14 Real Estate Terms You Should Know Before Selling Your Home
Mark Spain Real Estate is grateful to have outlined 14 real estate terms you should know before selling your home! It is critical to understand all of your options to maximize profit and facilitate a smooth sale, but during the process of selling your home, you may come across several real estate terms you might not recognize, which only adds to your frustration and could possibly hinder your experience. These words and phrases can often appear in the terms and conditions of essential documentation or even in your conversations with real estate agents and industry professionals.
Not to worry—Mark Spain Real Estate is here to improve your real estate knowledge, as we’ve broken down 14 real estate terms you should know before selling your home.
14 Terms You Should Know Before Selling Your Home
Amortization refers to the process of calculating the value of a loan or another intangible asset. In real estate, lenders often use this term to refer to the schedule of mortgage installment payments that home buyers will make over a given time period. Typically, a buyer’s amortization schedule is either a 15 or 30 year period, in which they make mortgage payments once a month.
An appraisal in real estate is an official process specifically designed to objectively value a property. Appraisals are performed by a third party, and they are typically required by a lender to make sure that the loan amount accurately reflects a property’s worth. If the appraised value of a home is less than the buyer’s offer, the lender can require the buyer to pay the difference.
In real estate, when a home is labeled as is, this typically means that the seller does not want to perform most, if not all, of the necessary repairs to the property. As-is can also be used to describe a listing price, and when a home is “priced as-is,” this indicates that the home is priced lower than the area’s market pricing.
4. Buyer’s Agent
A buyer’s agent, in the real estate industry, is a licensed real estate agent who represents the homebuyer exclusively. This real estate agent handles several aspects of the process, but is largely responsible for negotiating the best sale price on the home, providing background information on the home and the neighborhood, and making sure the home is properly inspected.
5. Closing Costs
The term closing costs refers to the expenses incurred by home sellers and home buyers in order to finalize a real estate transaction. These costs can be paid by either the seller or the buyer, but the fees often include taxes, loan origination fees, appraisal fees, title insurance, credit report fees, and more. Typically, the homebuyer pays anywhere from 2% to 5% of the home’s purchase price.
6. Due Diligence
When it comes to selling a home, the term due diligence refers to a period of time that the buyer is allotted to adequately examine and officially inspect the home, often with the use of professional home inspectors. Based on the findings during due diligence, the buyer may be allowed to renegotiate the price or terms of the transaction process. Basically, due diligence enables homebuyers to fully analyze the property and contract they’re considering.
Escrow, in terms of real estate, is a time period where a neutral third party holds something of value during the home selling process. This “something of value” is commonly money or checks, important paperwork and documentation, or personal property of some kind. The escrow holder is an impartial third party for an agreed upon period of time or until specific happenings have occurred, with respect to the transaction. Usually, this applies to the closing period of the home selling and buying process.
8. Fair Market Value
The Fair Market Value (FMV) of a home is the actual amount that the property could sell for on an open market. This term is used extensively in the real estate industry, as it is an accurate and fair representation of what a home is worth.
9. Home Inspection
When selling your home, the buyer will most likely want to give the property what’s known as a home inspection. A home inspection is a non-invasive examination of a home used to understand the condition the property is in and identify any potential necessary repairs or renovations. This procedure is typically performed by a professional home inspector, who then reports back to the buyer with their findings. Sellers can also request a home inspection before listing their home, as this sometimes helps to determine an effective sale price.
During the home selling process, a buyer can make a formal offer on the property they’d like to purchase. The offer can be the full listing price of the home or whatever amount the buyer and their agent feel is FMV. Then, the seller may either accept the offer or make a counteroffer, which is an adjusted amount to then be reconsidered by the buyer. This process is essentially documented negotiation.
11. Seller’s Agent
A seller’s agent is a licensed real estate agent who exclusively represents the person selling the home. The seller’s agent helps the home seller with a variety of different activities, such as collecting data on comparable properties, advising the client on the most effective listing price and marketing strategies, and organizing and suggesting tasks to help facilitate a successful sale.
12. Seller Concession
When selling a home, the seller can offer the buyer a concession, known as a seller concession, which is generally a contribution toward the closing costs. This concession is designed to further incentivize the buyer to go through with the sale, and usually requires approval by the buyer’s lender.
13. Seller Disclosure
A seller disclosure is a document issued by the seller to the buyer during a housing transaction process. This disclosure outlines any existing issues with the property that could influence the buyer’s decision. These documents include any number of important specifics, including previous repairs, details on appliances or internal systems, and a history of environmentally related issues.
14. Short Sale
A short sale is a real estate term that refers to when a home is sold for less than the debt that is owed on that property. This type of transaction must be approved by the seller’s lender, as the sale will come up “short” of the outstanding balance on the home. Approving a short sale can often take lenders a considerable amount of time.
Mark Spain Real Estate leads the nation in closed transactions, and with over 5,000 5-star reviews, Mark Spain Real Estate is also the leading real estate team in the country in customer satisfaction. Whether you’re looking to sell your home, buy a home, get a Guaranteed Offer on your home, or even if you just have some questions about real estate, the Exclusive Listing Consultants at Mark Spain Real Estate are here to help. Contact us today to get started, or check us out on social media to see how our team of experts continually provides clients with unparalleled service. We hope you find our terms to know before selling your home helpful!