ValleyMLS.com’s real estate terms to know

ValleyMLS.com helps home buyers learn the lingo.

ValleyMLS.com’s real estate terms to know
FIND A REALTOR. FIND A HOME. (Source: Valleymls.com)

HUNTSVILLE, AL (WAFF) - Valleymls.com wants to teach North Alabamians real estate lingo. The terms listed below will help home buyers and sellers navigate through real estate transactions.

FIND A REALTOR. FIND A HOME.
FIND A REALTOR. FIND A HOME. (Source: Valleymls.com)
  • Listing – The printed (or digital) description of a property for sale. Listings may include details about the property, the home (number of bedrooms, baths, featured rooms), other structures, the price, and photos.
  • Real Estate Agent vs. Realtors® - Real estate agents are licensed professionals to help you facilitate a home buying or selling transaction. The term Realtor, often used interchangeably with Agent, is the term to describe those Real Estate Agents who subscribe to a Code of Ethics and are members of their Local, State and National Association of Realtors. 
  • Buyer’s agent – A real estate agent who represents the interests of homebuyers. An Accredited Buyer’s Representative (ABR®) is a buyer’s agent who has earned the ABR® designation by successfully completing specialized coursework and demonstrating experience in representing buyers. 
  • Seller’s agent – The real estate agent who represents the seller of a piece of property. Their job is to act in the best interests of the seller, marketing their home to potential buyers and negotiating on the seller’s behalf.
  • Pre-qualification – Less “official” than a mortgage pre-approval, banks offer (at no cost or obligation) pre-qualifications to estimate the amount a buyer may be able to borrow. It is often used early in a buyer’s search to help determine a reasonable price range.
  • Pre-approval (loan) – A lender’s written guarantee to grant a loan up to a specified amount (subject to receiving full documentation). Pre-approval for a loan can strengthen a buyer’s negotiating position with a seller.
  • Adjustable rate mortgage (ARMs) – This type of mortgage usually has a lower initial rate (for a set number of years), then the rate may go up or down, depending on the specified index rate used for determination. Usually preferred for short-term ownership, the repayment period for ARMs are typically 5, 7, or 10 years, but they can be issued for longer time periods.
  • Fixed-rate mortgage – A conventional loan with a pre-determined (or “locked in”) interest rate for the duration of the loan repayment period. They are traditionally 30 years in length but can be issued for 15 years, 10 years, or another duration.
  • FHA loan – Loans insured by the Federal Housing Administration (FHA). With attractive financing rates and less stringent lending requirements than conventional mortgages, FHA loans are often appealing options for buyers with lower credit scores and/or smaller down payments. They do, however, require two types of mortgage insurance: an upfront premium and an annual premium, which is wrapped into monthly mortgage payments.
  • Earnest money – Also called a “good faith” deposit, these are funds held by a neutral party to demonstrate the buyer has serious interest in purchasing a property.
  • Closing costs – Incidental fees associated with completing real estate transactions, potentially including attorney’s fees, credit report fees, document preparation fees, deed recording fees, appraisal fees, etc.
  • Offer – A formal request to buy a home. 
  • Private mortgage insurance (PMI) – A monthly insurance payment that may be required if a buyer’s down payment is less than 20 percent of the home’s purchase price. It protects lenders against loss if a borrower defaults.
  • Appraisal – The estimated value of a property based on a qualified appraiser’s written analysis. Banks typically require appraisals before issuing loans to ensure the estimated value of the property adequately exceeds the amount borrowed.
  • Assessed value – The value of a property assigned by a governing authority to levy a tax or fee on the property owner.
  • Contingencies – Particular conditions that must be met prior to closing a real estate transaction such as a home inspection (to ensure the home has no serious defects), a financing contingency (which releases a buyer from the sales contract if their loan falls through), or a contingency that a buyer must first sell their current home. In general, the fewer contingencies required of a seller, the stronger a buyer’s negotiating position, in terms of getting the best price.
  • Home inspection – A thorough professional examination (at the buyer’s expense) that evaluates the structural and mechanical condition of a property (plumbing, foundation, roof, electrical, HVAC systems, etc.). This highly recommended step is a common contingency clause in real estate sales contracts. If the inspector identifies issues that may be expensive to remedy, these can be revisited with the seller before proceeding with the sale.
  • Sales contract – A legal agreement between a buyer and seller to purchase real estate, for a specified price and terms, for a limited time period (also called a purchase agreement or a binder). When initially presented to a seller, this document is often called a purchase offer. Once the seller accepts (or the buyer accepts the seller’s counter offer), it becomes a legally binding sales contract.
  • Title insurance – This type of insurance is acquired to protect against any unknown liens or debts that may be placed against the property. Before issuing title insurance, public records are searched to ensure that the current owner has legal rights to the title as well as the legal ability to sell the home and that no liens are held against the property.

For more real estate information contact a local REALTOR® using Valleymls.com.

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