Technical and Important Terms used in Real Estate
Real estate is one of the sectors that is full of jargon. These jargons can bring confusion to someone w buying or selling a home.
To avoid this confusion, I have developed this article to help you understand and learn the vocabulary that is used in real estate.
Adjustable-rate Mortgage (ARM)
This is the type of loan where the interest rate can change after an initial fixed-rate period as they adjust based on the interest rate index the ARM is fixed to. This type of loan is less predictable than a traditional fixed-rate mortgage. It can generate a lower interest rate during certain periods.
This term indicates that the seller is not willing to perform most if not all repairs. It could also mean that it is priced "as-is" which is typically lower than market pricing in the area.
This is a situation where a buyer is interested in buying a property that already is under contract with someone else. In this situation, the buyer has to submit a "backup offer" in case the first transaction falls apart. A backup offer must still be negotiated and any monies such as earnest money submitted to confirm it's the next offer inline
Debt to Income Ratio
This is the number based by the mortgage lenders which is determined by the total of your debt expenses, plus your monthly housing payment divided by your gross monthly income and multiplied by 100. The goal of this is to allow lenders to determine affordability programs and allows them to estimate how much you can afford to pay monthly for a mortgage.
Days on market
This is the number of days from when the property is listed for sale on the local real estate brokers to the date when the seller signed a contract for the sale of the property with the buyer.
An appraiser is required to estimate the value of a piece of real estate. During buying of a home, a mortgage lender has to send out an appraiser to get a professional opinion of the value of the property. This helps the leader know if the property is worth the amount of the loan the potential buyer is seeking.
An appraisal contingency is clause that allows a buyer to dissolve a purchase agreement if a home's appraised value is less than the sale price.
Covenant, condition and restrictions
These are rules and regulations placed on a real property to govern the operation of the property in real estate. This rules and regulations outline the requirements and limitations of what a home owner is allowed to do with the property. It may also include monthly and annual fees or special assessment.
Buyer's agent and seller agent
Buyer's agent is a licensed real estate professional whose job is to locate a buyer next property. They negotiate on behalf of the buyer to obtain the best price for buyer as possible. Selling agent in the other hand is a licensed real estate professional who market the seller property and negotiate on behalf of the seller to secure the best price and selling scenario as possible.
Blind offer is when the buyer makes an offer on a property they have not seen and even when it is possible to see it. Blind offer is mostly used in place with high competition where buyer makes attempt to be first and quickly to win the property.
Is when a buyer pays a licensed professional inspector to visit the home and prepare a report on its conditions and if there are any needed repairs.
Hard money loan
This is the way to borrow without using traditional lenders. Hard money lenders finance the loan based on the property in question, not on your credit score and it require a large down payment and short repayment schedule.