11 Common Real Estate Terms Explained

If you’re buying or selling a home, you’ll probably come across some terms that you’ve never heard before, or don’t completely understand. Being confused about the terminology can make an already complex process that much more stressful. By educating yourself before you dive into the market, you’ll gain peace of mind and might even save some money. Here are the most common real estate terms or concepts you should know.

Appraisal

If you’re purchasing a home with a loan, the lender will require an appraisal. This is an evaluation of all aspects of your home to determine its value, including its size and condition on both the interior and the exterior.

Adjustable Rate Mortgage

When shopping for a mortgage, you may decide to apply for an adjustable rate mortgage. These types of loans have a variable interest rate and are generally extended for 5, 7 or 10 years. They may also have a cap on how high the rate can grow.

Fixed Rate Mortgage

As opposed to an adjustable rate mortgage, a fixed rate mortgage has a predetermined interest rate. The life of the loan is typically 15 or 30 years.

Closing

Closing is the last step of a real estate transaction when paperwork is signed and the title is transferred from the seller to the buyer.

Contingency

When drawing up a contract for a real estate transaction, there may be certain provisions that need to be met in order for the sale to go through. These provisions are called contingencies, and a home may be listed as “contingent” until these requirements are met.

Down Payment

A down payment is the money a buyer pays upfront to secure the purchase of the home. In most cases, the down payment is 20 percent of the purchase price, though this can change depending on the type of mortgage you secure.

Earnest Money

Earnest money is the cash that is deposited when an offer is made on a home. If the sale goes through, the earnest money is often used towards the down payment. If the buyer backs out of the deal for reasons not stated in the contingency, the earnest money goes to the seller.

Escrow

A property is in escrow once the buyer and seller enter into an agreement and the earnest money is paid. A neutral third party then holds that money until all requirements are fulfilled.

Pre-approval

Before you begin looking for a home in earnest, you should secure a pre-approval from a lender for your mortgage. This is typically a letter from a bank stating how much they will lend to you.

Title

The title is the rights to a property, and often refers to the document that shows evidence of ownership. During the buying/selling process, a title company will conduct research to determine if the title is clear. If there are no outstanding claims on the title, it is then transferred during the closing process.

Underwriting

When a lender researches a borrower to determine whether or not to extend credit, this is called underwriting. This determination is made by examining the buyer’s credit scores, income, credit history and debt.

GETTING READY TO SELL

As we head into 2017, you may be thinking that this is the year to finally put your house on the market. And when you do, you’ll want it to sell quickly for the best possible price. Here are our suggestions for what you need to do to get your home ready to sell.

Detach emotionally

Selling your home can be fraught with emotions, especially if you associate it with some of your cherished family memories. But if you want to be successful, you’ll need to detach. Consciously decide to let go of your emotional attachment to the home, and think of it as a business transaction. Take the time you need to say goodbye, but then imagine a new family moving in so that you can look forward without regret.

Spruce up the exterior

Today’s buyers have a never-ending supply of online resources to research before contacting an agent. Browsing photos of listings is easier than ever, and first impressions count. Make your home a stand out from the get-go by spending a weekend sprucing up the exterior. Clean up the yard, add some color with flowers and take photos when the light outside best accentuates the positive aspects of your home.

Rent a storage unit

In today’s market, most agents will tell you that staging is key for a quick sale and will help net you the best offers. In order to make your home look it’s best, you’re going to need to de-clutter and de-personalize every room. Now is the time to take down all your family photos, empty out the closets and remove bulky furniture. Renting a storage unit early gives you a place to keep all your belongings until your official move-out date. It also gives you a head start on packing, which is never a bad idea.

Make needed repairs

Do you have a door handle that keeps falling off? A window that just won’t budge? Have you been covering up a hole in the wall with a strategically placed framed photo? You need to tackle these types of repairs before putting your home on the market. Not sure which repairs to do? Walk through your house and imagine you are a buyer. What things would stick out to you as potential problems? You should also address any larger issues that may come to light during a home inspection, such as problems with the air conditioning or heating systems.

