When you are buying or selling a property, there are a lot of terms that you need to be familiar with. In this blog post, we will go over some of the most common real estate terms and what they mean. This information is essential for anyone who is in the market for a new home or property. By understanding these terms, you will be able to make better decisions and avoid any surprises during the buying or selling process. Let’s get started!
As-is – When a property is being sold “as-is”, it means that the seller will not make any repairs or improvements before the sale. This is usually the case when a property is being sold at a discount or if it needs significant repairs.
Closing costs – Closing costs are the fees associated with the purchase of a property. These can include things like the loan origination fee, appraisal fee, title insurance, and more.
Due diligence – Due diligence is the process of researching a property before making an offer. This includes things like ordering a home inspection, checking for zoning changes, and more.
Escrow holder – The escrow holder is the neutral third party who holds onto the deposit and other important documents until the sale is complete.
Financing contingency – A financing contingency is an offer that is contingent on the buyer being able to obtain financing.
Home inspection – A home inspection is a professional inspection of the home that looks for things like structural damage, mold, and more. If the professionals spot problems, the buyer can ask the seller to fix them or negotiate a lower purchase price.
Mortgage – A mortgage is a loan that is used to purchase a home; the buyer makes monthly payments to the lender, and the loan is paid off over many years.
Debt-to-income ratio – A debt-to-income ratio is a number that represents the percentage of your monthly income that goes towards debts like student loans, credit cards, and your mortgage. A higher debt-to-income ratio means that you have less money available to save or spend each month.
Loan origination fee – The loan origination fee is a fee charged by the lender for processing a loan application; this fee is typically a percentage of the total loan amount.
NHD report – Short for Natural Hazard Disclosure report, an NHD report is a document that details any natural disasters or hazards that have occurred in a specific area. This report is important for buyers to review before making an offer on a home, as it can help them understand the risks involved in the purchase.
Title search – A title search is an examination of public records to determine the ownership history of a property and to identify any liens or encumbrances that may be attached to it. This is an important step in the home-buying process, as it can help to ensure that the property is free and available for the buyer.
Conventional sale – A conventional sale is a real estate transaction that is not subject to any government regulations or restrictions. This type of sale is typically between two private parties, and the terms of the sale are negotiable between the buyer and seller.
Short sale – A short sale is a real estate transaction in which the sale price of a property is less than the outstanding balance of the loan or loans secured by the property. This type of sale can be used as a way to avoid foreclosure.
If ever you’re stuck, consider an online course or even a real estate investing mentor to avoid mistakes and gain a better understanding of the niche.