If you are hoping to sell your house fast in Houston, there are some real estate terms you need to know and understand. Real estate terminology and jargon is not something that is intuitive, and if you have not had much experience buying or selling houses will likely seem overwhelming. To help you out, we put together a list of some of the most important real estate terms including some much lesser-known ones.
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List of Terms
An appraisal contingency is a clause that allows a buyer to back out of a purchase agreement if a home’s appraised value is less than the sale price. An appraiser hired by the buyer’s lender evaluates the value of the home to ensure that the loan is secured by an appropriate home value.
An appraised value is an evaluation of a property’s value by a professional appraiser. This can be done during the mortgage origination process or by the buyer or seller privately to help determine the value of the property. An appraisal can also be used for tax purposes or after a divorce.
A property marketed in “as is” condition usually indicates that the seller is unwilling to perform most if not all repairs. It could also mean that it is priced “as is”, which is typically lower than market pricing in the area. As is does not mean that the buyer is not allowed to do an inspection of the property before buying, as this would be listed as a separate “inspection contingency” we will discuss later.
The assessed value of a property helps determine how much a homeowner will need to pay in property taxes. The property appraiser will take into account location information, inspection information for the home, and recent home sales in the area.
Carrying Costs/Holding Costs
The carrying costs are the costs you facing each month to own the home. This includes things like your tax payments, insurance premiums, utility bills, and maintenance costs. (Check out the holding costs example in this article)
A clear title means that there aren’t any other ownership claims to the property, nor are there any liens against the house.
Closing is when the home sale finalized. Everyone has signed all documents, all money has been paid. Once all of these items are completed, then a buyer’s access to the property is then provided, and the buyer is considered the new homeowner.
Closing costs are an assortment of fees, including fees charged by: a lender, the title company, attorneys, insurance companies, taxing authorities, homeowner’s associations, real estate agents, and other closing settlement related companies. These closing costs are typically paid at the time of closing.
Comparative Market Analysis
A comparative market analysis, or CMA, provides information to help determine the value of the property. It takes into account recent sales to help you figure out what your house is currently worth.
A contingency is a stipulation in the contract that needs to be met before the contract is legal and binding. An example would be a “financing contingency“. Contingencies are important real estate term to understand, as these are in almost all traditional contracts.
A covenant formal agreement in which one party gives the other certain assurances. These are rules places on a property, usually by a homeowner’s association or builder that sets requirements or limitations of what can be done to a property by the homeowner. An example would be covenants of warranty in a warranty deed.
A delinquency occurs when a homeowner defaults on their loan. This is when a lender will actively begin the collections process, even initiating foreclosure.
A disclosure is a document that the seller provides the buyer, letting them know about any problems, defects, or known issues with the property. Failing to disclose a problem with your home can be considered fraud.
Earnest money deposit (EMD)
An earnest money deposit (EMD), sometimes referred to a “good faith deposit”, is the initial funds that a buyer is asked to put down once a seller accepts the buyer’s offer. It shows not only that the buyer is serious about buying, but that they are also willing to put their money where their mouth is.
An encumbrance is a claim against the property that restricts its transfer or use. A property lien is considered an encumbrance.
The escrow holder is the agent and depositary (impartial third-party) who collects the money, written instruments, documents, personal property, or other things of value to be held until the happening of specified events or the performance of described conditions, usually set forth in mutual, written instructions from the parties.
A financing contingency is a clause or addendum (also known as a mortgage contingency) in an offer contract that allows a buyer to back out of a deal and keep their deposit if they are unable to secure a mortgage with specified terms during a fixed period of time. This is a common real estate term.
A foreclosure occurs when a homeowner fails to make their mortgage payment, typically for 90 days. The owner waives all rights to the property and the home becomes the possession of the bank. A foreclosure will start by issuing a notice of default, which must be posted on the property as well as publicly.
Home sale contingency
A home sale contingency is for a buyer to indicate to a seller that part of their condition to purchase the seller’s property relies on the buyer’s ability to finalize a close on their current property. This is often negotiated with a clause in a contract or with an addendum to a contract. An example of how such a contingency can be used would be if a buyer needs to sell their property in order to have the down payment required on the purchase of the new property, or would rather use their sale proceeds instead of their savings to make the down payment.
Inclusions are personal property that is included in the home sale. This can be things like appliances, furniture, or outdoor items.
Also known as a “due diligence contingency,” the inspection contingency is a clause sometimes offered in a purchase agreement that grants buyers a predetermined amount of time during escrow to perform any necessary inspections. For a traditional house sale, you will almost always see this real estate term.
Market value is a valuation of the property in which the parties are free of pressure to complete the transaction and all details of the house are known. It can be formulated by finding the average between the highest price a buyer would pay and the lowest price a seller would accept.
A mechanic’s lien is a lien against the property which will secure the payment of contractors, laborers, and those who provide materials.
While amortization refers to paying off your loan, negative amortization happens when the payments you are making aren’t enough to cover the interest and the amount you owe becomes greater as opposed to less.
The option period is a much more common, but important real estate term to know. The Option Period in Texas is a specified number of days set forth in a real estate contract which allows the buyer to terminate the contract for any reason. This option, when written into a real estate contract, creates the right to terminate the contract within a certain number of days for a specified price without risking the earnest money deposit
Purchase and sale agreement (PSA)
A purchase and sale agreement is commonly referred to a written contract between the buyer and seller, which outlines the terms of the parties to sell and purchase real property.
A quitclaim deed transfers the interest in real property from one person to another.
A sale-leaseback occurs when a buyer purchases a property and then leases it back to the occupant.
A seller’s disclosure is a disclosure by the seller of information about the property, or which could affect a buyer’s decision to purchase the property, all of which to the best of the seller’s knowledge. This is important, as if it is proven that a seller had known defects that were not disclosed, legal action could be brought against them.
A short sale occurs when an owner sells their property for less than what is owed, allowing the lender to recoup some of the cost of the loan as an alternative to foreclosure.
The title refers to who has legal ownership and who can legally use the property. Just like a car, it is how you claim ownership of the property.
A title defect is when there is an adverse claim, somewhere in the chain of ownership. It can have an impact on who has legal rights to the property.
Voluntarily giving up a right, claim or privilege. It removes liability for the other party in the agreement.
When trying to sell your house fast in HOUSTON, you will likely hear a lot of real estate jargon thrown your way. It’s important to know what is being said and how the terms used will impact you. Do your homework before selling your house fast in HOUSTON so you don’t miss something you should have been aware of!