Real estate is one of the best investments to get into, it has so many advantages. It provides you with passive income, steady cash flow and it increases in value over time. However, these processes can be difficult to grasp with a lot of terms being thrown around. Having a basic understanding of real estate terms whether you are buying or selling a home could help the process and provide you with the peace of mind you deserve.
Below are some examples of real estate terms you should know:
1. Buyer’s Agent vs. Listing Agent: When beginning your home buying or selling journey, two agents are usually involved; that is the “buyer agent” and the “listing agent”. The buyer agent represents you, while the “listing agent” represents the seller. A Dual agency is when one agent represents both sides of the transaction. This is something you want to avoid at all costs.
2. Appraisal: To get a loan from the bank in order to purchase a home, you need to get your home appraised first. This so the bank can ensure they are lending the correct amount of money. Based on the examination, the appraiser would ascertain the value of the home, also the price of comparable homes in the area.
3. Inspection: This is one of the most important requirements when a buyer makes an offer on a property. This is means having a proper check on the intended property for purchase in order to avoid mistakes. Check the house plumbing, foundations, and appliances to make sure everything is up to standards. Failing to do an inspection may result in unexpected costly repairs down along the line for the home buyer.
4. Offer: An offer is an initial price offered by a potential buyer to a seller. A seller may choose to accept this offer, reject it, or counter with a different offer.
5. Real estate agent: A real estate agent is a professional with a real estate license who works under a broker and assists both buyers and sellers in the home-buying process.
6. Realtor: A realtor is a real estate agent who specifically a member of the National Association of Realtors. There is a code of standards and ethics that NAR members must adhere to.
7. Principal: This refers to the money borrowed to buy a home. Paying off the principal allows a buyer to build equity in a home. The principal is combined with interest to determine the monthly mortgage payment.
8. Closing: The meeting which occurs where the sales of the property are finalized is called the closing. The buyers and sellers sign the final documents at the closing, and the buyer makes the down payment and pays closing costs.
9. Escrow: Escrow is an account that the lender sets up that receives monthly payments from the buyer.
10. Title insurance: In order to close a deal, title insurance is often needed. . It entails research into public records to ensure that the title is free and clear, and ready for sale. If you purchase a home and find out later that there are liens on the home, you’ll be glad you had title insurance
Real estate investing can be conducted seamlessly if you have an understanding of these real estate terms. With commitment, time, and practice these terms would be imprinted in your memory.
