Are you sometimes confused by the terms Realtors use? Below are some common phrases which we may throw around, believing you know what we're talking about!
Agency - A relationship created when one person (the principal) delegates to another person (the agent) the right to act on the principal's behalf. In Georgia we are mandated by law to disclose our agency relationship in all real estate transactions. We can be a Buyer's Agent, a Seller's Agent, a Transaction Agent or a Designated Dual Agent (one who represents both Buyer and Seller in a transaction). Make sure you understand the Agency you have with any Realtor before you enter a transaction!
Agreement - A shortened form of Purchase And Sale Agreement. Also called simply the Contract.
ARM - (Adjustable Rate Mortgage) A mortgage loan on which the interest rate rises and falls with changes in prevailing rates. These loans are tied into various publicly available indexes.
Binding Agreement Date - This is the date when the contract is signed by both parties and delivered. It is a critical date as all the required stipulations in the contract which are tied into a date (for example, the home inspection) are counted forward from the Binding Agreement Date.
Broker - Generally, this term refers to the Realtor who is responsible for managing a Real Estate office. When a Realtor has a question, they go to their Broker for advice.
Closing - The act of finalizing a real estate transaction. In Georgia we close at a Closing Attorney's office. This attorney represents the Lender, not the Buyer or Seller, although they will generally be happy to answer any questions you may have.
Condominium - A type of dwelling wherein units have shared walls and common space. In this form of ownership, the area owned is considered to be the space inside of the walls of each unit and a shared interest in the common areas of the complex. There is a monthly fee assessed to cover the cost of maintaining the exterior of each building and the common areas. This fee could be hefty, so make sure you inquire when checking out any condo you may consider buying.
Deed - A written document that, when properly executed and delivered, conveys title to land. After the close of the sale, this document is filed in the county courthouse.
Earnest Money - The money that accompanies an offer to purchase as evidence of good faith. This money is held in escrow until the closing, when it is applied to the Buyer's downpayment.
Fee Simple - This term most often relates to ownership of a townhome. In this type of ownership, your property generally consists of everything "from the ground up to the sky," as compared to Condominium ownership wherein you own from the walls into the dwelling. You are responsible for the upkeep of the roof, everything on the exterior and usually the property directly in front of and behind your unit. However, there is rarely a monthly fee assessed.
HELOC -- (pronounced Hee-lock) An acronym for Home Equity Line of Credit.
Lender - A mortgage broker or bank where you acquire your loan.
Mortgage - A document which makes the property security for the repayment of a debt. This payment consists of four or five sub-parts, which we often call "The PITI payment." Principle + Interest + Taxes + Insurance = Mortgage Payment. There may also be another aspect of the payment, the PMI or Private Mortgage Insurance, which is collected whenever the downpayment is less than 20% of the loan amount. This amount is added to your monthly mortgage payment.
Offer - We use this term when we refer to "making an offer" on a home. The Buyer takes the first step in negotiating a sale when they present their offer. The Seller then comes back with a "counter offer." This process goes back and forth until an agreement is reached at which point it becomes a binding contract.
Possession Date - The date upon which the Buyer can move into their new home.
Short Sale - When the amount you owe on your house is more than you can sell it for, we call it a "short sale." Typically, the home has either been puchased recently or there is a second loan (a Home Equity Line) on the home and the market has declined creating a situation where the bank(s) are owed more than the house is worth. In this case, a Realtor must help the Seller negotiate with the bank(s) to encourage them to accept a sales price which will net them less than what they are owed.
Seller's Property Disclosure Statement - The document provided by the Seller disclosing all known problems, past and present, with the house. A Buyer should insist upon seeing a Seller's Disclosure Statement before making an offer to purchase.
Title - The right to or ownership of something. We use this term normally when referring to the deed. The title shows who owns the property.