The real estate industry, like most others, uses jargon that is sometimes difficult to understand. Consider this a primer to learning a few of those terms! Below you have a step by step definition that will make you sound “in the know” when buying or selling a home in Millburn, New Jersey!
“CLOSING” – Closing refers to the final steps in securing a home purchase. When a property is sold, it is referred to as “closed.”
“OFFER” – Buyers “offer” a contracted rate on a home for sale. A seller may receive many “offers” and is not required to accept any. This is why when a home buyer finds their dream home, it is important to get the “offer” in quickly. Full price “offers” are looked upon favorably, but even “offers” of up to ten percent beneath the asking price may be an acceptable practice, too. There are several variables to discuss with a knowledgeable real estate agent before submitting a low “offer,” however, so do your homework. Comparing a home to others in the local market and recognizing the length other homes have been listed are helpful to consider prior to submitting or accepting any “offer” in real estate.
“DEPOSIT” – The “deposit” or earnest money pledged with an “offer,” illustrates a commitment from the buyer to the seller. Generally the “deposit” amount is determined based on a percent of the home’s purchase price and applies to the final purchase price of the home for sale. This deposit is held “in trust” until the purchase is completed. As a potential home buyer, your “deposit” will only be accepted if your “offer” is accepted. Occasionally a home buyer decides not to move forward with the home sale which can result in the loss of the “deposit.”
“CONTINGENCIES” – Contingencies are requirements outlined in the contract that must be fulfilled prior to “closing,” often relating to financing or the house inspection. Contingencies generally last for 30 days, although the time frame depends greatly on market conditions.
“CONTRACT” – When a home seller accepts an “offer,” the “contract” is then created. A legal and binding document which guarantees the buyer will purchase the property when all contingencies are met. Transaction details are included in the contract, such as the property selling price and description, any important dates and contingency clauses.
“CLOSING STATEMENT” – Required by the Department of Housing and Urban Development to ensure accountability of all finances relating to the sale and purchase of a home. Real estate commission, escrow securities and deposits, and any other fees must be outlined in this document. The buyer and seller will each receive a copy of the “Closing Statement” per the Real Estate Settlement Procedures Act prior to “closing.”
“CLOSING COSTS” – These are the actual costs of “closing” and include securing title, loans, appraisals, credit reports, inspections,brokers, taxes and document preparation.
Hopefully this tutorial has helped you feel a little more familiar with real estate terms, so that whether you are buying or selling a home in Millburn, New Jersey, you can feel a bit more at ease.