What Words Do I Need to Know Buy Real Estate
Real Estate lingo... Why is it so freakin confusing ? In every industry we have our typical jargon that we use not realizing that people often don't understand what the heck we're talking about ! Don't talk to me about computers! Today I'm gonna talk to you about the most used lingo most jargon that we in the real estate industry use that is misunderstood; join me on the other side! Hey! Welcome back! That real estate lingo - that jargon... that terminology that we use every single day can be totally confusing listen don't feel bad about it I don't understand a word when you speak computer-eez! rankly most Realtors don't even know how to pronounce the word we're Real-tors guys not Real-A-Tors! )
I'm speaking to realtors here) So let's talk about what is this jargon so that it's in normal understandable words that you can feel comfortable using. I am Susan Thetford with Parks Properties here in the Nashville Tennessee area. I am a native Nashvillian, lifelong realtor, mom of two great kids, and my goal here on this channel is to talk about all things Nashville ,real estate, and design-- my three passions; if that's of interest to you, I invite you to subscribe to my channel- tap that Bell so that you don't miss anything.
I do a new video every single week and I'd hate to have you miss out on anything! If you or anyone you know is considering buying a home in the near future then reach out to me for this buyer's guide. This will give you from top to bottom what to expect in the home purchase process-- far more than just the lingo, but the whole process. The first word we'll talk about is "escrow" Now that can mean different things in different states -I'm talking about here in the state of Tennessee. Check with where you're from but it typically means it's funds that are held by a third party- not the seller, not the buyer- and typically now (it's held by) no longer the the buying and selling company either that represents the buyer- typically here in Nashville it's the title company that will hold that money.
The money that's held is typically "earnest money" Earnest money is the amount of money that is offered in a purchase and sale agreement once the the agreement has been agreed upon by all parties. That earnest money is an amount of money held by escrow that will apply to the purchase price when it closes --- it's actually good-faith ,just put it that way. It's a "good-faith" thing. So if the sales price is $300,000 earnest money is $5000 that's held by an escrow agent and when the property closes, that $5000 applies to the purchase price of the $300,000. Got it?
The next term that we're going to speak of is an "Appraisal" Again this is a third party valuation of what the home is worth it typically happens when there is a mortgage. so let's talk about a scenario; the buyer and seller have agreed on a purchase price, the buyer typically will have a loan, the bank actually has more at stake in the purchase of this home than the buyer who is typically putting down 3% 10% 15 %20% percent . the bank- the lender is offering 80% percent or more, so the lender wants to know that "if I lend you this money is the property worth what I'm lending it for," what you're buying it for... so it's a third-party evaluation based on comparable sales within the same area of similar size of simpler style of similar updates. it is based on hard numbers of recent sales in the last six months if at all possible within a one-mile radius or closer to the subject property.
That appraisal is really important and that may be a part of a contingency- we'll get to that next. So, in real estate we have a lot of acronyms "LTV" is the loan-to-value ratio loan-to-value meaning $100,000 home $80,000 loan the loan to value is 80% "APR" is complicated; put it this way. Here's the basic explanation- you may well go to 3 different lenders to get their (bids) what is the interest rate they'll charge? What are the loan fees they'll charge? How much is it going to cost to buy this home? it's far more than simply the interest rate. One lender may offer you a 4% interest rate and charge 1% origination fee another one may give you a 4.25% rate but charge you a half percent origination fee... you really need to compare apples and apples and that's what you must do- compare the APR on each loan that a lender is offering you to see which might be the best deal for you.
It's a complicated situation that's why you need to get with a trusted adviser- a trusted lender. If you're here in the Nashville area, reach out to me. I can give you several that I've worked with for years. The next word that you hear bandied about a lot is "appreciation" what does that mean? It is the increase in value of a piece of property since it was originally purchased... so maybe a home was bought seven years ago here in Nashville for $300,000 today you could sell it for $500,000 the appreciation is a percentage of value year over year. what you purchased it for, of what you could sell it for now (and the percentage of )change. That will be different from place to place and year to year in location to location.
Often what people really want to know is, what is my "Equity" to give you what your equity will be the difference between the sales price (when you sell) and the loan amount the day you close--that is your "equity" which brings us to another a word "Amortization" that is the amount of the original loan that has been decreased over time. Every single month when you pay your monthly payments, a little bit of that loan amount is being chipped away. In the beginning, it's mostly interest you're paying but as time goes on each monthly payment is paying a little bit more of the loan down... a little bit less interest (in each payment) so amortization means the difference in the loan amount from the beginning to where you currently are in your loan seasoning or process.
Another often misunderstood word is "Vontingency"; every single offer typically has several contingencies in that offer. And, again every single bit of this is negotiable so that's where you need someone who totally understands this process but a contingency typically will be maybe subject to the appraisal. Contingent upon the appraisal being of value of the purchase price or better; that would bean appraisal "contingency" meaning that if the home is purchased for three hundred thousand and it only appraises for two hundred and eighty thousand that contingency, if it's in the contract, potentially gives the buyer the right to back out of the contract or it can be negotiated and there's a lot that can happen... that's the bare essentials.
