1. Buyers Agent versus Listing Agent
Buyers Agent–When you are looking to buy a home and hire a real estate agent to help you find that perfect property, you will be working with a buyer’s agent. Not only will the buyers agent help you find the home, they will also guide you through the transaction and look out for your best interests so the transaction will close smoothly.
Listing Agent–When you decide to sell your home and you contact a real estate agent, you are dealing with a Listing Agent also known as the Seller’s Agent.
2. Contingencies — A contingency is a condition that must be met before the contract between the buyer and the seller becomes legally binding. An example of one of the most common contingencies is the home inspection. If the home inspection reveals major problems, then the contingency allows the buyer to walk away from the contract without losing any money.
3. Closing Costs
Closing costs are the various fees, charges and taxes needed to (A) originate a mortgage loan and (B) transfer a property from seller to buyer. Most of these fees are paid by the borrower, but in some cases, the seller may contribute money toward the buyer’s closing costs.
(DOM) stands for Days on market and it tells you how long a home has been for sale. The number of days a home sits on the market has a direct effect on the price the home will eventually sell for. Whether it’s a positive or negative economy, a home may sit on the market for a longer amount of time than normal. If there is an excessive supply of homes on the market for an extended period, it could signal that the economy has taken a downturn.
5. Disclosure: The making known of a fact that had previously been hidden. For example, a home seller must disclose major physical defects in a house within his or her knowledge, such as a leaky roof or potential flooding problem. Another example of a required disclosure by a seller is when there is the presence of lead-based paint hazards in buildings constructed before 1978.
6. Earnest Money Deposit — The earnest money deposit is the money you provide along with your offer on a house as a show of good faith. The earnest money deposit usually accounts for one to two percent of the property’s purchase price. An escrow agent holds the earnest money deposit until the sale goes through. If the sale goes through, the earnest money deposit goes toward the down payment. If the seller rejects the offer, the money goes back to the buyer.
In some cases, a piece of real estate might refer to an easement in the deed. The easement gives someone other than the owner access to the property. If the neighboring property does not have direct road frontage, the deed might list an easement for this property owner so that he can gain access to his property.
Occasionally known as a Settlement Statement, Closing Statement, or Settlement Sheet the HUD (Housing and Urban Development 1 Settlement) is a form that itemizes and lays out all fees and services that a borrower is to be charged by the broker when initially applying for a loan for the express purpose of purchasing real estate. In simple terms, it gives a complete list of where the list of charges come from when getting a loan.
9. Title Insurance
Title insurers search public records to make sure the home seller actually has the rights to the title and that there are no liens on the home (like a mechanics lien or a tax lien) After all the negotiations are done and the seller has accepted an offer, the purchaser should receive a home title report within a week. Most mortgage lenders require that title insurance be included as part of the closing costs.
10. Transfer Tax
A transfer tax is a tax imposed by states, counties, and cities on the transfer of the title of real property from one person (or entity) to another within a jurisdiction. The tax is based on the property’s sale price. In California, it’s common for both a county and city to impose transfer taxes on real estate sales.
In California, the seller traditionally pays the transfer tax. However depending on local market conditions, transfer taxes can become a negotiating point during closing. For instance, in a strong seller’s market, the seller may have multiple offers and will likely find a buyer who agrees to pay the transfer tax. In a buyer’s market, it’s more likely the seller will end up paying the tax.