Do a deep clean

There isn’t a single buyer out there who will be turned on by pet odors or lingering cooking smells. Once you’ve moved your belongings to storage, do a deep clean of your entire home. Make sure to tackle any strong odors, and clean every nook and cranny. Remember, buyers will be opening every closet and cabinet door, so you can’t hide anything. If you can afford it, hire a professional cleaning service to get the job done right. It’s a small investment that could have a big payoff in the end.

How to Save on Closing Costs

You’ve saved up the money for a down payment and are finally ready to make your dream of owning a home a reality. Congratulations! Buying a house is one of the most exciting – and one of the most stressful – events in your life. If you’ve done your due diligence, you’ve shopped around for a mortgage and secured a great interest rate. But did you know it’s also possible to save money on your closing costs? Here’s how.

SHOP AROUND

Lenders are required to provide you with a three-page Loan Estimate that includes your closing costs, which are fees that generally add up to as much as five percent of the purchase price. You can use these estimates to shop around and potentially save yourself thousands of dollars. You can also negotiate to have one lender match the lower closing costs of another.

In addition, a third party provider can perform some of the services required for closing. Take time to research options other than those provided by the lender for services such as pest inspection or title insurance. You’ll often find a lower price elsewhere.

EVALUATE AND NEGOTIATE

Once you’ve received the Loan Estimate, go over it in detail. Ask the lender what each fee covers. This is a good way to discover if the estimate has been padded with unnecessary or redundant fees. At this point, you can negotiate to have some of these fees reduced or removed.

Three days prior to closing, you will receive a Closing Disclosure. Double check to verify that the fees listed on your Loan Estimate match those on the Closing Disclosure or have increased no more than the standard limit of ten percent if you’ve used the lender’s service providers. If they have, the lender is required to reimburse you the difference.

ASK IF SELLER WILL SHARE COSTS

Another way to save on your costs at closing is to ask if the seller would be willing to pick up a portion of the fees. While this is unlikely in a tight market and isn’t advisable in a bidding war, if a seller is particularly motivated they may agree. You will need to check with your lender, as some have caps on how much a seller can contribute towards the closing costs. You can either request to have the seller pay for certain services, such as the home inspection, or for a specific dollar amount. Ask your real estate agent what would be the best course of action in your specific situation.

ENLIST THE HELP OF A PRO

Navigating the home buying process can be daunting. That’s why it’s helpful to have a trusted professional at your side. An agent with experience in your local market can help you through the closing process. They’ll take the time to explain the costs so that you understand, and help find ways to save you money in the long run. In the end, you’ll finally have that house you’ve always dreamed of, and at a price that fits well within your budget.

Preparing for Your Open House

If you’re selling your home, then an open house is likely going to be one of the tools your agent uses to market your property to prospective buyers. An open house is a great way to show your home to as many buyers as possible, so it’s important to take time to prepare. Here’s what you should do in the days leading up to the open house so that you can make the most of the opportunity

Clean and repair

First impressions count, so be sure that your home is ready to impress. Repair any items that aren’t functioning, such as loose doorknobs and leaky faucets. Consider giving rooms a fresh coat of neutral paint. Replace worn items like the mailbox or house numbers. If possible, hire professional cleaners to scrub all the nooks and crannies. This includes power-washing the exterior and cleaning the windows. Your home should be sparkling when prospective buyers finally arrive.

Remove clutter and stage

After you’ve cleaned and repaired, make a thorough sweep of your home to remove clutter. This includes any personal items like family photos and sports memorabilia. You should also remove bulky furniture and clean out the closets. Remember, you want to emphasize how much space your home has. If your furniture is worn or outdated, consider having your home professionally staged. A well staged home allows buyers to imagine what it would be like for them to live there, and can sell your home more quickly and for a better price.

Advertise

The key to hosting a successful open house is to get as many serious buyers there as possible, but they can’t come if they don’t know about it. Make sure your agent is listing your open house in the multiple listing service. Advertise on the major online portals for real estate, including Craigslist. Make flyers and pass them around to your neighbors. Post in your local Nextdoor.com group to let people know, and encourage them to spread the word. Create a Facebook event and encourage your network to share it with their friends. You never know who might be looking for a home in your neighborhood.

