A to Z's of Selling
Following are some common terms used throughout the homeselling process. If you have any other questions or terms that need to be defined, please feel free to emall us or contact a Burnett Realtor® directly.
Abstract
of Title
The condensed history of a title to a particular piece of real estate. It covers the real estate from the first time it was sold until
the present.
Agency
The relationship between the principal broker, its agent and the
client being represented.
Annual Percentage
Rate (APR)
A standardized method of calculating the cost of a mortgage that
may include points, loan fees, interest or credit costs.
Appraisal
A written report by a licensed appraiser that states the estimated
value of the property.
Buydown
An initial lump-sum payment is made which temporarily reduces the
buyer's monthly payments over the first few years.
CMA
"Comparative Market Analysis" is an estimate of value
prepared by a real estate agent based on comparable sales in the
recent past and usually suggests an asking price and possible sales
price for a property.
Closing
The meeting at which the sale of the property is finalized. The
buyer signs mortgage documents, pays closing costs, and
signs documents to transfer title of ownership from the seller to
the buyer.
Closing Costs
The fees incurred by the buyer and/or seller that are paid at the
time of closing. These may include, but are not limited to down payment,
loan fees and escrow fees.
Contingency
A condition that must be met before the sales contract is legally
binding. For example, the contract may be subject to satisfactory
completion of the home inspection.
Deed
The legal document which transfers title of the property from the
seller to the buyer.
Down Payment
The amount of the property's purchase price that a buyer pays in
cash at the time of closing.
Earnest Money
Money that the home buyer pays with the purchase agreement that shows
evidence of good faith.
Good Faith
Estimate
A written estimate of closing costs for a home buyer that is provided
by the mortgage lender.
Home Inspection
A visual inspection by a professional home inspector that produces
a written report of the structural and mechanical condition of the
property.
Home Warranty
A protection plan purchased by the buyer or the seller that warrants
against possible unforeseen failure of systems within the property.
HUD-1 Statement
A final disclosure statement stating the costs to both the buyer
and seller that are due at the time of closing.
Legal Description
An exact description of property as written by a surveyor.
Loan-to-Value
The ratio of the amount of the loan value to the selling price of
the property.
Lock
The lender's guarantee that an interest rate will be good for a
specified amount of time.
Mortgage
A legal document that uses the property as collateral to secure
payment of a debt.
Offer/Purchase
Agreement
A written agreement between a seller and a buyer which states the
terms and conditions under which the property will be sold to the
buyer.
Origination
Fee
A fee paid to a lender for processing a loan application.
PITI
The acronym which typically refers to the components of a mortgage
payment (Principal, Interest, Taxes and Insurance).
Points
A point is equal to one percent of the mortgage loan value.
Pre-Approval
The loan originator has verified the claims of assets and earnings
as stated on the mortgage loan application. The borrower receives
a letter which states that the bank is willing to grant a loan to
the client based on a specific purchase price limit.
Private Mortgage
Insurance (PMI)
Insurance written by a private company that protects the mortgage
lender against default by a buyer who has typically put less than
20 percent down on a mortgage.
Title
A legal document that states a person's right of ownership of a
particular piece of property.
Walk-Through
Just before closing the buyer "walks through" the home
to assure that it is in the same condition as when the purchase
agreement was written.
