The world of real estate can be a confusing place. There are many things to understand when trying to tackle the market on your own, which makes having a Realtor very enticing. Purchasing a home without a Realtor is difficult so you will have to know what you are doing if you plan to go this route.
There are probably a bunch of terms you’ve heard flying around when listening to people talk about real estate or when viewing online listings.
We are going to go over some of the popular terms you may hear when navigating the real estate market.
Closing Costs – These are the costs accrued individually by both the buyer and the seller when the home purchase deal closes. The closing costs are: the commission paid to the broker or brokerage, mortgage-related fees, escrow or attorney settlement fees, recording fees, as well as title insurance.
MLS – This stands for Multiple Listing Service. The purpose of a multiple listing service is to collect, compile, and distribute information about homes that have been listed for sale by its members – which are real estate agents. There are different MLS that operate at the local level or regional level. There is no MLS that will cover the entire country. Multiple listing services are not open to the general public, which means you’ll need to speak with a Realtor in the area you are looking that is a member in order to get access to the data.
Title Insurance – This type of insurance policy protects a lender or owner’s interest in a property from fraudulent ownership claims. If you are purchasing a home then it is typical to also pay for the owner’s title insurance property when transferring ownership over.
HOA – A homeowner association (HOA) is a governing body of a housing complex, a condo, or a housing development that sets and enforces rules and regulations. They usually charge a fee and may have rules like “no hedges over 5 feet tall in your front lawn” or something similar. There are some good HOA’s out there and some which are controlling and unfavourable. Make sure to do your research about whether the home you’re buying is part of an HOA. If it is then find out what others in the HOA have to say about it before purchasing the home.
Comparative Market Analysis – The importance of this kind of analysis is it allows you to determine an estimate on the value of a home using a number of factors. This analysis is typically carried out by a real estate agent, and the factors used to estimate the value of a home include: recently sold homes of similar condition, age of the home, location, features, and size. This analysis is crucial in properly pricing your home for sale, as well as determining whether a seller is offering their home for a fair price.
Knowing the terms involved in real estate will save you from being fooled and confused when it comes to the important stuff. When there’s hundreds of thousands of dollars involved you should definitely know what you are doing and what others are talking about.