9 essential terms
If you've ever been involved in a Real Estate transaction, you'll quickly find that the paperwork involved is packed with terms and phrases completely foreign to you. If it looks more like ancient Greek, consider this your cheat sheet:
If a buyer is planning on mortgaging their home, the lender will require the buyer to pay for an appraisal. That’s where a third party is hired to estimate the value of the home, making sure a lender’s money is not going to be wasted. This also assures the buyers that they are not overpaying for the property.
BINSR stands for “buyers inspection and sellers response.” After the inspection period is over, the buyers will submit a BINSR stating which items on the inspection report they would like the seller to fix. Not every buyer has items that they would like to have fixed. A seller has 2 options after receiving a BINSER from the buyers:
- “Seller agrees to correct the items disapproved by Buyer pursuant to terms set forth herein…”
- Seller is unwilling or unable to correct any of the items disapproved by Buyer.
- Seller’s response to Buyer’s Notice is as follows:”
The Sellers will then list which items they will correct, and which ones they will not. After the buyers receive this, they can either accept the seller’s response or cancel the contract.
The closing is the final stretch of your real estate transaction that involves bringing together all parties involved. Also known as settlement, at closing, the buyer will provide the funds to purchase the home. It’s also when you get the keys to your new home! This is the final step in a real estate transaction, and the buyers now are legal owners of the property.
Real estate can be scary! But don’t let the vocabulary scare you away from making such a worthwhile investment. Don’t be afraid to ask questions and go find your dream house today!
Due diligence essentially provides a time for the buyers to do homework about the property if they find anything negative in the inspection period. The may cancel ESCROW and receive a refund of their earnest money if they choose to do so.
Contingencies are requirements that must be met before a real estate deal can close. The normal contingencies for the buyers are property appraisal, financing, home inspection, disclosures, HOA disclosures, and a title report. As all things real estate, all contingencies are negotiable between buyers and sellers.
Earnest money shows a seller that a particular buyer in serious about buying the property. The buyer will put in an offer showing how much earnest money they out towards the house. The money is held with the title company to house the transaction.
The effective date is the day that the last party signed or initialed any terms or changes to the contract. This day is the day that the clock starts on many of the contracts deadlines. For example, a home inspection must happen in the first 10 days after the effective date.
Escrow is when an impartial third party holds on to something of value during a transaction. Generally, ECROW is held with the title company. They facilitate the transaction, and hold all funds used during this time. This protects both parties, because neither party can access funds placed there until closing.
All sellers are required to fill out a SPDS report, which stands for “seller property disclosure statement” for the buyers that states every good and bad thing they know about the home. A seller who intentionally withholds information is committing fraud, so when in doubt, disclose! This is a safety net for the buyer to know they are not buying a house with a slew of problems.