Another contingency that is typical is an "inspection contingency". again that goes back to the buyer and seller have agreed on a purchase price, now it's subject to an inspection such that the buyer pays an inspector to come in and look at all the essential parts of the home- basically gives them a full understanding of what to expect (it's like an owner's manual for this home) based upon that... the buyer may determine " I don't want this house" or he may say "I want this house if you'll make these repairs" That's a contingency.
and it all depends on how it's written in your offer as to what can happen. Next a third very typical contingency is simply "loan approval" the buyer hopefully has been approved by the lender * before even looking at homes* based on information given, the buyer should be approved for the loan that he's asking for but the contract is still contingent upon that loan being approved and finalized (by the underwriters) if the last minute the buyer maybe loses his job or any number of things can happen that loan may not be approved, If that's the case, that contingency if correctly written in the contract and all other things are met, that contingency could potentially allow the buyer to nullify the contract, not have any more liability, and receive his earnest money back. So, as you can see, there could be quite a few contingencies that are in a purchase and sale contract. In all probability everything will go just fine but those contingencies do offer an "out" if properly prepared and properly executed .okay this is exciting we're finally at the homestretch at the "closing" and "possession" again contracts have to specify every piece of this but typically what happens in the closing is the loan if there is one is all that paperwork is signed by the buyer the funds are transferred to the seller the seller signs off that he sold the house he's agreed on all the numbers and then that sale is recorded; until that sale is recorded ,the buyer can't have possession.
Something that often happens here in Tennessee is the the contract states possession being "date of deed" now it can be date of deed plus three days or 24 hours that's all negotiable- but if it says "date of deed" that doesn't necessarily mean the date of the closing because of this--- possession it not considered done (closed) until it's recorded. if the sale or the closing happens to happen at 3:00 p.m. in the afternoon it's not going to be funded until the paper work came transferred (to all parties) funding hasn't gone through because bank cut-off at 3:00 pm and it's not been sent to the courthouse for recording... so that possession may not be able to occur until the next day after that recording has happened. if you need to have possession the night of the closing you better set your time for closing up for 8:30 9 o'clock in the morning !
So there. you have a very brief catalogue of our industry jargon ,the real estate lingo that can make you so crazy. If I can help you in any way please reach out to me and if you'd like this buyer's guide that includes a lot of that lingo, reach out to me. I'm more than happy to send it to you. If you're here in the Nashville area, let's have a cup of coffee! Again, "like" subscribe to this channel and if you are looking for some great financing information, I think you should check out one of these two videos. Have you heard of a recast? that's helping people tremendously ! I look forward to talking! Outtake....okay frog it's time to go!
What Words Do I Need to Know Buy Real Estate
I'm speaking to realtors here) So let's talk about what is this jargon so that it's in normal understandable words that you can feel comfortable using. I am Susan Thetford with Parks Properties here in the Nashville Tennessee area. I am a native Nashvillian, lifelong realtor, mom of two great kids, and my goal here on this channel is to talk about all things Nashville ,real estate, and design-- my three passions; if that's of interest to you, I invite you to subscribe to my channel- tap that Bell so that you don't miss anything.
I do a new video every single week and I'd hate to have you miss out on anything! If you or anyone you know is considering buying a home in the near future then reach out to me for this buyer's guide. This will give you from top to bottom what to expect in the home purchase process-- far more than just the lingo, but the whole process. The first word we'll talk about is "escrow" Now that can mean different things in different states -I'm talking about here in the state of Tennessee. Check with where you're from but it typically means it's funds that are held by a third party- not the seller, not the buyer- and typically now (it's held by) no longer the the buying and selling company either that represents the buyer- typically here in Nashville it's the title company that will hold that money.
The money that's held is typically "earnest money" Earnest money is the amount of money that is offered in a purchase and sale agreement once the the agreement has been agreed upon by all parties. That earnest money is an amount of money held by escrow that will apply to the purchase price when it closes --- it's actually good-faith ,just put it that way. It's a "good-faith" thing. So if the sales price is $300,000 earnest money is $5000 that's held by an escrow agent and when the property closes, that $5000 applies to the purchase price of the $300,000. Got it?
The next term that we're going to speak of is an "Appraisal" Again this is a third party valuation of what the home is worth it typically happens when there is a mortgage. so let's talk about a scenario; the buyer and seller have agreed on a purchase price, the buyer typically will have a loan, the bank actually has more at stake in the purchase of this home than the buyer who is typically putting down 3% 10% 15 %20% percent . the bank- the lender is offering 80% percent or more, so the lender wants to know that "if I lend you this money is the property worth what I'm lending it for," what you're buying it for... so it's a third-party evaluation based on comparable sales within the same area of similar size of simpler style of similar updates. it is based on hard numbers of recent sales in the last six months if at all possible within a one-mile radius or closer to the subject property.