Provide refreshments

Don’t be afraid to provide snacks and drinks on the day of the open house. Baking a fresh batch of cookies makes your home smell wonderful, and giving people an opportunity to linger with a drink and a snack makes it easier for them to envision themselves in your home. It also gives buyers the chance to speak with your agent and have some of their questions answered.

Get feedback

Though as a seller you should not attend your own open house, do ask your agent for feedback once it’s over. Your agent spent the day listening to prospective buyers’ impressions of your home, and this can be valuable information. Does the house feel too cramped? Are there any off-putting smells? Is there enough light? Is your asking price on par with what buyers are expecting? Having this information will allow you to make adjustments, so that future buyers are more likely to put in an offer.

By taking a little time to prepare for your upcoming open house, you’ll be well on your way to a successful sale!

How to Deal With Post Home Purchase Anxiety

You just bought a new house. You should be happy, right? But unfortunately, you can’t quite shake this sinking feeling that somehow you’ve made a big mistake.

The good news is that feeling anxious after a big purchase is totally normal and there are ways you can deal with it. Here are a few proven methods you can use to help conquer that feeling of buyer’s remorse.

REMIND YOURSELF WHY YOU BOUGHT THE HOUSE

When you first began your home search, did you write out a list of what you wanted and needed in a home? Now is the time to revisit that list. Does the home you just purchased tick off many of the items on your list? What was it about the house that made you originally fall for it? You might discover that it isn’t the house itself that is provoking your anxious feelings. It could just be that any home purchase would trigger these feelings. It can be incredibly reassuring to remind yourself of why this house is the one for you.

MAKE A LIST OF YOUR WORRIES

Home ownership can bring with it a new set of worries that you might not have anticipated. Go ahead and make a list of what’s worrying you. This could be everything from not being able to afford your mortgage payments to making needed repairs on the house. After you’ve gotten all those doubts on paper, choose one worry and tackle it. Maybe it’s a small repair you can finish in an afternoon. Or perhaps it’s a plan for how you’ll pay your mortgage if you suddenly find yourself without a job. The best way to banish your worries is to confront them head on.

PICK YOUR FAVORITE SPOT

A great way to ease any worry is to be mindful and present. Walk around your new house and really see and experience every room in the present moment. How does the light hit the wall in the afternoon? Which window affords the best views? How nice is it going to feel sitting in front of a fire in the new fireplace? Imagine taking a bath in that new Jacuzzi tub. Pick a favorite spot in your new home that you can retreat to when you’re feeling particularly anxious. Take some deep breaths and remember that this feeling of buyer’s remorse is only temporary.

HAVE A HOUSEWARMING PARTY

Nothing makes a house feel more like home than filling it with friends and family who love you. Don’t feel like your house needs to be “finished” before inviting people over for a housewarming party. Have a barbecue, cook a three-course meal in your new kitchen, or get your friends together to watch the big game. It doesn’t matter what the reason is, just get your favorite people together to celebrate you and your new home. You’ll be amazed at how their excitement for you will make you feel.

Ultimately, when feeling anxious about your new home purchase, simply remember that this is a natural part of the home-buying process. Soon those feelings will pass and you’ll wonder why you ever worried in the first place.

How to Sell Your House When You Work From Home

According to the Bureau of Labor Statistics, nearly one quarter of employed Americans work from home. Innovations in technology coupled with a changing economy have made it easier than ever to do your job from the comfort of your own home. And while working from home is often more convenient for most people, it can be somewhat of a challenge when it comes time to sell your home. If you are a telecommuter getting ready to put your home on the market, here are our best tips for navigating the process.

