Common Real Estate Terms, Explained

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Common Real Estate Terms, Explaned

 

Whether you're thinking of selling or buying a home, there are many real estate terms that you'll likely hear throughout the process. Here’s a breakdown of what they all mean.

 

Appraisal: An appraisal is a third-party estimate of what a home is worth. When purchasing a home, lenders require appraisals to ensure they're loaning the right amount. If the appraised value is lower than the buyer's offer, the buyer may need to pay the difference.

 

Broker: A broker is a professional who has obtained a broker's license and understands construction, property management, and real estate law. Real estate agents are supervised by brokers.

 

Closing: The closing process is the last step of a real estate transaction. On this date, the property is transferred from the seller to the buyer.

 

Closing costs: These costs can amount to 2-5% of the home's purchase price. Examples of closing costs include appraisal fees and attorney fees.

 

Deed: A deed is a contract that transfers the title directly from the seller to the buyer.

 

Down payment: A down payment is the total amount of cash that the buyer pays at closing. Home loans have minimum down payments of 3-5%.

 

Earnest money deposit: This deposit is around 1-2% of the purchase price and is paid by the buyer when the contract is first signed. It's meant to show the seller you are serious about the transaction.

 

Escrow: This account is made when a third party holds an earnest money check from the buyer until the transaction is completed. Then these funds are sent to the seller.

 

Home inspection: An inspection is performed by a third party to identify a property's condition during the closing process. Inspectors will include information about the foundation's stability, the condition of a home's roof, and the state of any major home systems in their report.

 

Interest rate: This is the cost that the buyer pays to their lender to borrow funds over a set period of time. It's displayed as a percentage.

 

Lender: A lender is an individual or financial institution that's lending money to an individual buyer to purchase property. The loan will then be repaid with a certain amount of interest.

 

Mortgage: A mortgage represents an agreement between a lender and borrower that allows the lender to obtain the property if the borrower can't make their loan payments on time.

 

Pre-approval: Before you make an offer to buy a home, you should get pre-approved by a lender. The lender will check your credit history and income, verify all information, and approve you for a specific loan amount.

 

With these terms and definitions in hand, you should be better prepared to buy or sell a home. If you have questions about any of these terms or want an overview of what the process looks like for your specific situation, reach out anytime.

 

QUESTIONS? VISIT bonnieharris.realtor

Bonnie Harris, RSPS

REALTOR

United Real Estate Solutions

License #347731

865-469-0848

865-444-2400

bonnieharrisrealestate@gmail.com

bonnieharris.realtor

 

If you have a brokerage relationship with another agency, this is not intended as a solicitation. All information deemed reliable but not guaranteed.