The real estate industry is one of the most complex to grasp and fully understand. There are many home buying terms and processes involved purchasing a home that are often misunderstood by home buyers and seller alike.
In this guide, I provide a real estate terminology glossary to help home buyers in the Joplin, MO area understand key details and information that might hear during their home buying process. While this document shouldn’t be considered a complete or extensive list – it might act as a great reference for you as you find and purchase your dream home.
I presented these terms in alphabetical order for ease of discovery. If you have questions or need more assistance with your real estate search, please contact me using the information under my profile.
This is an supplemental document added to a purchase agreement or real estate sales contract that is used to communicate additional terms, special loan items, HOW disclosures or other edits requires to the terms and conditions of the original agreement.
Sometimes referred to as a home appraisal or real estate appraisal, an appraisal is an estimate of the value of your home as compared to other homes within neighborhood. Typically this is done by a professional real estate appraiser who compares the characteristics of your home to other similar homes within a set distance. A home appraisal is required by lending institutions when they issue a mortgage.
An “As-Is” property typically indicates a situation where the seller lists the home for purchase with the understanding that they are not willing or able to perform any changes or repairs to the home during the closing process. The home seller will also not warranty repairs or appliances on the home. This is usually the default agreement for foreclosures, short sales and other properties listed for sale by a bank or lending institution.
A buyer’s agent is a licensed real estate professional who has a fiduciary responsibility to represent the party who is purchasing the real estate in question. Their job is work on behalf of the home buyer and help them locate properties to purchase, submit formal offers and negotiate on their behalf and ultimately help them through the closing process.
A real estate closing usually represents that date where a real estate transaction is considered final and when ownership is formally transferred from the selling party to the buying party. Typically, this is the day where all of the financial transactions and title recordings for the property will happen to payoff mortgages (for a seller), transfer escrow funds, accept new mortgage funds (for a buyer), collect transaction fees (to mortgage brokers, title companies and real estate agents), and more.
The closing costs represent the various fees and charges that are involved in a real estate transaction, and which are paid on the date of the closing. Some items typically included in the closing costs are lender fees, title company fees, real estate agent commissions, insurance fees, prorated taxes, HOA fees, and other items identified on the settlement statement.
An FHA loan (Federal Housing Administration) is one of the most common loans issued by lending institutions because the federal government provides mortgage insurance to the lending institution in case of default by the homeowner. These loans are popular with home buyers because they require a minimal down payment obligation (3.5% or 10% down) to obtain the home. However, there are key requirements with FHA loans that must be met by home buyers (in the form of credit scores) and by the home seller (home appraisals) in order to qualify.
FHA 203k Loan
This is another form of loan that is backed by the Federal Housing Administration that allows for future renovations to be included in the purchase price of the home. This is a benefit to the home buyer because they can finance the costs needed for repairs and upgrades to a home considered a “fixer-upper”. 203kloans, however, usually have higher interest rates that other loan products.
A loan contingency is an additional document (addendum) in the purchase agreement that allows the home buyer to back of a deal and recoup their deposit if they are unable to obtain financing for the home.
A Realtor® is a professionally licensed and active real estate agent who is also a member of the National Association of Realtors (NAR). Members of this association have more stringent requirements and standards to uphold including a Code of Ethics that is maintained by each professional in every real estate transaction – and solely for the benefit of buying and selling parties.
A seller’s disclosure is a type of document or addendum to a purchase agreement that identifies potential issues, impediments or other items that could affect the rights and abilities of the homeowner to purchase and/or use their home. Usually this document will also include any material or personal items that will not be included in the real estate purchase.
A VA Loan is a type of mortgage product that is guaranteed by the government through the Department of Veterans Affairs. VA loans are only available to active, retired and veterans of the military and their spouses and provide low or no down-payment options for purchasing a home. However, there are typically additional home related requirements and stricter verification’s required to pass inspection.