Learning how to speak real estate is like learning how to speak a new language.
There are seemingly countless never-before heard terms that you encounter on a regular basis that always leave you puzzled. But when you’re wanting to sell your home, knowing real estate terminology will keep you in the loop when you’re selling your home.
To make it simple, here’s a guide to some of the most common terms we are asked to explain:
Real Estate Terminology 101
APS (Agreement of Purchase and Sales)
After you’ve found a buyer for your home, you will be required to fill out an agreement of purchase and sales. This is a legally binding contract that spells out all the conditions of the sale of your home. In going through this document, you get to go through the inclusions and exemptions of the sale to make sure everything is detailed correctly.
Also included in this document is the final purchasing price, the closing date and other important details.
Chattels are unattached goods in your home that you will be taking with you when you move out. Chattels can be big ticket items like TVs, motor vehicles, and other appliances.
Although some chattels seem obvious to both sellers and buyers, there are sometimes disputes over certain goods, like expensive curtain rails or cabinetry. To avoid confusion on your closing day, be sure that all your chattels are clearly outlined in your APS.
After you make a purchasing agreement with your buyer, you need to close the sale. The closing is a meeting that takes place to finalize the deal.
This is the time when both sellers and buyers sign the final documents. The buyer also makes the down payment and pays for the closing fees.
CMA (Comparative Market Analysis)
When you put your home up for sale, your real estate agent will run a comparative market analysis--a report of similar homes that have been sold in your area. When considering the real estate market in your area, an agent is able to determine an accurate list price for your home.
Oftentimes, when building an offer, buyers will have place conditions in the purchasing agreement that ultimately have to be removed before the sale can go through. These conditions are called contingencies.
Some contingencies are as easy as getting a home inspector to go through your home, but some are as difficult as waiting for the buyer to sell their own home before the closing of the deal.
After you accept an offer on a home, your house is put in escrow.
During this time, the buyer’s money is put into a third party holding along with necessary documents and instructions. All of this stays in the escrow account until both the buyer and seller fulfill their obligations written out in the purchase agreement.
Homes are put in escrow to make sure everything with the sale is fair and impartial. So, funds are not distributed until both the buyer and seller meet the terms and conditions of the purchase agreement.
When you sell your home, you may still have a remaining mortgage amount that you haven’t yet paid. The equity of your home is the difference between the appraised market value of your home and that remaining mortgage amount.
So, if your home is worth $300,000 and you still owe the bank $50,000, then the equity on your home is $250,000. The equity is the amount of money you get to keep after you pay off your mortgage.
On most occasions, when a buyer is interested in purchasing your home, they will hire a professional to go through it for an inspection. The inspector looks at the plumbing, foundation, appliances, and other features in the home to ensure that they are up to code and are functioning properly.
If any substantial repairs are indicated to the buyer, they may use this information to reduce their offer price
Mortgage Prepayment Penalties
When you pay off your mortgage early, the bank may subject you to penalties. These penalties are designed to protect lenders from potential interest losses.
For some cases, banks may ask for three months worth of interest payments, but this may change depending on your individual situation.
One of the most important aspects of selling your home is its marketability. To make your home as desirable to a buyer as possible, you may want to hire a professional stager who will re-design your interiors with furniture and accessories in an appealing way.
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