Real estate terminology can sound complicated, confusing, and even seem like its own language. If you're buying your first home, there are five words you should know to help you better understand the process.
1. Offer
When you want to buy a property, your real estate agent will make an Offer to Purchase, which is also called the Contract of Purchase and Sale. Once the buyer and seller accept the offer, it becomes the contract between both parties.
2. Contingent
When the sale of a home is contingent, that means the seller has accepted an offer from the buyer and the home is under contract. The sale is subject to certain criteria being met by the buyer and/or seller before the deal is closed. Common contingencies are the buyer's financing, appraisal, title search, home inspections, and more.
3. Appraisal
An appraisal is an estimation of a home's market value based on comparable recent sales of homes in the neighborhood. Appraisals are done by licensed appraisers and are ordered to protect a the home buyer's lender to ensure the value of the home is equal to or greater than the loan amount.
4. Inspection
A home inspection is an examination of a property's condition and is usually performed by a home inspector in connection with the property's sale. A home inspector is usually hired by a home buyer to provide a written report of any issues that may affect the value of the property.
5. Closing Cost
Closing costs are fees over and above the price of the property. Common closing costs are excise tax, loan-processing costs, title searches, appraisal fees, and title insurance. The closing costs usually add up to 2-5% of the purchase price of the home and may be paid by the buyer or seller.
Do You Have Questions About Real Estate?
If you have questions related to the sale or purchase of a property, feel free to get in touch with one of our licensed real estate agents!
