Drop us a line today!
9 Real Estate Terms to Know
December 22, 2018 | kcallender
Basic home buying terms
A basic understanding of real estate concepts is important before your start your home buying journey. It will give you peace of mind knowing what things are when they come up during the transaction and could potentially save you money in the future. Here are 9 real estate terms to know and understand before you buy a home. If you have questions a Bellanor Real Estate Group Agent will be happy to help explain anything to you.
Buyer’s Agent vs. Listing Agent-
Typically there are two different agents involved when you buy a home. The Buyers agent, who represents the buyer in the transaction, and the Listing agent who represents the seller. On rare occasions a transaction can involve just one agent such as a "for sale by owner" or a dual agency situation.
Dual agency is when one agent is representing both sides of the transaction and should be avoided if at all possible for most buyers. Your Bellanor Realty Group Agent will discuss this situation with you and all of your options should this come up.
For Sale By Owner listings may not have an agent representing them but it does not make this a dual agency. Your real estate agent will discuss this with you if you are looking at these types of homes.
Money saving tip: when you buy a home your real estate agent is paid from the sellers side of the transaction not by the buyers.
Fixed Rate vs. Adjustable Rate Mortgages-
Conventional style loans can either be "adjustable rate" or "fixed rate" mortgages. Adjustable rate mortgages will have a variable interest rate that can change after a certain period of time, most commonly 5,7, or 10 years. While a fixed rate mortgage has a set rate and are typically 30 or 15 year terms, with the most common being 30 years.
Money saving tip: If you are planning on selling or refinancing your property before the introductory period an adjustable rate mortgage can make financial sense. If you are planning on being the home for a long time a fixed rate mortgage typically is less of a risk. Make sure to do your homework and shop around for the best rate. This can save you a considerable amount of money in the long run. Ask your friends family or real estate agent for recommendations on a reputable lender.
Before you start seriously shopping for a home or applying for a mortgage you should get a pre-approval letter from a lender. This is not a guarantee of a loan but it is an estimate of the amount that you will be able to qualify for when you apply. This shows agents and sellers that you are a serious buyer and are able to purchase the home.
Money saving tip: When you are shopping for a lender for your pre-approval letter, make sure you understand everything they are offering. Don't be afraid to ask about rates , fees, closing cost, or if they can lock in a guaranteed interest rate. Having a local lender can be a big plus in a multiple offer situation. Local lenders are tied to the community and want continued referrals and a good reputation locally. Listing agents tend to prefer to deal with local lenders.
Homes for sale are referred to by real estate agents as "listings". On a website a "listing will show you information about the, such as price, features, and special points of interest, as wellas pictures of the home in most cases. You can browse listings on BellanorRealty.com in New Hampshire and Vermont
Money saving tip: For the most up-to-date listings, use sites from real estate brokers like Bellanor Realty Group, rather than real estate portals. Brokers have access to the MLS (multiple listing service), which real estate agents are required to update. The information is more accurate than sites who aren’t affiliated directly with a brokerage. In a competitive market, you can potentially miss a good deal if you use sites that don’t show all the homes for sale, or that are not updated as frequently.
The first thing you need to do after you have an accepted offer on a home is to make an appointment with a home inspector. Home inspections typically cost $500-$900 depending on the size of the home and any additional testing you are having done. (water, radon, etc). Your home inspector will perform a thorough inspection of the property and all of the homes systems like the plumbing, electrical, roof, foundation, heating , and appliances.
Money saving tip: Your real estate agent will be able to provide you with names of reputable home inspectors in the area, or you can ask family and friends who have recently purchased a home who they used. If the inspection turns up something wrong, you can negotiate for a reduced price. If you skip this vital step, you could be stuck with expensive repairs after you’ve purchased the home.
As part of the loan process your lender will require an appraisal of the property to be done. The lender will have a licenced appraiser estimate the value of the home based on comparable properties in the area as well perform an investigation of the home itself.
Money saving tip: If the appraised value comes back less than the offer you are making on the home, you will not be approved for a loan. Lenders won't loan more than the value of the property (in most cases). Before you make an offer, your agent to do a comparative market analysis. This will give you an idea of the homes value and what other homes have sold for nearbuy. If you’re a seller, getting a CMA on how much your home is worth before listing it from your Bellanor Realty Group agent will make sure that this doesn't become an issue down the road.
When making an offer on a home you can have certain conditions specified in the purchase and sales contract that must be agreed to by the seller before the deal will go through. These conditions are called "contingencies". There are several standard contingencies in every contract, such as financing, inspections, and appraisal contingencies. Those are just a few of the standard ones and there can be others depending on your situation and loan type. Make sure to discuss with your real estate agent what should or should not be included for your specific situation.
Money saving tip: In a multiple offer situation, it can sometimes help strengthen your offer to shorten or even waive some of the contingencies in the contract. but make sure that any thing you do you fully understand so that you are not put in a bad situation that could end up costing you money.
Offers and Contracts-
After you find the right home for you, it's time to put in an offer on the property with the help of your real estate agent. When you make an offer the seller can accept, counter or reject your offer. If they accept you are good to go and you start the process of inspections and getting the loan. If they counter it is typically because they want more money or a shorter closing time frame. At this point in the process it is time to negotiate, and this is where a good agent can make a big difference for you. Sometimes it can help to enclose a personal letter explaining why you want to buy the home with your offer. Sellers are typically emotionally attached to the home and knowing that it will be loved and cared for can sometimes tip the balance in your favor.
Money saving tip: Making sure you chose an good realtor is the key to winning in a negotiation. Do your homework and find one that has done recent deals in your area, and be sure to read online reviews.
Be prepared to pay a lot of fees when you purchase a home. Typically, closing costs will amount to 2-5% of the purchase price of the home, and that doesn’t include the down payment. Common fees include excise tax, loan-processing costs and title insurance. When you purchase a home be ready to pay a lot of fees. Closing cost will run from 2%-5% of the purchase price of the home on top of the down payment. You will have state and possibly local taxes, loan processing fees, insurance, escrow, title insurance and others to take into For more information on how much money closing costs will take out of your wallet, click here.
Money saving tip: Be sure to ask your lender about every fee involved in the Good Faith Estimate. See if you can shop around for a better price for those services or negotiate down. Examples include homeowner’s insurance, wire transfers, underwriting and settlement fees.