SET UP PARAMETERS FOR SHOWING TIMES

One of the realities of selling your home is that ideally it should be ready for appointments at a moment’s notice. This may not always be possible if you work from home. Be clear with your real estate agent from the beginning about any restrictions you may need to place on showings and open houses. Request that you be given at least 30 minutes notice before a prospective buyer shows up, or ask that your home only be shown at certain times of the day. This gives you time to plan in case you need to vacate while you’re working. While your agent may not be able to accommodate you every time, you will be inconvenienced less frequently.

MAKE ADJUSTMENTS TO YOUR WORKLOAD OR WORKSPACE

If you are interrupted while you are working, have a contingency plan in place. Do you have any work that can be completed in advance? If so, try to use your free time to get ahead on work. This way, if you have to step away for an hour or two during the day you won’t be missing any deadlines. Does your work require that you be at home? If not, find a local coffee shop or library with Wi-Fi so that you can relocate easily during the day when needed. If those kinds of public spaces have too many distractions, considering temporarily renting a spot in a co-working space.

KEEP YOUR WORKSPACE TIDY

This should go without saying, but when you’re showing your home, it needs to be spotless. This goes for your workspace too – which may be tough for those of you who thrive with a messy desk. Every morning before you begin work, and every evening at the end of the workday, take a few minutes to clean. Organize papers, tidy your desk, wipe down surfaces, clear away dishes and cups from lunch and sweep or vacuum the floor. Although you are actively working in the space, it needs to have the appearance of being neutral. Remember, you want potential buyers to be able to imagine themselves in your home. Don’t make it harder for them by leaving evidence of your workday behind you.

TAKE TIME OFF

While it may not always be possible, if you have some flexibility in your work schedule, why not take some time off? This gives you the time and space you need to focus on getting your home sold quickly, and it will save your work from constant interruptions. After all, isn’t flexibility with scheduling one of the greatest perks of working from home? Use it to your advantage during what can be a hectic time.

What Are Closing Costs?

When buying a home, you know you should expect to have a certain amount of money saved for a down payment. But have you stopped to consider how much you’ll need to have set aside for closing costs?  Here we’ll break down the fees associated with closing on a home.

What are closing costs?

In a nutshell, closing costs are those fees charged by third parties who are involved with the sale of a home. These can include your lender, the title company, local government offices and land surveyors. While closing costs can vary significantly from location to location, you can expect to pay up to five percent of the home’s selling price in additional fees.

Who pays the closing costs?

In general, both buyers and sellers are responsible for paying the closing costs. However, buyers typically pay a larger percentage than sellers – around three percent. While most of the fees are paid during closing, some are paid upfront, such as the inspection fee.

What are the fees due at closing?

The fees associated with closing can vary depending on where you live, but these are some of the costs you’ll most likely encounter:

• Application fee paid to the lender to process your application.
• Appraisal fee paid to the appraisal company assessing the value of the home.
• Attorney fee paid to an attorney reviewing closing documents.
• Closing fee paid to the title or escrow company.
• Courier fee paid to companies transporting documents.
• Credit report fee paid when your lender reviews your credit to determine the interest rate on your loan.
• Home inspection fee paid to the inspector verifying the condition of the property.
• HOA transfer fee paid by the seller to verify payments are current.
• Homeowner’s insurance fee paid to insurance company to cover first year’s insurance.
• Origination fee paid to lender to cover administration costs.
• Prepaid interest fee paid to lender to cover interest that will accrue between closing and the first payment on your mortgage.
• Private Mortgage Insurance (PMI) fee that is levied if you put down less than 20 percent for your down payment.
• Property tax fee paid to lender for any taxes due during the first 60 days of purchase.
• Recording fee paid to the local recording office for public records.
• Survey fee paid to survey company to verify property details.
• Title search fee paid to a title company to search the property’s records.
• Transfer tax fee paid when the title is transferred from the seller to the buyer.
• Underwriting fee paid to lender for research involved with approving your loan.

Can you estimate the closing costs?

When your lender provides you with a loan estimate, they will also include what your closing costs are expected to be. However, understand that these numbers are an estimate and can change. You can also check out this online calculator that will help you determine what your closing costs may be. Before your closing date, your lender will give you a Closing Disclosure statement, which will outline what the final closing costs will be.