Buying or selling your home can be confusing and stressful. Having an experienced real estate agent is a must and can help with this confusion, but let’s be real. These guys live and breath real estate, and sometimes they can forget that they’re talking to someone who doesn’t have experience with real estate transactions like they do.
When I started working with Zach, I learned a ton of new vocabulary that I think would be beneficial to anyone in the process of buying or selling a home. I’ve broken down this vocabulary list into Basic, Intermediate and Advanced.
Let’s start with some easy stuff – the basics.
Buyer’s vs. Listing Agent: There are typically two agents in every real estate transaction, the Buyer’s Agent and the Listing Agent. The Buyer’s Agent represents the buyer while they are purchasing their home and may also sometimes be referred to as the “Selling Agent”. The Listing Agent represents the homeowners who are selling their home and helps ensure the best rate and terms for the home sale.
Contingency: Contingencies can be various conditions that are included with an offer on a home. In order for the deal to close, these contingencies must be fulfilled. Contingencies can apply to either the buyer or the seller and can include everything from financing contingencies to sale contingencies. Some of the more common ones include appraisal or inspection contingencies.
Closing Costs: There are various fees associated with the sale of a home, outside of the down payment and agent commissions. Closing costs include fees for items and services such as title and settlement services, appraisal, lender fees or any other services that take place during closing. Typically closing costs are about 2% – 5% of the home’s price for the buyer and 8% – 11% for the seller, but an exact number will not be determined until the final Closing Disclosure is complete and will depend on the agreement the buyer and seller have reached.
Down Payment: The amount of money paid at closing to fund the purchase of a house is called the down payment. Depending on the type of loan the buyer gets, a different percentage of the home’s price will be due at closing. For example, conventional loans typically require at least 20% while FHA loans typically require at least 3.5%.
Escrow: Escrow is a neutral third party that handles the exchange of money and documents after both parties have agreed to an offer. Escrow will work with the buyer’s lender and real estate agent to make sure that there is a clean transfer of ownership.
Title: Title is the right to or the ownership of a specific real estate property. When a buyer agrees to purchase a home from a seller, title will transfer from the seller to the buyer during escrow.
Listing: A term, frequently used by real estate agents, for any type of property or piece of land for sale.