10 Real Estate Terms You Should Know Before Buying
Having a fundamental understanding of essential real estate ideas before you start the home buying process, will give you peace of mind now and could save you time in the future. Here are ten real estate terms you should be familiar with.
1. Pre-Qualified Letter
Before you begin searching for a home, you should get a pre-qualification letter from a bank/credit union, or a loan officer. The pre-qualification process will give you an idea of how much money you can be approved for on the purchase of your home. Once you’ve been pre-approved the financial institution will provide you with a pre-qualification letter stating how much you have been approved for. This will be essential and required when making offers.
MLS stands for “Multiple Listing Service.” Which is a database of current active properties available to purchase. For buyers, after being pre-qualified, your Realtor will set you up on a MLS search. The Realtor will ask you a series of questions to narrow your criteria of what your looking for. If you are selling your home, there are lots of benefits of listing your home on the MLS, one being having more exposure to potential buyers from clients of other agents.
Real estate agents often associate homes that are for sale as “listings.” These homes will generally appear on the MLS or websites designated to real estate. The listing will contain vital information like the sale price, number of bedrooms, square footage, location, etc. You can browse listings on biggsrep.com in major areas in California.
4. Buyer’s Agent vs. Listing Agent
There are usually two agents involved in the transaction when you are buying a home, the “buyer’s agent,” who represents the person purchasing a home, and the “listing agent,” is someone who represents the person who is selling the home. However, there are times where one agent can act as both the buyer’s agent and the listing agent. This is called a Dual agency.
When you have finally found the perfect home, it’s time to MAKE AN OFFER! WAHOO! Your real estate agent will help you determine the best offer price and terms to present the seller with a strong offer. The offer will then be sent to the listing agent, who will then send to the sellers to review. Once your offer is accepted by the sellers, you and the sellers are now in a bilateral contract, meaning it is a mutual arrangement between two parties where each promises to perform an act in exchange for the other party’s act.
6. Counter Offers
You may run into sellers who want to negotiate the offer you’ve submitted. In this situation, a seller has two options. Option #1: The seller can reject the offer OR Option #2: Submit a seller counter offer. If this situation arises your Realtor will be there to assist you in the negotiation process the best suits your situation.
7. Earnest Money
One of the crucial things in your offer that sellers are going to look at is how much you are going to be putting down as a initial deposit. This is referred to as your Earnest Money Deposit. Usually, Earnest Money Deposits are 1% of the purchase price. Buyers competing against multiple offers often use earnest money as a resource to show the seller that they are serious about the purchase.
Once your offer is accepted you will open escrow. What does this mean? Escrow is a neutral third party to the transaction which means they do not work for the sellers nor the buyer. Escrow’s main purpose is to protect all parties, both the buyers and sellers, to ensure that the contract is being executed.
Disclosures are documented information that a seller provides to the buyer about the property they are purchasing. Most state laws require that sellers provide specific disclosures within a certain timeframe of the transaction. Disclosures can be very useful in identifying information about the property that may not be able be accessible to buyers and agents because it comes directly from the sellers.
10. Close of Escrow
The term close of escrow means that the transaction is coming to an end. All paperwork, inspections, and negotiations will be finalized at this point, meaning that you will be the OWNER OF A NEW HOME!