As part of Financial Literacy Month, it’s time to turn to the real estate world. Here are three key real estate terms that you should know when buying and selling a home.
3 Key Real Estate Terms
The real estate market can be very complicated, stressful and riddled with paperwork. Getting a head start on research and background knowledge will make the entire process go more smoothly, especially for first-time homebuyers. To help you begin navigating through these uncertain waters, check out the following key real estate terms that you’ll see on written forms or hear when speaking to a real estate agent.
“Contingent” means subject to change. So when there is a contingency in a real estate deal, it basically means that the deal can change if something goes wrong. A buyer is able to back out if a condition is not met during negotiations. Common examples of contingencies include a loan contingency, an appraisal contingency, and an inspection contingency. This may sound scary and unpredictable, but it’s actually a great protection for the buyer.
Think of escrow as a third party holding onto all the money as the real estate deal moves forward. With all the legality and large sums of money involved, escrow creates a safe space for both parties. Once everything has been met and the escrow is over, the real estate deal can be completed.
Any major problems that might affect the value of the home must be disclosed to potential buyers. A seller cannot conceal structural or other significant issues. Laws vary state to state; some require a written disclosure. The buyer should always be diligent when investigating a home, prepared with questions and a home inspection.
Hopefully, these three key real estate terms are now more easily understood. When you start saving for a home or getting ready to sell a property, remember these key terms.