As a local real estate agent, I am often asked to explain some of the more complicated terms that come up during the buying and selling process. In this article, I will break down seven terms that I believe are particularly important for buyers and sellers to understand: Pending or contingent offer, Closing Costs, Equity, Certified Funds, Due Diligence, Contingencies, and Title Commitment.
First, let’s talk about Pending Offers. Locally, we consider an accepted offer to purchase a property, as a “Pending Offer.” This means that the property is generally no longer available for other buyers to make offers on, but the sale is not yet final. A Contingent Offer is similar to a Pending Offer, but it comes with certain conditions that must be met before the sale can be completed. For example, a buyer may make a Contingent Offer that is only valid if they are able to sell their current home first. If the contingency is not met, the offer can be withdrawn by either party.
Closing Costs are another important term to understand. These are the costs associated with buying or selling a property that are typically paid at the actual time you meet to finalize the sale. These costs can include things like appraisal fees, title insurance, and legal fees. They can be substantial, so it’s important for buyers and sellers to be aware of them up front and budget accordingly. In my opinion, an experienced agent will be able to help you identify your specific closing costs before you agree to a contract.
Equity is simply the difference between the value of a property and the amount of money still owed on it. For example, if your property is worth $300,000 and there is a $200,000 mortgage outstanding, the equity you have in the property would be $100,000.
Certified Funds are funds that have been verified as genuine and available for use. For example, a cashier’s check or wire transfer would be considered certified funds, while a personal check would not. When buying or selling a property, it’s a requirement that you bring certified funds to your closing.
Due Diligence is the process of investigating a property before purchasing it. This can include things like inspecting the property and researching the neighborhood. It’s important for buyers to do their due diligence to ensure that they are making an informed decision about purchasing a property. When executed properly, this protects you from being stuck buying a house that has undesirable conditions uncovered.
Contingencies are contract conditions that must be met before a sale can be completed. For example, a buyer may have a contingency that the property must pass a mold inspection before they will agree to buy it. Contingencies can be included in both Pending and Contingent Offers and can be anything that all parties agree to in writing.
Finally, a Title Commitment is a document that outlines the terms of the title insurance policy for a property. It includes information about the property, such as its legal description, as well as any restrictions or liens that may be on the property. It is important for buyers and sellers to review the title commitment to ensure that there are no surprises when it comes to the property’s title.
In conclusion, understanding the complicated terms that come up during the buying and selling process is essential for both buyers and sellers. By understanding terms like Pending or Contingent Offer, Closing Costs, Equity, Certified Funds, Due Diligence, Contingencies, and Title Commitment, buyers and sellers can make informed decisions and navigate the process with confidence. If you have any questions about these terms or any other aspect of buying or selling a property, please don’t hesitate to reach out to your trusted real estate agent for guidance.
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