As someone who is in the real estate industry, you have to familiarize yourself with the various terminologies that you will encounter as you go through transactions. Being a responsible real estate agent or property valuator means that you need to understand the key terms that you will use upon communicating with many people.
To help you out, here are the 11 common terms about real estate that you need to know:
- Mortgage – This is one of the most common terms in the real estate industry but is also the most frequently forgotten. According to Investopedia, a mortgage is a debt instrument, secured by the collateral of specified real estate property that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses to make large real estate purchases without paying the entire value of the purchase up front.
- Buyer’s Agent and Listing Agent – In the home buying process, there are two agents that are involved – buyer’s agent and the listing agent. The buyer’s agent represents you while the other one represents the home seller.
- Fixed Rate and Adjustable Rate Mortgages – You have to remember that conventional loans include “fixed rate” and “adjustable rate” mortgages. The first one is the predetermined interest rate throughout the life of the loan (most common are for 30 years) while the other one is the variable interest rate (most common are for 5, 7, or 10 years).
- Pre-approval Letter – This is a document given by your bank that contains the estimated amount it can lend to you prior to applying for mortgage or looking for a home. The pre-approval letter will help you determine what you can afford and ensures the home sellers that you can get a loan when the need arises.
- Listings – The real estate agents call homes for sale as “listings”. The listing on a certain website provides the information about the home, its price and usually the number of bed rooms.
- Inspection – An inspection in the real estate industry means hiring an inspector for a certain amount of price that usually depends on the market demand. An inspector will go through every nook and cranny to review specific things that are vital to the overall quality of the property.
- Appraisal – Before applying for a mortgage, you have to provide your lender with an appraisal of your property. A licensed real estate property appraiser, just like Aviso Valuation and Advisory , will be in charge of estimating the value of the property based on the comparable homes that were already sold in a certain area. The appraiser is also responsible for the investigation of the property’s quality.
- Contingencies – These are the specific conditions that must be met before sealing the home buying deal.
- Offers and Contracts – After finding the right home, you have to make an offer on the property with the help of an agent or an attorney.
- Closing Cost – This is the total cost after sealing the deal. It usually costs 2-5% of the purchase price of the home excluding the down payment. This also includes the excise tax, loan-processing costs and title insurance.
- Title Insurance – When the negotiations are over and the seller has accepted your offer, you shall be given the home title report within a week.
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