Julie and Daniel Desrochers from Desrochers Realty Group and EXP Realty stopped by to talk about real estate “lingo” that you’ll encounter when buying and selling a home!
Payment that is given to the seller at the time of the offer to show good faith that the buyer will close on the property.
- Earnest money is usually held by the listing agents company in a trust fund and is credited back to the buyer at closing.
- If the buyer were to back out of the purchase agreement due to something that was not a contingency of the purchase agreement the seller would keep the earnest money.
- Example. Buyer finds another home they like better 15 days after the purchase agreement is finalized and they cancel the offer. Seller would keep the earnest money.
A provision of the purchase agreement that keeps the agreement from being fully legally binding until a certain condition is met. You can have multiple contingencies. Most common are an inspection contingency and a financing contingency. A purchase agreement can also be contingent upon the buyer selling their home. Details on each:
- Financing – PA is contingent upon the buyers financing being approved and completed on the property. If there are issues financing the property the buyer can cancel.
- Inspection – Pa is contingent upon the buyer performing an inspection and being satisfied with the condition of the property. If they are not satisfied they can back out.
- Contingent upon the sale of buyer’s property – PA is contingent upon the buyers selling their home. If their home does not sell they can back out of the purchase agreement.
An unbiased professional opinion of a home’s value. If someone is purchasing a home and getting a loan through a bank the lender is going to require that an appraisal is completed so the bank can confirm that the home value is coming in at or above the purchase price.
- There can be issues with the loan if the home does not appraise. Buyer may have to put down more money as a down payment on their loan or if they don’t have more cash to put down they may have to cancel or try to renegotiate the price with the seller.
Buying a home “as is”:
Releases the seller from responsibility or liability for the home’s condition. So for example the seller could have had a flooded basement at some point but if they are selling the home as is and waiving their disclosure they do not have to tell the buyer about this.
- Buyer still has the right to have the property inspected and can do their own due diligence
- If something were to come up after the home is purchased the seller has no legal responsibility to take care of the issue or compensate the buyer monetarily.
HOA: Home owners association
- An organization made up of neighbors concerned with managing the common areas of a subdivision or condominium complex
- You will find HOAs in townhome and condo neighborhoods along with some single family neighborhoods.
- In the case of townhomes and Condos, the association is usually responsible for upkeep of exterior items for example the roof and siding. Usually responsible for things like lawn care and snow removal. With this homeowners are assessed monthly dues.
- Responsible for enforcing any covenants or restrictions
- Example: a single family neighborhood may have restrictions on the color you can paint your house. Or a condo association may not allow dogs.
MLS: Multiple Listing Service
- A computer based service where licensed realtors list properties.
- Only realtors have access to the actual MLS.
- 3rd party websites like Zillow.com and Realtor.com pull listings from the MLS and publish them on their site
- It’s important if you want to sell your home that it is put on the MLS. For sale by owners do not have access to the MLS.
- A realtor can set up their clients on a search on the MLS
CMA: Comparative Market Analysis
- How we figure out a value or a list price for a property
- Pull comparable homes that are currently on the market, currently pending (which means sold but waiting to close) and then homes that have sold, usually within the last 6 months
- By looking at those and comparing them to the subject property we try to come up with a value and list price for the home