Buying or selling a home is an exciting journey. But with so many different things to research and decide, it may be overwhelming. Especially when you aren’t familiar with terms commonly used during real estate procedures. I'm here to help! Let’s go through some of the most common real estate terms and what each one means for you.
This is one of the most used words in real estate. A contingency refers to a certain event that must take place in order for the contract, between buyer and seller, to not be nullified or voided. For example, a buyer’s contingency may state that the seller must replace the water heater before sale is final. If the seller chooses not to meet this requirement, the buyer may pull out of the sale without being penalized. Common contingencies would include an appraisal, an acceptable home inspection, or the approval of the HOA documents. Itcan also mean that the sale is contingent upon another home selling first before the buyer can complete their purchase. Most contracts have multiple contingencies, so it's important to understand what they are and how(and when) they will be satisfied.
The down payment is the percentage of the total sales price that the Buyer pays out of pocket when purchasing a home (with the balance being paid by a loan if applicable), not including the closing costs. Typically the larger the down payment percentage, the more favorable the loan terms may be.
Equity refers to your part or percentage of actual ownership in your home (the difference between what you owe the bank and what your home is worth). The title to the home is in your name, but your mortgage lender has interest in the home until it is completely paid off.
In real estate, escrow means putting something, such as a deed or money, in the custody of a neutral third party until certain conditions are met. The escrow company does not represent either party, and can only do what the Buyer and Seller have mutually agreed to. Escrow or title companies often oversee a real estate transaction, from initial deposit to final funding, to ensure a smooth process.
As a home seller, it is common to require potential buyers to provide proof of pre-approval. The pre-approval process includes checking your credit, verifying given information and stating the specific loan amount you qualify for. (A pre-approval is stronger than a pre-qualification, which may only involve information given verbally rather than verified information.)
This means that a Seller has accepted an offer, but the transaction hasn’t closed yet.
There are plenty more phrases or definitions you may come across while doing your research, so please reach out to me with any questions you may have. As your Real Estate Consultant, I am here to help you understand the process every step of the way. My office is open 7 days a week for your convenience, and I'm looking forward to working with you.
Laura Harbison, ABR, AHWD, BPOR, BS, CDPE, CRS, DRB, GRI, PSA, RSPS, SRES
Broker/Owner REALTY EXECUTIVES SOUTHERN NEVADA PROPERTIES
License Numbers B.0026537LLC PM.0164922.BKR