An introduction to real estate language
When I work with first-time buyers, I often hear them say, “I have a stupid question. I automatically answer that there is no such thing.
What they think is a stupid question has almost invariably been asked before by many others in the same situation. Answering a stupid question almost always makes you smarter, so what they really have can be a “smart question.”
Several questions that have been asked to me recently have prompted me to revisit what I was discussing during my first consultations with buyers, so let’s start there.
A Buyers consultation is a first meeting with a buyer, whether face to face, over the phone, or through Zoom or similar interactive means, where we exchange information about the buyer’s needs and the services I provide and determine if we will work together exclusively and how long.
If we decide to go ahead, we sign a Exclusive buyer’s representation agreement, which allows an agent to act as the buyer’s advocate by representing only the buyer’s interests in a real estate transaction, protecting the buyer’s confidentiality and providing essential services reserved for a client relationship . In the DMV, in the absence of such an agreement, agents must legally represent and pledge allegiance to a seller they have never met of a property they have never seen.
At DC, our real estate contracts consist of 33 paragraphs of boilerplate language audited by a committee of agents, brokers and lawyers, updated as needed to comply with legislative changes and regulatory requirements. In other words, they contain a lot of “legal”. In addition, there is a plethora of addenda that can apply to a real estate transaction.
So it’s important that customers understand what they’re reading before signing and, rather than just asking buyers to sign an offer electronically, I believe in providing them with a sample contract and reviewing at both the documents and the process with them to explain terms, market standards and the potential consequences of certain choices.
The terms below rarely change significantly and learning them can be a good way to begin to understand the contracting process.
Hurry up, which is at the top of our purchase contract, means deadlines are set. There is no “just one more minute wait” unless both parties agree in writing to an extension.
a Honest money deposit, typically an amount greater than 3% of the bid price, accompanies or follows an offer and is held by a real estate brokerage or settlement company until needed at closing.
Terms Rules and Closing are interchangeable and refer to the signing and registration of documents transferring ownership from seller to buyer.
A Contingency is a condition that must be met for the contract to settle. An example might involve a satisfactory home inspection or appraisal, the sale of a previous home, or the receipt of financing. Compare it to a situation unrelated to real estate, like “if you wear a mask you can go into the grocery store and do your shopping.”
Home inspections are usually carried out after the conclusion of a contract Ratified, which means that all parties have agreed to the price and conditions. They can allow the negotiation of repairs with the sellers or the simple acceptance or rejection of the good according to the findings. Some buyers opt for a Walk and talk inspection, which is carried out before submitting a bid. The cost is less, as buyers take their own notes and no report is issued. The offer made by buyers will be well received by sellers without the delay of an eventuality.
a Evaluation is ordered by the lender to determine the value of the property and whether this value supports the loan amount given to buyers. Do not confuse this with a Evaluation conducted by municipal assessors to determine value for property tax purposes.
A Title search is conducted to determine that there is nothing in the chain of ownership that would prevent the sale of the house. Title insurance isolates the lender from issues such as fraud, forgery, liens, and other items that may not have been discovered during the initial research. Buyers can also purchase title insurance to protect themselves in the same way.
In closing, a word on Closing costs, amounts paid to lenders, lawyers, brokers and municipal offices in the settlement of expenses incurred to effect the transfer of ownership. Any deposit you have on deposit will be credited to you for these one-off charges or for the remainder of your deposit. As JG Wentworth says, “It’s your money. Use it when you need it.
Valerie M. Blake is a licensed associate broker in DC, Maryland & Virginia with RLAH Real Estate. Call or text her at 202-246-8602, email her through DCHomeQuest.com, or follow her on Facebook at TheRealst8ofAffairs.