Terrie O'Connor Realtors Real Estate School

A Homeowner's Association is when a group of homeowners in a community, such as a condo, join in paying fees that cover the maintenance of the entire property.

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The interest rate for an adjustable-rate mortgage changes periodically. You might start with lower monthly payments than you would with a fixed-rate mortgage, but fluctuating interest rates will likely make those monthly payments rise in the future.

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The fair market value of a property is the price a property would fetch if it was put up for sale under current conditions. Determining fair market value usually requires a comparative analysis of the current market and housing prices. However, in cases where a property is exceptionally unique — such as if it were owned by somebody famous — fair market value can be difficult to determine.

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Earnest money is cash, usually held in an escrow, that shows the seller that the buyer is serious about going through with the transaction. With earnest money, the seller can remove the listing from the market with confidence. Earnest money is often 1% - 3% of the sale price.

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Conventional mortgages are among the industry’s most common loan offerings. In fact, many homebuyers choose a traditional 30-year conventional mortgage when financing their property purchase. However, conventional mortgages are not backed or insured by a government entity, so they can require higher down payments or mortgage insurance.

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Put simply, the chain of title is the backstory of a property. It’s a record of who built the home, how much it cost, how long they lived there, and how many previous owners have either owned or occupied the property.

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Sometimes the terms “real estate agent” and “real estate Broker” are used interchangeably, but the truth is real estate agents sell real estate on behalf of a brokerage firm. A brokerage is a firm consisting of agents who conduct business under a licensed Broker.

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The pre-approval process involves a potential lender or bank reviewing an individual's finances, including their income, assets, and credit history, to determine how much money can likely be borrowed.

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Home equity line of credit (also referred to as a HELOC) is a second mortgage that allows a homeowner to borrow money against their home's value.

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An exclusive listing is when a seller commits to working with one specific broker and a designated agent on the sale of a property.

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During the home buying process, your money will be placed "in escrow" and is protected by a third party until the real estate transaction is closed.

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The down payment is the amount of money a buyer has saved in order to purchase a property. This can typically range from 5 - 20% of the home's cost.

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A conventional mortgage is Ideal for borrowers with strong credit, this type of loan is not backed by a government agency like the Federal Housing Administration (FHA).

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When a buyer makes an offer on a property they haven’t seen, even when it was possible to see it, that offer is considered a “blind offer”. It is most commonly used in a highly competitive area and/or circumstance, and used as an attempt to be first and win quickly.

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DOM is defined as the number of days from the date on which the property is listed for sale on the local real estate brokers’ multiple listing service (MLS) to the date when the seller has signed a contract for the sale of the property with the buyer.
A related metric is the average DOM for homes sold in a market during a specified period. A low average DOM indicates a strong market that favors sellers. A high average DOM signals a weak market that favors buyers. Seasonality can also be a factor.
Homes generally appear to sell faster in Spring than Winter, since you often have more people looking to purchase and sell during the more pleasant weather months rather than the colder more uncomfortable weather months.

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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.

Depending on the market, it could hamper negotiations with a seller when a contingency is part of the picture.

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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.

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A title search examines public records for the history of the home, including sales, purchases, and tax and other types of liens.
Generally, a title examiner will conduct a search using title plants, and sometimes the county records, to see who is listed as the record owner of the property. Such information, along with any liens or encumbrances that are recorded against the property, will be listed in the Preliminary Report for the parties to review prior to the close of escrow.

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In a short sale, the property is being sold for less than the debt secured by the property. Short sales will require the approval of the seller’s lender(s) as the proceeds of the sale will be just “short” of the amount owed; most lenders’ processes of approving short sales are long and drawn out, requiring more time to close than a traditional sale.

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A purchase agreement is a contract between a buyer and seller stating the terms of the home sale. It may stipulate conditions like sale price, what appliances will stay in the home and when the buyer will move in.

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Private mortgage insurance is a policy that protects your lender in case you default on your loan. Usually, if your down payment is less than 20% on a conventional loan, you will also need to pay for PMI.

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Escrow is a legal arrangement where a third party holds large funds until terms of an agreement are met. In real estate, you’ll set up an escrow account to hold funds for taxes or insurance throughout the life of your mortgage.

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Earnest money is part of your down payment paid before closing to show you are serious about purchasing a home. It is also known as a good faith deposit.

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Conventional mortgages are funded by private lenders rather than government-backed agencies. Most often, these loans are then sold to government-sponsored enterprises like Fannie Mae or Freddie Mac to provide liquidity to the nation’s mortgage market.

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A right of first refusal clause is a valuable tool for sellers who find themselves dealing with a home sale contingency. This clause allows a party to submit the first offer when an owner decides to sell.

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Dual Agency occurs when a real estate agent works on behalf of both the home buyer and seller. In most real estate transactions, it is much more common to have separate agents represent each party, as this helps avoid the conflict of interest that can happen when an agent negotiates for both sides.

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An escrow holdback agreement lets the buyer hold back a portion of the seller’s proceeds in escrow. There are various reasons you may want an escrow holdback, like if the seller has not finished repairs to the home by the time of closing and you still want to close on time.

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An earnest money deposit is essentially a deposit on the property that you're looking to buy. As a general rule, you can expect to pay anywhere from one percent to five percent of the purchase price.

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Closing costs are the fees you pay as part of a purchase agreement for residential property. Sellers have closing costs as well related to the transfer of property.

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An agent will use real estate comparables in order to determine the market value for a particular property. The acronym for this real estate term is a CMA.

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