortgage officer in our area contact our office today.
