Terms to Know

Agreement to Buy/Sell- An agreement signed by Buyer and Seller defining the terms by which a property will be sold by the Seller and purchased by the Buyer.

 

Amenities- Anything of recreation offered by a community or on a property such as a neighborhood pool.

 

Appraisal- During the loan process, an independent, third-party licensed by the state is randomly chosen to view and give a true value of the property you are buying/selling based on sold comparables of the past 6 months.

 

Bill of Sale- A contract the accompanies a contract to purchase a home that specifies personal property to convey at the closing of the real property, for example a refrigerator or furniture, either for a determined price or to be included with the sale of the home at no monetary value.

 

Building Permit- A contingency of a land contract that gives the Buyer the right to obtain an accepted building permit from the municipal entity prior to being required to purchase the property.

 

Buyer’s Agent- The licensed agent representing the Buyer.  Also known as the Selling Agent.

 

C&R- Covenants and restrictions of a particular neighborhood, a document recorded by the county, that must be followed by owners living within a specific community governed by those C&R’s.

 

CD/Closing Disclosure- The statement received prior to closing that specifies the fees the Buyer and Seller will pay to transfer the property at closing.  This document will be signed at closing and should be kept for your accountant for the next filing of taxes.

 

CL-100- This is a letter written by a licensed termite inspector to determine any infestation of the property to be purchased.  This inspection is required by the lender in many cases.  This is a one-time look at the property and guaranteed by the inspector for 30-days.  A termite bond has no relation to the CL-100 and it is not required for the company holding the bond to perform the CL-100 nor will the cost likely be cheaper to use a company that holds the bond.  See Termite Bond.

 

Clear to Close- Everyone’s favorite three words in a transaction.  This is given by the lender when all conditions of the loan are met and all contingencies have been removed and the parties are only waiting on the closing time to exchange the deed.

 

Client- A party represented by an agent that includes all fiduciary responsibilities and an ability to discuss in confidence all terms of the transaction including the party receiving advice on price.  In a client relationship, the agent is working FOR the client.  See customer.

 

Closing Costs- The amount paid by the parties of the transaction at closing which includes for the Buyer the mortgage fees, attorney’s fees, 1-year of taxes and insurance to establish the escrow account and other miscellaneous fees.  Many times, the agent can negotiate these fees in the contract to be paid by the Seller.  The Seller’s fees generally include commissions, attorney’s fees, mortgage payoff and deed stamps.

 

Community Disclosure- A disclosure completed by the Seller and delivered to the Buyer disclosing knowledge related to the HOA.

 

Condominium- A kind of real estate ownership where the purchaser buy/owns a specific unit and has an interest in the common areas of the community.  Generally, what is owned are the walls, floors and ceiling in.  The HOA will many times include insurance on the exterior of the building and the HOA will be responsible for employing for the replacement of the roof, siding, etc.

 

Contingency- Conditions of the contract that must be met prior to closing.  For example, if a Buyer is receiving financing, the contract will be contingent on the financing being approved.  Other contingencies might include a contingency on the inspections and due diligence periods.

 

Contingency to Sell Buyer’s Current Home- This contingency gives the Buyer time to sell their current home prior to closing on the contracted property.  Your agent will set parameters and time restrictions to protect your interests.

 

Deed- A signed legal and recorded document conveying the property from the Seller to the Buyer.

 

Deed Stamps- A fee charged to the Seller at closing by the state equivalent to $3.85 per thousand of the sales price.  This fee may change without notice.

 

Designated Agency- A transaction where one company represents both the Buyer and Seller of the same transaction.

 

Dual Agency- A transaction where one agent represents both the Buyer and Seller of the same transaction.

 

Due Diligence- A period of time designated by the contract to allow a Buyer to do any type of inspection desired and the ability to release the contract during that time with a fee paid to the Seller with the release of contract.  The fee may be $0 and is negotiable.  The Buyer may ask for repairs under the due diligence period.  See Repair Procedure.

 

EMD/Earnest Money Deposit- Consideration placed on a contract at the time the offer is ratified.  The money is assurance for the Seller the Buyer is sincere about purchasing the property.  The money is deposited within 48 hours of ratification and is held until closing at which time the money is generally credited to the Buyer’s closing costs.  In an instance where the Buyer defaults on the contract, the Seller may request the EMD as payment by the Buyer for defaulting on the agreement to purchase.

 

Equity- The amount of money between what a Seller owes on a property and the sales price.

 

Fee Simple- The type of ownership generally associated with a single-family detached residence.

 

Home Inspection Report- A report received by the Buyer, generally as a contingency of the contract, from a state licensed inspector to give a broad overview of the condition of the property.

 

HOA/Home Owner’s Association- A neighborhood governing committee which enforces the C&R’s.

 

HUD- The Department of Housing and Urban Development is a government agency that regulates mortgage closings.

 

LE/Loan Estimate- Most commonly known as a GFE/Good Faith Estimate is a document that shows the key terms of a loan and settlement costs to be approved and accepted by the Buyer three days prior to closing.

 

Lien- A claim against a property used by a company, government or individual to guarantee payment of a debt or loan assumed by the Seller.  Liens will be paid off and removed by the closing attorney prior to closing.

 

Listing Agent- The licensed agent representing the Seller.  Also known as the Seller’s Agent.

 

Listing Agreement- The agreement between the Seller and the Listing Agent to sell their property.  Formally called Exclusive Right to List Listing Agreement.

 

Ratified- All parties to the contract have agreed to the terms of the contract in writing.

 

Real Estate Agent- A state licensed agent who is not a member of the NAR, SCAR, or CTAR Realtor associations.

 

Realtor- A state licensed real estate agent required by the NAR, SCAR and CTAR to obtain additional training and uphold a standard of practice in their business not required for Non-Realtor agents.  See Real Estate Agent.

 

Repair Procedure- Unlike the due diligence, there are specific repairs a Buyer can request which consists of large mechanical and structural items.  The Seller may fix these items or release the Buyer.  The Seller is not obligated to make repairs above these specified items.  See Due Diligence.

 

Seller’s Agent- The licensed agent representing the Seller.  Also known as the Listing Agent.

 

Selling Agent- The licensed agent representing the Buyer.  Also known as the Buyer’s Agent.  

 

SD/Seller’s Disclosure- An affidavit signed by the Seller and delivered to the Buyer disclosing all material or latent defects of a property as well as any repairs made during ownership or outstanding repairs needed on particular items.  See Community Disclosure.

 

Termite Bond- An insurance bond put on a property to insure against termite infestation.  It has no relation to the CL-100 and it is not required for the company holding the bond to perform the CL-100 nor will the cost likely be cheaper to use a company that holds the bond.

 

Townhome- A home that is attached, generally, at the sides to another home.  In most cases, the owner owns the land under the unit and possibly some land considered a front and backyard.  The HOA at times will be responsible for front landscaping, but generally the owner is responsible for the roof and all repairs inside and out, as well as all insurance costs.

 

Underwriting- The department during the loan process responsible for reviewing all documents to determine whether funding will be granted to the applicant/Buyer.