When purchasing a new house or condo, there are a lot of legal formalities that need to be performed. It is important to stay up-to-date with real estate terms and conditions, to ensure you make an informed buying decision. Staying in the loop will keep you from getting nervous if unexpected real estate related obligations arise. Here are some of the standard real estate terms that you should be familiar with: Appraisal An appraisal is referred to as an evaluation carried out by a certified individual in order to provide the cost of a property and avoid legal issues later on. It can be thought of like a survey of homes of similar types which are located in the neighborhood. This procedure takes up a lot of time and as each house needs be surveyed and then a final selling price needs to be decided by the seller. Commission This can be associated with the actual amount that is needed to pay to a real estate agent once the transaction of a newly purchased property is completed and the deal is finalized. The percentage of the total cost can range anywhere between 3 to 6 percent. Comparative Market Analysis (CMA) The CMA is a report that is generated by an agent for clients who are interested in purchasing a property. This report contains a survey that is carried out for the comparison of homes around an area. This report is necessary to assist the client in providing a sensible listing along with the selling price so that the clients can make a sound decision regarding the purchase of the property. Earnest Money Before buying a property, buyers are required to put down a deposit in order to prove they are interested. The funds that are generated can be put towards the payment. Once you have deposited the earnest amount, the funds can be kept in an escrow account until closing and until the time comes for the deposit to be applied. Escrow Escrow is criteria for placing something on a third party note unless and until certain conditions related to the property are satisfied. Once the transaction is closed, you can finalize the property, and the money that is earned from it will be deposited in the escrow until it is delivered to the seller. For instance, one can use an escrow account for selling the house, and in the case that there are conditions related to its sale including the passing of inspection, then the seller or buyer might agree on passing the escrow. Equity can be described as the financial interest of a person who is the owner of the home. It is the difference between the market value of the house along with what is spent on the mortgage and any other claim that is there on the house. When the equity increases, you can choose to make home improvements that might eventually help in increasing the market value by a fair price. Lien Once you are done with the selling of the property, you can make an official claim of the property which is referred to a lien. This might include both mortgages and the first trust action that can be both regarded as liens. It can be thought of as a guarantee for an obligation such as when you want to pay a loan and be initiated by the creditor. Real Estate Purchase Contract (REPC) The real estate purchase contract is basically the contract that is assigned between two parties who tend to purchase or sell the properties. The contract has been written down and signed by the parties who are officially bound by mutual consent. Bank Owned Home vs. Short Sale In some cases, the bank has agreed to sell a home in a short sale which means that the bank has allowed the owner to sell the house at a price that is less than what currently owed on the property. On the other hand, a bank might not have given the authorization to sell the home for the amount that is less than what is already charged on the house. Under Contract When you have got the buyer’s offer to purchase the property then it is termed as “under contract.” The buyer is given a certain time period when the sale is done. During this period, the seller is not allowed to accept other offers from new buyers. Have a general understanding of all of the terms that are listed above and you will never be confused when you find a professional speaking in real estate language. Always do some homework before you meet a real estate agent so that you have an idea about the property that you are willing to buy and your expectations regarding the same.
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