When you’re selling your home or other real property on your own, you don’t have to know everything about the process. It does help to have a practical knowledge of the terms that come up during the process.
Keep in mind, these aren’t intended as “be all, end all, penultimate” definitions. They’re working definitions for pragmatic folks. Let’s go…
1) Acceptance – A legal term referring to the acceptance of a buyer’s offer by the seller. Acceptance is often preceded by a number of counter offers between the parties.
2) Appraisal – a professional opinion of the value of real property. Most jurisdictions have careful rules defining who may call themselves an appraiser, and most lenders have a “stable” of approved appraisers whom they use regularly. Typically, the lender making the new mortgage loan will require that the property appraise for at least as much as the purchase price. Occasionally, a buyer will require the same thing in an all cash transaction.
3) Bridge Loan – Short term loans used to “bridge” any time gap between the sale of a home and purchase of the next one. These loans can be valuable when escrow is delayed on the sale of a home and the seller has committed to the purchase of another home. Bridge loans are also known as “panic loans”, but can be a life saver.
4) Coinciding Settlements – when a buyer needs the funds from the sale of his prior home (which is under contract to be sold) in order to purchase his next home, he may well make settlement under his sale a contingency for settling on the home he is purchasing. In reality, the sales don’t usually coincide. They usually take place back to back. Funds from the first are often wire transferred to the second.
5) Closing – Depending upon the state you live in, Closing can have different meanings. Generally, the closing of a real estate transaction refers to the exchange of necessary documents, execution of the same and transfer of money.
6) Comps – This term refers to the sales prices of similar properties in the area of a house in question. Comps are used to help determine the fair market value of a property.
7) Conditions – any conditions which must be met before the sale can be consummated. Some typical conditions include things like the property’s appraising for the purchase price or more, the property’s being in good condition when a home inspection is done, the buyer’s loan being approved.
As you can image, there are many real estate terms for which you have a general understanding. In our next article, we continue with the terms starting with “Condominium.”