Home buyers may find it hard to understand some terms in the real estate business, making it difficult as well to appreciate some of the home’s features or understand conditions and details when it’s time to purchase.
To avoid this, Realty Times came up with a rundown of these commonly misunderstood or confusing terms.
1. Alley-loaded – is a type of home where a garage located in the rear of the home is accessed by a common alley.
2. Appraised Value – it is the value assigned to a home by an appraiser based on several factors including similar homes in the neighborhood and condition, size, and location of your home.
3. As-Is – is a home is usually sold without a warranty and without any commitment to making repairs. They are commonly foreclosures.
4 . Backup Offer – is an offer that’s already second (or third or fourth ) to an accepted offer on a home. This backup offer can move up in line idea if a home falls out of escrow for some reason.
5. Buying down your interest rate – means coming up with money out of pocket in exchange for a lower interest rate.
6. Closing – takes place once all the escrow requirements have been met. It is that time when the buyer signs all the necessary documents and takes ownership of the home.
7. Comparables – are homes that compare to the one you are buying or selling. Also known as “comps”, they are used to identify a home’s sales price by comparing the home to others that are similar in terms of size, age, location, condition, and other factors.
8. Contingency – is sometimes attached to an offer, making it dependent on other factors, like the sale of a potential buyer’s existing home.
9. Earnest money – is typically paid when making an offer on a property. It becomes part of your down payment once an offer is accepted and you enter into escrow.
10. FSBO – stands for “For Sale By Owner” instead of with a Realtor . It is also pronounced “Fizbo.”
11. HOA – stands for Homeowner’s Association, which charges a fee to homeowners for things like landscaping and amenities.
12. P&I – stands for principal and interest only.
13. PITI – means Principal, interest, taxes and insurance, also known as the four main elements of a monthly mortgage.
14. PMI – stands for private mortgage insurance. It is usually required on homes where the buyer has put less than 20 percent down.
15. Zero lot line – also known as Z lots which are built differently than traditional single-family or attached homes. According to Investopedia, “Zero-lot-line house are built very close to the property line in order to create more usable space.” Examples of these are rowhouses, garden homes, patio homes and townhomes which may be attached (as in a townhome) or detached, single story or multistorey.
Read the full post in Realty Today
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