Residential real estate
Residential real estate is property specifically developed as a place for people to live. It ranges from single-family houses to multi-family apartment buildings.
A real estate agent is someone who is licensed in a state to represent buyers and sellers of property. During the buying process, they help you find and tour properties that meet your criteria, submit offers and negotiate with the seller’s agent. During the selling process, they help get your house ready for sale, list and market it, manage showings and open houses, negotiate with the buyer’s agent, and draw up a purchase and sale agreement.
A Realtor is a real estate agent or other professional who belongs to the National Association of Realtors (NAR). Belonging to the NAR isn’t required to be an agent, but membership and agreeing to the NAR’s code of ethics is required to use the Realtor designation.
While some agents work for a flat fee, most real estate agents are paid through a commission, a percentage of the sale of your property. Figures vary, but are typically three to six percent of a home’s sale price.
A real estate broker is a real estate agent who has gone through additional licensing and training that legally authorizes them to conduct transactions involving property. The broker is the one who reviews the final contracts (and in fact, may have drawn up the original boilerplate contract) to ensure that they are compliant with state and local laws and regulations. Real estate agents must work under or through a real estate broker, if they are not one themselves.
For sale by owner (FSBO), pronounced “fizz-bow,” is a term for people who sell their homes themselves without using a real estate agent. Sometimes buying a home that is FSBO can result in significant cost savings, but it varies significantly based on the seller’s personality, experience, and the timeline for selling.
A mortgage is a type of loan specific to real estate. A long-term debt that’s repaid in monthly installments, it uses the property you’re purchasing as collateral. Mortgages charge fixed or variable interest rates.
Commercial real estate is property on which a business is operated; it’s designed to generate income. Types of commercial real estate include retail spaces, warehouses, factories, office buildings, and apartment complexes of more than four units.
A buyer’s agent represents a person or party seeking to purchase real estate.
Contingencies are clauses in a purchase and sale agreement specifying an action or requirement that must be met (or met within a certain timeframe) for the transaction to close. Common ones include home inspection, mortgage approval, sale of prior home/purchase of new home, appraisal, and title search. If the contingency is not fulfilled, it allows you to back out of the contract with minimal or zero consequences.
A counter-offer is a response to a buyer’s bid. It’s a part of the negotiating process between buyers and sellers.
A home inspection usually occurs after a home is in contract — that is, buyer and seller have signed an initial agreement. Conducted by a professional inspector, it evaluates the home’s condition, reviewing the property to make sure it is safe, inhabitable, and up to current building codes and regulations. It indicates any dangers or need for repairs.
A real estate purchase contract or REPC (pronounced “rep see”) is a legally binding document that outlines the terms and conditions of a property sale or transaction. It will include things like the price the buyer’s willing to pay, the timeline for buying the property, any repairs or other concessions for the seller to make, and any contingencies that must be satisfied for the sale to conclude. Some states refer to REPC as a purchase and sale agreement (the initial contract) or a purchase agreement (the final contract, signed at closing).
The walk-through usually refers to the final tour of the property a buyer takes right before the closing. The goal is to ensure the home is in the same condition it was when you agreed to buy it, or that the seller has indeed made agreed-upon repairs.
A home appraiser is a qualified individual who determines the value of a home, usually either to assess property tax or as a basis for a mortgage. They will consider the size, quality, and location of the property as it compares to other similar properties nearby.
Closing costs are the cost of making the transaction of buying or selling a home happen. They can include real estate agent commissions, lending fees, mortgage discount points, property taxes, and title fees.
The down payment is the amount of cash a buyer is paying towards the property; the rest is being financed by a mortgage. Conventional mortgages typically require a down payment that’s 20 percent of the home purchase price.
During the home buying process, escrow refers to funds being held in a neutral place, by a disinterested third party (neither the buyer nor the seller). Earnest money, the purchase sum, and administrative fees might all be held in escrow. Usually, a title company or closing agent will manage the escrow account and handle transferring funds to and from sellers, buyers, and their respective lenders throughout the transaction.
An escrow account refers to the financial instrument, managed by a third party, holding in escrow various funds involved in a real estate transaction. While the home is in contract, the account usually holds a buyer’s initial deposit on the home. After the sale closes, an escrow account might hold a homeowner’s property taxes, mortgage insurance, and homeowners insurance premiums. Some lenders require mortgage-holders to have these accounts, to make sure that certain bills are paid on time.
A mortgage broker acts as a middleman between buyers and lenders. They take your information and shop it around to multiple mortgage companies to get you a comparative listing of loans and their interest rates and terms.
An online lender is a mortgage lender that doesn’t have a brick-and-mortar location. It operates via its website or platform, and the entire loan process is done remotely. Often its fees and interest rates are lower, because it has less overhead.
A pre-approval is confirmation from a lender saying they agree in principle to extend you a mortgage, up to a certain amount. Some real estate agents require you to get pre-approved before they’ll take you on as a client, and many sellers require buyers be pre-approved before bidding on a house.
Title insurance is coverage for mortgage lenders and homebuyers against problems with a property’s deed once ownership is transferred. For example, if the wrong person inherited a property and then sold it to you, title insurance would help protect you against losing your home to the person who actually had the rights to it.
A comparative market analysis (CMA) is something a real estate agent will complete to determine a home’s value and the asking price when preparing a listing. They will look at comparable homes in your area that have recently sold to determine.
The fair market value of a home is the price a buyer would be willing to pay a seller for a home in an open market. It tries to disregard current supply