A Real Estate Broker’s Share

Some of the most basic real estate terms to learn when initiating your first transaction are:

Realtor or Real Estate Agent

Realtors are those individuals who have registered with the National Association of Realtors. Both real estate agents and realtors work to help buyers to locate properties and for sellers to sell their properties.

APR

APR stands for Annual Percentage Rate and this is typically listed on your offer for a mortgage loan. Your APR is typically higher than your interest rate listed on your mortgage.

Seller Note

A seller note is a financing strategy in which the property owner self financing the sale of their property to a buyer. The terms of the self financed mortgage such as the interest rate, duration of the loan and the loan length are all determined between the buyer and the seller.

Assumable Mortgage

This type of mortgage is one in which the loan and payments can simply be transferred to another person, typically a buyer.

Appraisal

When purchasing a property, it is common for the lender to require an appraisal prior to agreeing to fund the loan. An appraisal uses features about the property as well as current comparable properties in the area to determine what the present market value of the home is. Appraisals are also often required when a home owner inquires into refinancing the mortgage or for a home equity loan.

Inspection

A home inspection is common in both residential and commercial properties and is sometimes required by the lender. A home inspection involves carefully examining all portions of the property, including the interior, the exterior and the land itself. Any issues will be reported to the buyer and the seller for remedy prior to closing. Some buyers will request that items be repaired prior to the closing, some will ask for financial renumeration in the amount estimated to repair the items found in the inspection and some buyers will cancel their offer if the inspection items are perceived to be too costly.

Closing Costs

Closing costs are one-time costs that the buyer and/or the seller will be responsible for when the closing takes place, transferring ownership of a property to another party. Closing costs are in addition to the down payment applied from the buyer and can include things such as property taxes prorated, mortgage interest prorated, insurance payments prorated, fees assessed by the title company, fees assessed by the real estate agents and other miscellaneous administration fees required to process the transaction. Closing costs range, but can typically be estimated from 2-4% of the purchase price of the property.

Earnest Money

Many sellers will require a good faith deposit called earnest money when a buyer makes an offer. These funds are held in an escrow account by the title company closing the transaction. And, it is typically applied towards the down payment.

Property Taxes

These are the taxes due annually for your property which are based upon the property value. They are typically due at the beginning of the year, although some municipalities require payments semi-annually. Some mortgage companies collect a portion of real estate taxes due each month to pay the annual real estate taxes on behalf of the property owner.