For those without a background in Real Estate, some of the wording used can sound like a foreign language when trying to buy a house. This is often the biggest purchase in someone’s life, so it’s important to comprehend what’s going on. That’s where we come in – breaking down the jargon (from A to Z) on some of the more commonly used terms in Real Estate to help you understand the process. We’ll start off this first blog with letters A through E…. Here we go!
A: Appraisal: A professional evaluation of the home’s market value determined by a licensed appraiser. An appraisal is typically required by a lender, with the valuation often based on comparable sales of similar homes in the area.
B: Broker: A person who is licensed in their state to negotiate the purchase, sale, and lease of property. A broker typically has more training than an agent, and has full authority to run a Real Estate company.
C: Contingency: Conditions that must be fulfilled before a contract is legally binding or before the deal can close. Contingencies often include a time frame in which the buyer can get their earnest money back if the contingency is not fulfilled before the deadline.
D: Down payment: The amount of money required at closing by the lending institution for the buyer to get a mortgage. This may be as little as 3.5% with an FHA loan, or at least 20% of the home’s price with conventional loans.
E: Escrow: Documents and money held in a secure account by a neutral third party until the fulfillment of a specified condition. It is often used by brokers to hold the buyer’s money until closing, or by the lenders to hold money for taxes and insurance on a property. The escrow holder has the obligation of safeguarding the items while in their possession, and to disburse funds and/or convey the title only when all provisions of the escrow have been met.