Common Real Estate Terms You Should Know as a Seller
Selling a home can be a challenging and nerve-wracking experience. To prepare yourself, here is an introduction to some common real estate terms that any seller should understand.
Seller's agents serve to represent the interests of sellers throughout the home selling process by marketing the property, helping find suitable buyers, and negotiating its sale.
Top 5 Terms You Should Understand When Selling a Home in Madison
Real estate transactions involve complex terminology that can be dauntingly daunting for first-time homebuyers and sellers alike. Real estate agents tend to throw around words without clarifying them; therefore, it is imperative that homebuyers and sellers familiarize themselves with these common clauses before entering a real estate deal.
Home sale contingencies allow buyers to purchase the property if they can sell their existing one within a certain timeframe and use that equity as financing for the new one. These arrangements can be helpful for buyers seeking to leverage equity from selling one home as part of financing their next one.
One common contingency is financing contingencies, which allow homebuyers to cancel their contract if they cannot secure funding for the property. Furthermore, an appraisal contingency should always be included to ensure that it appraises as per its expected value.
Buyer’s agent vs. listing agent
Buyer's agents represent their clients during real estate transactions. They help determine an affordable price point, market it through platforms like the Multiple Listing Service (MLS), recommend renovations or upgrades as necessary, host open houses to show properties, and negotiate offers with sellers.
Agents provide valuable guidance when looking at properties, and assist in the drafting of contracts and paperwork. Exclusive buyer representation ensures your agent focuses solely on serving your financial interests; typically drafting a contract outlining their responsibilities and compensation procedures to avoid any misunderstandings, as well as binding you to purchase through them - this practice is known as agency exclusivity.
Real estate has its own language that may be difficult to decipher for those unfamiliar with it. Buying or selling a home is already stressful enough without having to grapple with unfamiliar terminology!
Seller concessions are an effective way for sellers to help cover some of their buyers' closing costs and expenses, most commonly found with FHA loans and lower down payment mortgages.
Purchase and Sale Agreement
Purchase and Sale Agreements, more commonly referred to as Real Estate Sales Contracts or Home Sales Agreements, are legal documents which detail the terms of selling a property and are typically signed by both parties after an agreed-upon price and closing date have been established.
Contingencies are important conditions of real estate contracts that must be fulfilled before selling any property, such as financing, inspection, and title contingencies.
Other details to keep in mind include who covers both buyer and seller closing costs. Closing expenses typically fall on both parties equally and may include loan fees, appraisal, attorney's fees, homeowner's insurance premiums, and property taxes. It is crucial for sellers to know which costs they owe when and which party covers which expenses so that they can make informed decisions regarding the transaction.
Due diligence period
Due diligence refers to the period allowed for a homebuyer to thoroughly explore a property, possibly hiring experts for testing and inspection. Due diligence also allows homebuyers to back out without penalty if they discover serious issues that must be addressed before moving forward with a transaction.
At this stage, buyers are advised to visit the building department regarding permits needed for renovations or additions, contact their homeowner’s association for fees and rules information, conduct research on local demographics as well as conduct an investigation into vacancy rates.
In certain instances, buyers can attach an addendum or rider to the contract that clarifies certain items such as homeowner association membership rules or Federal Housing Administration loan financing details - either way, is sure to help buyers make an informed decision when making their purchase decision.