Real Estate Terms Sellers Must Be Aware Of

Real Estate Terms Sellers Must Be Aware Of

There is a steep learning curve for those that have chosen to buy a house.  If they have never been a part of the process before they may have some studying to do on the many real estate terms that are thrown around.  But once that homeowner goes to sell their house years down the line they will encounter many of the same terms in addition to some new ones. Knowing what terms mean during a sale process is going to help the sellers stay on top of every part of the process.

Common Real Estate Terms

Many terms that people encounter when buying a house will come up again when selling their house, with the first being the deed to the home.  After a house has been purchased the new owner will get a deed. This deed will show the new owners’ names and register the property. When selling, the deed is something a homeowner will have to provide for both parties to sign before transferring the property over.

A multi-listing service (or MLS) is something many buyers are familiar with because it is a great resource to find houses to buy.  These organizations hold information on houses that are for sale and provide it to professionals like real estate agents. Buyers and sellers must go through their real estate agent for a multi-listing service since it is not available to the public.

One contract called the agreement of purchase and sales is something both sellers and buyers have to sign, even though they may not be familiar with the name.  This contract shows what the time frame for the sale will be. It also specifies other conditions for the sale like the purchase price and any other details that must be decided before closing the sale.

While looking to buy a house many people use comparable homes on the market to determine if their desired house is within the right price point.  Sellers can use comparable houses or a comparative market analysis (CMA) which shows all of the similar houses that have recently sold. It is meant to be used to accurately price a house before listing it on the market.

New Terms for Sellers

A seller may want to bring certain items with them to their new home.  Those items that a seller does not want to leave in the house should be removed.  However, some are necessary to stage the home. Specifying what chattels are being taken is important to do.  

Chattels are the personal properties of the homeowner that are being taken.  It is important to designate what chattels are being taken to avoid any confusion upon closing.  Usually, these items include appliances, furniture, customized lighting fixtures or other fixtures like curtain rods or valances.  

An important term to understand when selling a house with a mortgage is equity.  The equity that a homeowner has on a property depends on the amount that they owe on the mortgage versus the appraised market value of the house.  When selling, the equity will be the payout to the homeowner if the house sells for more than what is owed to a lender.

Some mortgage companies will charge mortgage prepayment penalties.  These penalties are in place to help the mortgage lender recoup the loss of interest from a loan that was paid off early.  A homeowner can expect to pay around three months of interest when paying off their loan early to compensate for this penalty.  

To make sure the house is ready for buyers to walk through the homeowner should stage the house.  Staging consists of cleaning the home, decluttering, and ultimately moving furniture and decorations into their ideal areas.  Some homeowners choose to hire a professional but this can be costly.

Some sales will only go through if they meet certain conditions.  During a conditional sale, the buyer makes an offer and specifies the condition they need to follow through with the sale.  Many times a buyer uses this to make sure the home passes inspection and to allow them ample time to find financing to match their offer.  A seller who chooses to accept a conditional sale cannot accept any other offer until the other buyer backs out of the deal.

A homeowner that is having trouble selling their house may choose to finance a buyer to purchase the home through a vendor take-back mortgage.  This type of mortgage would be paid directly to the seller by the buyer each month, bypassing a need for a lender. While the seller will have added money in their pocket and it makes it easier to sell a home in a slow market there are some risks for choosing to sell in this way.