When it comes to real estate there will be some vocabulary words and terms that you will hear along the way. Being familiar with them and having some knowledge of their meanings will help you be prepared during this process. I always want my clients to feel like they are as informed as they can when it comes to purchasing or selling their homes. Here is my mini glossary on the top 10 real estate terms to know when you are buying or selling in the Vail Valley or Cordillera area.
1. Buyer’s Agent VS Listing Agent VS Transaction Broker
A Buyer’s Agent represents buyers in a real estate deal and helps you find property in your price range. They will find you properties close to amenities and then help you determine a fair price for your offer. They are also skilled in guiding you through negotiating your offer and will advise you throughout the transaction.
A Listing Agent represents sellers in the sale of their home and is essential in helping you determine the fair market price of your home. They also market your home to sell, hold open houses if you desire and then negotiate offers with you. Overall they guide you through the transaction to closing.
A Transaction Broker acts as neutral party to both sides whereas an agent represents the best interest of their client and, in fact, is a fiduciary. They are legally neutral and can assist both the buyer and the seller in a transaction, acting as a mediator between both parties to the deal.
2. Fixed-Rate VS. Adjustable Rate Mortgages
A fixed-Rate mortgage has a fixed interest rate for the entire term of the loan. This means the mortgage carries a constant interest rate from beginning to end, and does not go up. However, this also means it does not come down either.
An Adjustable-Rate Mortgages can also be called variable-rate mortgage or tracker mortgage.
This loan has an interest rate that can periodically adjust. These adjustments are based on the index that reflects the cost to the lender or borrowing credit markets.
3. Pre-Approval Letter
A pre-approval letter provides a buyer with documentation that you have been approved to borrow from the bank. It shows both your Realtor and the sellers that you are prepared to buy a home. Your pre-approval letter will state your loan program, loan type, and loan amount. It can make a huge difference for homebuyers in having their offer accepted by the seller. Keep in mind a pre-approval letter doesn’t guarantee you a home loan. Want more information on pre-approval? Click here to read my blog post on it!
4. Listing
This is one of the real estate terms that a lot of people find confusing. You probably would just assume listing refers to homes that are on the market in the Vail Valley or Cordillera area. The listing refers to the listing agreement that is made between a principal and an agent, regarding the marketing of the seller’s property.
5. Home Inspections
A home inspection is an examination of a home and it observes and reports the condition of a property. This can be done by the seller prior to marketing the home and is then called a pre-inspection. A buyer will most often have an inspection done soon after going under contract to buy. A qualified home inspector assesses the condition of the property including heating and cooling systems, plumbing, electrical, and water. They will do a general inspection and look for water, fire, structural or any other damage that could affect the value of the house. In addition to a general inspection, there are many other specialized inspections that a buyer can have done in addition to the general inspection, from sewer and radon, to mold, pests, and if recommended by the general inspector, an in-depth structural inspection performed by a structural engineer.
6. Appraisal
An appraisal is the estimated value of a home determined by an inspection of the property and its comparisons to recently sold homes in the area. Unless you are purchasing the property with cash, an appraisal will be required. An appraisal is also needed when refinancing a home. The appraisal amount will determine the amount a mortgage lender will let you borrow for the property.
7. Contingencies
Contingencies are actions or conditions that must be met for a real estate contract to become binding. It becomes part of a binding sales contract when both parties, the buyer and the seller, agree to the terms and sign the contract. Contingencies protect both the buyer and the seller. One of the other real estate terms that you might see that is related to this is that a home is contingent. Meaning it’s not fully sold until all the contingencies have been met.
8. Offers & Contracts
An offer is the conditional proposal made by a buyer or seller to buy or sell an asset. That offer becomes legally binding upon the mutual execution of the contract (MEC). It is essentially the submission of a bid to buy the home.
Contracts are between both parties buyer and seller for the purchase of the home and protect both buyers and sellers. In a contract the buyer and seller have agreed to terms but the deal is still not finalized or completed.
9. Closing Costs
Closing Costs are additional fees due at the closing of a real estate transaction. They can include origination fees, appraisal fees, title fees, surveys, taxes, and credit report charges. They must be disclosed by law to buyers and sellers and agreed upon before a real estate deal can be completed.
10. Title Insurance
Title insurance is the only insurance that protects you from things that happened in the past. It is a way to ensure that the property is transferred to the buyer correctly. It also helps with legal expenses in the event there is a defect in title to your property that is covered by your policy. This isn’t an additional monthly payment, it is just a one-time payment due at the closing.
How Can I Help?
I hope this glossary with 10 real estate terms you should know when buying or selling in the Vail Valley area has been useful. If you have any further questions or need help with anything at all, please reach out to me! I want to provide my clients with interesting and up-to-date information so they can make informed decisions. If you think that my expertise and positive attitude might be of service to you don’t hesitate to reach out and contact me.
Would you like more information on the Vail Valley/Cordillera area or the real estate market specifically? To receive my detailed monthly market report immediately, click here!
Robert Schilling
Coldwell Banker Global Luxury Specialist
Coldwell Banker Distinctive Properties
(970) 390-0705
[email protected]