Real estate can be pretty intimidating, even to seasoned buyers and sellers who’ve traded multiple homes over the years. The process is a complex network of agreements, steps, and obligations – all steeped in the kind of legalese you don’t hear in everyday speech. If you’re starting your real estate journey, you might need a guide. While this article is no replacement for a knowledgeable real estate agent, it will get you started on the right path. Here are some essential real estate terms to know before putting your hard-earned money on the line:
All good home-hunting endeavors start the same way – with some dedicated research. As you begin your journey into homebuying, understand these critical concepts and real estate terms.
This is your representation, your curator, your coach, and your advocate. A quality selling agent should do it all. They should align their search efforts with your criteria and expectations. They should educate you on every step of the process, ensuring you always understand what you’re signing (or not signing). And they should mercilessly go to bat for you when it comes time to place an offer. As such, it’s imperative you find a quality agent. Consider using Nobul – helmed by real estate and tech innovator Regan McGee – for your best shot at bagging the perfect agent.
Next, you should determine what kind of market you’re buying in – whether it’s a “seller’s market," "buyer's market," or “balanced market.” Collectively, these are known as the market conditions, a function of the relative supply and demand in your area. In a seller’s market (defined by high demand relative to supply), the seller is in control, often setting a higher price. A buyer's market is the opposite.
These are the mortgage hoops through which you will jump. Pre-qualification involves self-reporting basic financial information and, as such, holds little water in negotiations (although it’s still worthwhile for determining what you can afford). Pre-approval is more in-depth, locking you into a rate for 90 to 120 days and giving sellers some assurance that you will ultimately be approved.
You’re off to the races, looking at homes with your agents, putting in offers, ironing out the details of your mortgage, and eventually nabbing your dream home. Here are a few concepts to remember as you ramp up your home buying efforts.
Perhaps obviously, these are the homes you’re viewing on the market. As you peruse listings online, you’ll notice important specs about the property, like age, square footage, gross taxes for the past year, title type, and – of course – the asking price. You can also view photographs and (in some cases) virtual tours.
Let’s say you like a place. In this case, you will ask your agent to put in an offer. If the seller accepts this offer, you’ve secured the home. That is unless either party is dissatisfied with…
Contingencies are conditions you write into the offer contract. They allow you to back out of the offer if something the stipulated condition isn’t met. Common contingencies are; condition to inspection, in which you can back out if the inspection doesn’t pass your approval; condition to financing, which allows you to escape with your deposit if the bank doesn’t approve your mortgage; and condition to sale, which stipulates that you must sell your previous home before moving ahead with this sale. (That last one doesn't apply to a first-time buyer).
This is where it all happens – the moment you assume legal possession of your brand-new home. Before you close, ensure that you’ve integrated closing costs into your overall budget. You’ll need to hire a lawyer or notary and set aside money for mortgage underwriting fees, insurance, record filing, taxes, etc. Otherwise, steel yourself for all the procedural complexities involved in closing. And ensure that your real estate agent (or lawyer) thoroughly explains all documents as you sign them.
There is a mountain of other real estate terms you’ll encounter on your journey, but those are the basics. These real estate terms should be enough to get you started on the right path, alongside knowledgeable professionals and personal research.