Common Real Estate Terms Everyone Needs to Know
When you work in real estate, you learn numerous terms and they become part of your everyday vocabulary. Unfortunately, this professional jargon can be a little overwhelming, especially for first-term home buyers.
As always, Landmark Realty Services strives to go above and beyond for our valued clients. Our wonderful, highly-trained REALTORS are happy to answer any questions you may have. So, what are some of the terms you might hear when you buy or sell a home?
1. Buyer’s Agent vs. Seller's Agent
A buyer’s agent simply is the agent representing the buyers. The buyer’s agent has a legal and moral responsibility to represent the interests of those purchasing a home--not those selling the home.
The seller's or "listing" agent is the agent representing the home sellers. The listing agent has no moral or legal responsibility to watch out for the interests of the buyers--just that of the sellers.
This isn’t common, but there are occasions when an agent will represent both the buyers and sellers. This typically occurs when a listing agent also has clients who are searching for a home. To represent both parties, the agent must clearly communicate that he or she is representing both the buyer and seller--and both parties must agree to this arrangement. If either party is uncomfortable with a dual agent, the brokerage will assign another agent to help with the other side of the transaction.
Real Estate Tip:
Always be sure to ask who your agent is representing if you have any doubt.
2. Fixed Rate Loan vs. Adjustable Rate Loan
Fixed Rate Loan
A fixed rate mortgage is a loan with an interest rate that does not change during the life of the loan. Your interest rate at the start of the loan will be the same as what you pay at the end of the loan.
Adjustable Rate Loan
An adjustable rate loan is just that--adjustable. Typically the loan remains constant for a period of time, perhaps 5, 7, or 10 years--but then it can increase or decrease based on what the current interest rates or what rates may be in the future.
Real Estate Tip
An adjustable rate loan, which typically offers a lower interest rate than a fixed rate loan, is a wonderful choice for a borrower who knows that he or she will be moving before the interest rate of the loan is scheduled to change or for someone who plans on refinancing before the first rate change. For example, if you know you will be transferred in four years, choosing an adjustable rate loan that can change in five years is a safe bet and a money saver!
As a home buyer, one of the ways you can make the process move along more smoothly (and quickly) is by getting pre-approved by a bank. You will receive a letter from a bank estimating how much the institution will lend you to buy a home. Not only will being pre-approved speed up your loan process, but it also demonstrates to home sellers that you are a proactive buyer who has already taken the initial step out of the process and show that you are qualified for a loan--all of this tells the seller how serious you are about buying their home.
Real Estate Tip
Before starting the pre-approval process, shop around. Find the lowest interest rate and the best loan program for you and your family. Not all loans and loan programs are created equal!
Listings are simply homes for sale that are being marketed by the real estate agency. To list your home means you are working with a brokerage to sell your home.
An inspection is simply a thorough review of the home by a licensed professional. This professional will inspect everything – from the roof to electrical, HVAC, plumbing, foundation and even appliances.
An appraisal is an estimate of the home’s value by a licensed appraiser. The appraiser will estimate the value based on comparable homes that have sold in the same area. Lending institutions typically require appraisals to ensure that they aren’t making a bad business decision – loaning more money than the home is worth.
Real Estate Tip
Hiring a home inspector before you list your home can often prevent delays in selling your home and potentially even save you money. Finding issues before you list your home provides you with the time to make needed repairs (and obtain lower estimates for repairs), instead of having those issues show up unexpectedly on an inspection report a couple of weeks before closing and then frantically searching for a contractor to make repairs.
Contingencies are conditions that must be met before you are willing to move forward with the deal. For example, your offer may include contingencies about being able to obtain financing, or the home appraising for a certain value or major issues not being found during the inspection.
An offer is a written proposal to purchase a home. An offer only becomes a binding legal contract when both parties have signed (buyer and seller) and all terms have been agreed upon, including contingencies.
9. Title Search
Title insurance is a search by a title agent to ensure that the seller has rights to the title and that there are no liens (unpaid bills tied legally to the home such as contractor bills or taxes) preventing the transfer of the title to the buyer. Title insurance ensures that you will have a “clean” title.
The commission is the fee charged by the real estate agency to pay for marketing the home and to pay agents (and the agency) for their work. The commission is not typically paid by the buyer; it is almost always paid by the seller from the proceeds of the sale of the home.
Call Landmark Realty Services today at 304-842-5298 if you have questions about these terms, other terms you may encounter, or if you would like to schedule an appointment with one of our real estate professionals! Call us today to see the Landmark difference!