Real Estate Terms to Know, Not Just for first time Home Buyers
Buying a home can sometimes feel like you need to learn another language. Whether your a first time home buyer or just need a refresher before buying another home here are a few terms to learn.
*Addendum: Additional material attached to and made part of a document. For example if the property has a septic system both parties will have to sign the septic addendum.
*Closing Cost: These are costs that are paid in addition to the purchase price (buyer) or deducted from the proceeds (seller).These items may include appraisal fee, inspection fee, commission and escrow fee ccc. The purchase agreement will outline which party pays for which expense.
*Commission: this is the amount paid to the real estate broker for the services rendered during the sale. There is no industry set commission and it is usually stated in a percentage of the sales price. This commission is usually paid by the seller even for the buyer’s broker.
*Earnest Money: Usually a check held by the escrow company as a good faith down payment. This essentially is what tells the seller that you are a serious buyer and it is safe for them to pull their property off the market and no longer allow potential buyers to see the house. The earnest money check is usually forfeited to the seller if the buyer decides to no longer purchase the house for reasons like “ I changed my mind” or “ I found better”.
*Multiple Listing Service (MLS): a broker membership service that pools all the listings of their members. Every member broker has the access to the same properties on this list so there is no need to go to multiple brokers in order to “see everything” on the market you will end up with the same list over and over.
*Real Estate Agent/ REALTOR: These two things are not the same. A real estate agent is an individual who holds a license to sell real estate. A REALTOR is a real estate agent who is also a member of the National Association of Realtors. You should try to only work with one agent through your entire purchase process this will save time and effort on both parties.
*Real Estate Contract: an agreement between the seller and buyer for a purchase where a portion or all of the selling price is deferred. The purchase price is usually paid in installments over the contract period.The buyer gets possession and equitable title while the seller holds legal title
Terms found in:
The Language of Real Estate: Sixth Edition
John W Reilly