Working in any industry means that you will be coming across some terms that will be confusing. Before you can start buying or selling properties, here are some essential concepts in the real estate industry that you should digest. They will make it easy for you to transact and avoid losing money in the short or long term.
Earnest Money Deposit
This is an amount that a buyer deposits to a title company or attorney to go toward closing costs. The seller has the authority to retain the money if there is malice or breach of contract by the buyer. Earnest money shows that the buyer is serious about the property but it is also required on all real estate transactions.
Fixed-Rate Mortgage
This is a type of loan that is offered with the sole purpose of funding the purchase of a property. It has fixed monthly installments and set interest payments throughout the lifetime of the loan. A fixed-rate mortgage is highly preferred as it offers a stable option for paying loans. It protects the owner from future inflation and volatility in the market which causes changes in interest rates.
Property Appraisal
In the real estate industry appraisal refers to the process of determining the value of the property under consideration. It is important to the lending institution as it decides the loan one will get to finance the property. Property appraisals are done by licensed professionals.
Dual Agency
The concept of dual agency arises when a real estate agent wants to represent both the buyer and seller. This is a business strategy termed transaction broker and is widely used in today’s market. It required high integrity and honesty and equal representation. The real estate agent though may not share fiduciary information from one party to another.
Mortgage Broker
A mortgage broker brings borrowers and lenders together. It is often more advantageous to use a mortgage broker rather than a bank for a variety of reasons. Mortgage brokers can find better deals by comparing numerous lenders rather than representing just one lender.
Listings
Listing is a term used in the real estate industry to refer to the properties available for sale. A house listing will contain information such as price, square footage, number of rooms, and other features. With vacant land acreage is disclosed. Commercial listings cover all of the above.