Real Estate Vocabulary

Buying a home can be a daunting task, be prepared by knowing whats-what in a real estate transaction.

OFFER

An offer is the initial price and contract terms that you agree to. It is not a valid contract until approved by the sellers and executed.

CONTINGENT

A contingency is a condition put into a contract that must be met in order to close on the property. Common Contingencies include the ability to obtain financing, appraisal and the sale of an existing property.

EXECUTE

A contract is considered "Executed" after all parties to the transaction have agreed and signed. After the contract is executed, Option fee and Earnest money are due.

OPTION PERIOD | OPTION FEE

The "option period" is a prescribed time in which you have the home inspected and negotiate any repairs deemed necessary. During this time, the home goes into "Active Option" status. Within this time frame you can walk away from the contract for whatever reason, or no reason at all.

The "option fee " is an amount paid by the buyer to the seller for the option period or otherwise considered time off the market. The option period and fee are always negotiable and typically credited back to the buyer upon closing.

EARNEST MONEY

This is essentially a deposit on a property, it shows the buyer's good faith to purchase and is credited back to the buyers upon closing. Earnest money is typically 1% of the purchase price but is always negotiable. Earnest money is held in an escrow account at the title company.

INSPECTION

Every home, even new construction, should be inspected by a professional home inspector of your choice. This is an extensive examination of a property, inside and out.

TITLE

A title is a bundle of rights in a piece of property. The title company will provide you with a preliminary title report for you to review before accepting the property.

TITLE POLICY

A title policy protects a buyer from the discovery of existing tax liens on a property, non-disclosed restrictions on the property’s use, mistakes in the public recording of the exchange of ownership, and even fraud and forgery.

APPRAISAL

Performed by a professional appraiser chosen at random, an appraisal is a property's official valuation report. This process can take 1-2 weeks to complete. Many lenders and loan programs require that a property appraise for the contracted price of the property in order to obtain loan approval. Exceptions to this rule would be if you were paying cash or put an excess of 20% down creating immediate equity and in turn less risk for the lender.

INSURANCE

Choose your home-owners insurance and provide the information to your lender. Be sure to shop around and collect 3 or more quotes before choosing.

CLOSING COST

All the fees and expenses associated with closing the home. These fees typically range from 2 - 4% of the selling price of the property. Items such as loan origination fees, discount points, appraisal, survey, underwriting fees, title search fees and title insurance. In addition to closing fees and down payment, your lender or loan program may also require you to deposit several months worth of property taxes and insurance into your escrow account. Combined, this is the amount you can expect to come to closing with.

Ready to start your real estate journey? Contact me today!

Macy Williams

REALTOR

281-543-3032

macysellshomes@gmail.com