Realtor Talk- Some vocabulary tips
- Listing Agent – The agent representing the person selling their home.
- Buyers Agent – The agent representing the person buying the home.
- Repo – Home that has been repossessed, either by a bank or the government agencies such as the VA or HUD.
- Comps – Sold homes that match the property under consideration, they are used in estimating the value of a home. These should be in the same neighborhood or subdivision for the best results but at times may have to be extended to the school district or city that the home is in. The comp should be a max of 12 months old and in a good market 3-6 months old. The properties used should be of the same approximate age, size, condition, bedrooms, baths etc.
- Closing Costs (Buyer) – These are costs separate from the down payment and will range from 2-4 % depending on a number of factors. They include loan origination, lender processing fees, appraisal, home inspection, lender title insurance and escrow account. The escrow will include a year’s property insurance and 6-9 months of property taxes. The inspection & appraisal will be paid for up front, the rest will be paid for at closing.
- Closing Costs (Seller) – As a seller you will be responsible for the entire commission, title insurance, state and local transfer taxes, these will be subtracted from the proceeds at closing.
- Seller Assist – As a buyer you can ask for the seller to pay up to 3% of the sale price towards you closing costs. This will come out of the sellers proceeds so you are really getting the home for that amount less than the agreed upon cost and you are adding this to your loan. This is done to save your cash at closing for work to be done on the house. Best to ask a Realtor about this, a little hard to explain in a forum like this.
- Appraisal - An evaluation of the property by a licensed appraiser. This is required of all mortgages to ensure the property value at least matches the agreed upon contract price for the home.
- Inspection – Upon getting an accepted offer the buyer should have a home inspection done by a certified inspector. This will check the condition of the home including roof, electrical, plumbing, structure, heating etc. Should also have a radon and pest inspection performed.
- Occupancy – The date you can actually move in, often the seller needs extra time to move and will pay the buyer “rent back” which is the next item.
- Rent Back – The seller will pay the buyer for the number of days they stay in the home beyond the closing date. This amount if figured by using the buyers new payment of Principal, Interest, taxes and insurance, often said as PITI,
- EMD – Earnest money deposit, also known as a good faith deposit. It depends on the price of the home but will often be $1,000 or at times 1% of the selling price of the home. The money is held by the buyers broker and will be brought to closing as part of the buyer’s assets. This indicates that this is a serious offer and that the buyer intends to purchase the home if all goes well with inspections etc.
- Sellers Disclosures – Sellers knowledge of the condition of the home along with any known issues such as water in the basement. Often will give the age of roof, furnace, hot water heaters etc. Will also give information on the area in which the home is located.
- PMI – Private mortgage insurance. Will be required by lenders for loans with less than 20% down payment. The amount will depend on credit score and the amount you put down. For an FHA loan the PMI stays for the life of the loan, the only way to get rid of it once you have 20% equity is to refinance. For a conventional loan it can be removed once you have reached the 20% mark.