Real Estate Defined: Terms to Know
There is a lot of real estate jargon out there to navigate through. From compliance to fiduciary, to contracts and contingency; it can be a lot to swallow. You may not be a licensed agent, but knowing some commonly used terms can make understanding the home buying or selling process much easier. Mark Spain Real Estate always wants to ensure our clients are well informed so they can make educated decisions. Check out some of these commonly used real estate terms!
Understanding Real Estate Terms-
Due Diligence / Inspection period
Once a home has gone under contract, the due diligence period allows time for appraisals and inspections. It is also referred to as an inspection period in some areas. This time period is important because it allows home buyers to review information about the home before closing. An average due diligence period lasts about 10 days.
Earnest money is a good faith deposit. It is a sum the buyer pays to the seller once a contract has been signed. The deposit can be kept by a brokerage or an attorney but is not given directly to the seller, this helps to ensure proper distribution of funds.
The MLS, or Multiple Listing Service, is the online service where homes are listed for sale. Each MLS name can differ by market however, this is the place where agents will search for properties for their buyers! The MLS allows information sharing to be streamlined between agents. Additionally, they provide websites like Zillow with facts about a listing.
SUPRA / Sentrilock / eKey
Electronic keys are used to provide real estate agents access to lockboxes! Some regions use SUPRA lockboxes and some use Sentrilock. These ekeys provide additional security for home sellers. Regardless of which type, electronic lockboxes and the usage of ekeys ensure that only licensed agents in good standing have access to the keys inside lockboxes.
Contingencies define conditions or actions that must be met for real estate contracts to become binding. There are several types of common contingencies found in real estate contracts. For example, appraisal contingencies protect buyers by ensuring a home is valued at a minimum amount. A financing contingency allows the buyer time to obtain financing so that they may purchase the property.
Down payments are out-of-pocket partial payments and a portion of the purchase price. They can range from 5% to 25% of the purchase price on average. Additionally, paying a larger down payment can reduce the loan balance and decrease interest expenses.
PMI (private mortgage insurance) is a type of mortgage insurance that protects lenders. It is not backed by a government agency in contrast to other loan types. Private mortgage insurance is required if you use a conventional loan and make a down payment of less than 20%.
Understanding common terms like these make navigating the home buying or selling journey much easier. Above all, if you have questions, always consult an experienced real estate agent. Mark Spain Real Estate has the most experienced agents in the industry. Ready to start the home buying or selling process? Contact us today to work with the best!
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