Selling your home: The Terms!
You’re ready to sell your home, awesome!
You have had a yard sale and your home is staged. The landscapers have been by and now there is instant curb appeal. You contact your real estate agent and ask enthusiastically, “What’s next?”
The agent starts rambling about comparables in the area and the fair market value. She goes on to say eventually you will have an appraisal and this value will be important for closing and loan acceptance, underwriting, title search, transfer tax, inspection report, due diligence, blah, blah, blah….Your eyes, and ears, slowly glaze over and your back in elementary school lost in the basics of order of operations!!
Take a deep breath. This is why you have an agent, and if you have a good one she or he will explain the process more than once. If you haven’t bought or sold a home, there probably hasn’t ever been a reason for you to understand the real estate jargon, so give yourself a break.
Here are some initial terms and their meanings you will need to know when starting the process to SELL your home. When buying, there are different terms and processes you would need to be concerned about, but let’s just keep it simple for now!
You will want to set a price for your home and your agent will be able to help you do that by averaging home sales in the area to figure a good price. It also depends on your need and urgency for selling your home.
Let’s start with those:
The valuation placed on property by a public tax assessor for purposes of taxation.
This is what your tax rate is based on and is NOT necessarily going to reflect what homes will sell for in the area.
Recent sales of similar properties in nearby areas and used to help determine the market value of a property. Also referred to as "comps."
Your agent should have this information available for you and depending on
Fair market value
The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.
After reviewing the comparables and assessing your personal situation, you can settle on a sale price that fits closing with the fair market value.
A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby.
If the buyer is taking out a loan to purchase a home, most banks will require an appraisal in order to ensure the home is worth the loan amount.
An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property. Since an appraisal is based primarily on comparable sales, and the most recent sale is the one on the property in question, the appraisal usually comes out at the purchase price.
An individual qualified by education, training, and experience to estimate the value of real property and personal property. Although some appraisers work directly for mortgage lenders, most are independent.
The banks will require a licensed appraiser to find the “appraised value”. As long as the appraised value of the home meets or exceeds the buyer’s loan amount, the bank should not have a problem with the loan amount requested.
There are hundreds of real estate terms. The above terms are just a FEW to start understanding the process of selling.
All terms retrieved from Realestateabc.com
RealEstateabc.com. (2017) Real Estate & Mortgage Resources: Real Estate Terms, Definitions and Dictionary. Retrieved from http://www.realestateabc.com/glossary/