There are many terms used in real estate, having a basic understanding of their meanings will help with the home buying or selling process.  Below is a list of what we consider more commonly used terms:

 

Seller's Agent and Listing Agent

A seller's agent is the "buyer's agent" who represents the buyer.  In Virginia, an Exclusive Right to Represent Purchaser" form is required so that there is no confusion as to who is representing who in a transaction.  Without this form, the agent is not permitted to freely discuss the property they are showing to a buyer or buyer lead.  By the way, commission for the buyer's side/selling agent, is covered by the listing side.  So if you are a buyer, there is no need to try to navigate thru a real estate transaction on your own!

A listing agent is one who represents the seller of the property.  The seller pays the commission on a settlement, that amount is typically between 5-6% of the property's sales price. 

Both listing and selling agents handle the transaction from contract to settlment.

 

Pre-Approval versus Pre-Qualification

A pre-qualification is along the lines of an estimate of how much house you can afford and the initial stages in the house buying process.  It may also involve verbally providing estimates and not having your actual financial documents run thru underwriting.  In our area, listing agents prefer a "pre-approval letter" over a pre-qualification letter.  A pre-approval looks stronger on paper and provides more reassurance to a home owner that the buyer is well qualified.

A pre-approval letter means you have provided a lender financial documentation and have a letter possibly pending conditions before a loan is fully approved.  *This DOES NOT guarantee you will be provided a loan* as certain terms must be meet. . .appraisal, title search, verification of financials.  We always tell our clients that your financials are under a microscope once you have a ratified contract.  Check with your lender before making large moves with money whether transferring funds or spending it on new household items, buying a vehicle, whatever the case may be. 

Appraisal
 

Anyone who applies for a property loan will have an appraisal completed on the property.  An appraiser will come to the property, determine value based on other solds in the neighborhood.  In order for the buyer's loan to be approved, the property must appraise at or above the sales price agreed to by both parties. 

Commitment Letter

This is also known as the loan commitment and is provided by the lender.  Sometimes a listing agent will ask for this letter to reassure their seller that the buyer has provided all their necessary financial documents to complete the loan. 

Contingency

This refers to a condition or conditions that need to be met before a contract is legally binding.  Typically the two most common contingencies are for the home inspection and appraisal/financing. 

Ratified

This refers in contract terms to making it official or when both buyer and seller agree to contract terms/conditions. 

Conveyance

This refers to items within a property passing onto the new buyer and/or the transfer of title from one party to another. 

Time is of the Essence

We refer to this phrase as please get it done if asked!  If contract items, lender or title requests, or realtor paperwork is not completed in a timely manner, material or financial consequences could follow. 

 

Several other terms exist in real estate, these are ones we picked for purposes of this blog.  Should you have questions, feel free to contact either one of us directly for explanation.