When you're buying and selling a home, it can feel like your realtor is speaking an alien language. No one likes being in the dark!
With us, education is the name of the game. Our agents know their stuff and will explain each step of the buying and selling process to you. Until you can meet with them, however, here is a tidy list of the 15 most important terms every buyer, seller, and eventual homeowner should know:
A realtor who specializes in purchasing homes on behalf of the soon-to-be-homeowner. Buyer’s agents are generally paid commission from the home seller, and we've got three awesome buyers agents on our team.
A realtor who specializes in selling homes on behalf of the homeowner. Listing agents are generally paid around 6% of purchase price, and we've got two awesome listing agents on our team.
Any home that is currently being sold. It’s called a “listing” because it’s been listed on a listing service. Listing services are basically databases of all every home for sale in a particular area. The Bell Team lists their homes on Georgia MLS (which stands for Multiple Listing Service) and FMLS (First Multiple Listing Service).
Fixed Rate Mortgage vs. Adjustable Rate Mortgage
These conventional loans differ in how they deal with interest rates. In a fixed rate mortgage, your interest rate will start off relatively high but will never change. In an adjustable rate mortgage (ARM), your interest rate generally starts lower, but can fluctuate.
- TIP: Before taking out an ARM, find out just how high or low your rate can go, how frequently your rate may adjust, and how soon your rate may go up. Always make sure you can afford to pay the maximum interest rate.
Days on Market
This is a metric that shows how long a property has been available to purchase. As of March 8, The Bell Team’s average Days on Market (DOM) was 36 compared to the national DOM of 35, the local DOM of 80, and the statewide DOM of 52.
List to Sale Price
A home is not always sold for its asking price. “List to sale price” refers to the amount a home was listed for versus what the home was sold for. For instance, if a home is listed for $200,000 and sells at $170,000, you have an 85% list to sale price (because $170,000 is 85% of $200,000). List to sale price can also be over 100% if a home sells for over its asking price. If a home sells for exactly the list price, it has a 100% list to sale price.
- Did you know? The Bell Team averages a 98% list to sale price!
- Accurate pricing is 80% of the marketing for a home, so it's important to choose the right price to not let your home stagnate.
Before purchasing a home, it is beneficial to the buyer to be pre-approved for a home loan, which means the lender has already taken a look at the buyer’s finances and has decided it is safe to let them borrow money for a home. Being pre-approved can give the buyer a stronger position during negotiation, as pre-approval can drastically speed up the closing process.
Once a seller finds the home they want, they will write an offer which includes a purchase price at, above, or below the asking price. Once received, the seller will usually write a counter. From there, buyers and sellers negotiate a purchase price and a timetable for when they can close.
A document which includes (among other things) an agreed-upon purchase price. Once the contract is written the listing is considered “Under Contract” and the wheels are set in motion for due diligence, appraisal, and inspection.
While under contract, it’s in the buyer’s best interest to have a licensed inspector take a look at the property. Costs vary based on the size of the home, but the average price is $250-800. After inspection, the buyer will know what (if any) aspects of the home require attention.
- TIP: Inspections are valuable to sellers as well. A seller can have their home inspected before they list to be sure of what work needs to be done on their property. Additionally, if a buyer terminates the contract because of an inspection, the seller can then address all the issues and then make their home more attractive to the next buyer.
After a home is under contract, a licensed appraiser analyzes the home to objectively determine a fair price. The lender usually requires an appraisal before writing a home loan.
This is a part of the buyer’s responsibility after their contract goes binding. Over the course of 10 or so days, the buyer will have an inspection done and will do neighborhood research like checking out schools, crime reports, etc if they haven’t already.
When a buyer puts down an offer, they can say their offer is contingent (ie, won’t go through) until certain conditions are met. Finance contingency demands that the buyer not close until they can secure their home loan. Inspection contingency demands that the buyer not close if there are… surprises… during the home inspection. Appraisal contingency demands that the buyer not close if the home appraises for much less than the purchase price.
When purchasing a home, the buyer pays the purchase price as well as closing costs. Closing costs include excise taxes, the cost to process a loan, and title insurance (see below).
- TIP: At the start of your home search, be sure to ask your lender and agent of possible closing costs. Don’t be blindsided by unforeseen costs that could push you over budget.
Think Carfax for your home: the lender uses this document to comb the public records to ensure the seller actually has the right to sell and that there are no liens on the home (such as contract work that has yet to be paid). The cost of title insurance is usually bundled in your closing costs.