That appraisal is really important and that may be a part of a contingency- we'll get to that next. So, in real estate we have a lot of acronyms "LTV" is the loan-to-value ratio loan-to-value meaning $100,000 home $80,000 loan the loan to value is 80% "APR" is complicated; put it this way. Here's the basic explanation- you may well go to 3 different lenders to get their (bids) what is the interest rate they'll charge? What are the loan fees they'll charge? How much is it going to cost to buy this home? it's far more than simply the interest rate. One lender may offer you a 4% interest rate and charge 1% origination fee another one may give you a 4.25% rate but charge you a half percent origination fee... you really need to compare apples and apples and that's what you must do- compare the APR on each loan that a lender is offering you to see which might be the best deal for you.
It's a complicated situation that's why you need to get with a trusted adviser- a trusted lender. If you're here in the Nashville area, reach out to me. I can give you several that I've worked with for years. The next word that you hear bandied about a lot is "appreciation" what does that mean? It is the increase in value of a piece of property since it was originally purchased... so maybe a home was bought seven years ago here in Nashville for $300,000 today you could sell it for $500,000 the appreciation is a percentage of value year over year. what you purchased it for, of what you could sell it for now (and the percentage of )change. That will be different from place to place and year to year in location to location.
Often what people really want to know is, what is my "Equity" to give you what your equity will be the difference between the sales price (when you sell) and the loan amount the day you close--that is your "equity" which brings us to another a word "Amortization" that is the amount of the original loan that has been decreased over time. Every single month when you pay your monthly payments, a little bit of that loan amount is being chipped away. In the beginning, it's mostly interest you're paying but as time goes on each monthly payment is paying a little bit more of the loan down... a little bit less interest (in each payment) so amortization means the difference in the loan amount from the beginning to where you currently are in your loan seasoning or process.
Another often misunderstood word is "Vontingency"; every single offer typically has several contingencies in that offer. And, again every single bit of this is negotiable so that's where you need someone who totally understands this process but a contingency typically will be maybe subject to the appraisal. Contingent upon the appraisal being of value of the purchase price or better; that would bean appraisal "contingency" meaning that if the home is purchased for three hundred thousand and it only appraises for two hundred and eighty thousand that contingency, if it's in the contract, potentially gives the buyer the right to back out of the contract or it can be negotiated and there's a lot that can happen... that's the bare essentials.
Another contingency that is typical is an "inspection contingency". again that goes back to the buyer and seller have agreed on a purchase price, now it's subject to an inspection such that the buyer pays an inspector to come in and look at all the essential parts of the home- basically gives them a full understanding of what to expect (it's like an owner's manual for this home) based upon that... the buyer may determine " I don't want this house" or he may say "I want this house if you'll make these repairs" That's a contingency.
and it all depends on how it's written in your offer as to what can happen. Next a third very typical contingency is simply "loan approval" the buyer hopefully has been approved by the lender * before even looking at homes* based on information given, the buyer should be approved for the loan that he's asking for but the contract is still contingent upon that loan being approved and finalized (by the underwriters) if the last minute the buyer maybe loses his job or any number of things can happen that loan may not be approved, If that's the case, that contingency if correctly written in the contract and all other things are met, that contingency could potentially allow the buyer to nullify the contract, not have any more liability, and receive his earnest money back. So, as you can see, there could be quite a few contingencies that are in a purchase and sale contract. In all probability everything will go just fine but those contingencies do offer an "out" if properly prepared and properly executed .okay this is exciting we're finally at the homestretch at the "closing" and "possession" again contracts have to specify every piece of this but typically what happens in the closing is the loan if there is one is all that paperwork is signed by the buyer the funds are transferred to the seller the seller signs off that he sold the house he's agreed on all the numbers and then that sale is recorded; until that sale is recorded ,the buyer can't have possession.
Something that often happens here in Tennessee is the the contract states possession being "date of deed" now it can be date of deed plus three days or 24 hours that's all negotiable- but if it says "date of deed" that doesn't necessarily mean the date of the closing because of this--- possession it not considered done (closed) until it's recorded. if the sale or the closing happens to happen at 3:00 p.m. in the afternoon it's not going to be funded until the paper work came transferred (to all parties) funding hasn't gone through because bank cut-off at 3:00 pm and it's not been sent to the courthouse for recording... so that possession may not be able to occur until the next day after that recording has happened. if you need to have possession the night of the closing you better set your time for closing up for 8:30 9 o'clock in the morning !
So there. you have a very brief catalogue of our industry jargon ,the real estate lingo that can make you so crazy. If I can help you in any way please reach out to me and if you'd like this buyer's guide that includes a lot of that lingo, reach out to me. I'm more than happy to send it to you. If you're here in the Nashville area, let's have a cup of coffee! Again, "like" subscribe to this channel and if you are looking for some great financing information, I think you should check out one of these two videos. Have you heard of a recast? that's helping people tremendously ! I look forward to talking! Outtake....okay frog it's time to go!
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