Knowing real estate terminology before heading into a real estate transaction can help you communicate with your agent! Here are some noteworthy real estate terms:
Abstract of Title
A complete historical summary of the public records relating to the legal ownership of a particular property from the time of the first transfer to the present.
Agreement of Sale
Also known as contract of purchase, purchase agreement, or sales agreement according to location. A contract in which a seller and buyer agree to certain terms spelled out in writing and signed by both parties.
Appraisal
A professional appraiser’s estimate of the market value of a property based on local market data and the recent sale prices of similar properties.
Earnest Money
A deposit given by the buyer to bind a purchase offer, and which is held in escrow. If the property sale is closed, the deposit is applied to the purchase price. If the buyer does not fulfill all contract obligations, the deposit may be forfeited.
Equity
The value of the property, less the loan balance and any outstanding liens or other debts against the property.
Easements
Legal right of access to use of a property by individuals or groups for specific purpose easements may affect property values and are sometimes part of the deed.
Escrow
Funds held by a neutral third party (a title company) until certain conditions of a contract are met and the funds can be paid out. Escrow accounts are also used by loan servicers to pay property taxes and homeowner’s insurance.
Fixed Rate Mortgage
A type of mortgage loan in which the interest rate does not change during the entire term of the loan.
Principal
The amount of money borrowed from a lender to buy a home, or the amount of the loan that has not yet been repaid. Does not include the interest paid to borrow.
Purchase Offer
A detailed, written document which makes an offer to purchase a property, and which may be amended several times in the process of negotiations. When signed by all parties involved in the sale, the purchase offer becomes a legally binding sales agreement.
Title
The right to, and the ownership of, property. A title or deed is sometimes used as proof of ownership of land. Clear title refers to a title that has no legal defects.
Title Insurance
Insurance policy that guarantees the accuracy of the title search and protects lenders and homeowners against legal problems with the title.
Title Search
A historical review of all legal documents relating to ownership of a property to determine if there have been any flaws in prior transfers of ownership or if there are any claims or encumbrances on the title to the property.
Contact your real estate agent to start your real estate venture today!
