By Alexis Winnell, Realtor
There’s no denying that buying or selling a home can be overwhelming. Between the logistics and then throwing in terms like “due diligence” and “earnest”, it’s easy to understand why you might feel confused. Let’s not make things more complicated, so here are some real estate terminologies broken down in an uncomplicated way.
Due Diligence -“A term used to describe the process of a buyer investigating a property being purchased in a diligent manner, usually within a period of prescribed time in the Offer to Purchase contract, to determine if the buyer is satisfied with the property and wishes to proceed to the Purchase and Sale Contract” This is the period that the home inspection and repair negotiations are made
Earnest Money – “A sum paid by a prospective purchaser of real estate as evidence of good faith, usually paid to the broker at the time an offer is made” This is a check a buyer pays that is held by the listing broker. If a buyer cancels a contract during the due diligence period, the earnest money is returned to the buyer. This money is credited back to the Buyer at closing and counts towards the purchase price.
Contingency – “A provision in an offer or contract that makes performance and consummation of the offer or contract dependent or contingent upon the occurrence of some act”.
Comparative Market Analysis (CMA) – “An estimate prepared by a licensed real estate broker that details the probable selling price or leasing price of a particular parcel of or interest in property”
Appraisal – “An estimate or opinion of quantity, quality, or value. As applied to real property, it is an opinion as to a property’s value, marketability, usefulness, or suitability. Also, the process of deriving a conclusion as to value, and the report setting forth this conclusion”. This is ordered by the lender and required when obtaining a loan for your purchase.
Comps – “Comparable – a term used to describe a recently sold property that has similar characteristics to a property that is the subject of a CMA or appraisal being appraised (the “subject” property) and that is used for comparative purposes when estimating the probable selling price or value of the subject property.”
Tenants by the Entirety – “a form of joint tenancy held only by husband and wives in which each spouse holds an equal, undivided interest in the whole property. The most important characteristic of a tenancy by the entirety is the right of survivorship which exists on behalf of each spouse; upon the death of one spouse, the surviving spouse automatically acquires ownership in severalty of the entire property without the need for probate”.
Power of Attorney (POA) -“an instrument authorizing a person to act as the attorney in fact of the person granting it; it may be a general power or may be limited to the performance of a specific act or acts”.
Buyer’s agent
This is the agent who represents the buyer in the home-buying process. On the other side is the listing agent, who represents the seller.
Cash Reserves
The cash reserves is the money left over for the buyer after the down payment and the closing costs.
Closing
The closing refers to the meeting that takes place where the sale of the property is finalized. At the closing, buyers and sellers sign the final documents, and the buyer makes the down payment and pays closing costs
Closing costs
In addition to the final price of a home, there are also closing costs, which will typically make up about two to five percent of the purchase price, not including the down payment. Examples of closings costs include loan processing costs, Title insurance, and excise tax.
For further discussion on the Massachusetts real estate process, contact Manderley Real Estate, LLC at 978.376.3313 or Alexis(at)ManderleyRealEstate(dotted)com.