There are so many terms tossed around when buying and selling a home. This glossary is intended to explain some of the most common terms. If you have any questions at any time – that’s what we’re here for!
Real Estate Agent: This is who you’ll be talking to about buying or selling a home — we’ll walk you through the process and help you navigate the paperwork. Real estate agents are licensed by the state, though state licensing requirements vary. Typically, there will be a real estate agent representing the buyer (buyer’s agent) and another representing the seller (listing agent) to represent the interests of each party in the transaction. Real estate agents are paid by commission, usually a percentage price of the final home sale, and typically by the seller, not the buyer.
Realtor: Though “Realtor” and “real estate agent” are sometimes used interchangeably, a Realtor is a real estate agent who is also a member of the National Association of Realtors. Members of the NAR are required to follow a strict code of ethics, which gives you an additional guarantee that your agent is working in your best interests. All of the McGuire-Cooley Team members are also members of NAR.
MLS: Though you may not realize it, this database of real estate information will probably be the start of your endeavor to buy or sell a home. The MLS (or multiple listings service) is a searchable listing of homes for sale, with detailed information on each. A real estate agent can add your home to the MLS or help you search the MLS to find your dream home — though many online searches allow anyone to browse the MLS for properties.
Listing Status: When browsing MLS listings, you’ll find properties listed with a number of different statuses.
- “Active,” means the home is on the market and available for purchase.
- “Closed” or “Sold” means a home has been sold and is no longer available.
- “Contingent” in Tulsa means that a home is under contract pending the sale of the buyer’s home, or possibly some other very specific contingency. Sellers may still take back up offers during this time frame in case whatever the offer is contingent upon does not succeed.
- “Pending” – the home is under contract, but has not closed. Buyer financing, inspections, or other circumstances could cause the contract to not be executed, and the property could end up back on the market.
Offer: When a homebuyer has decided on a property, they’ll make an offer to the seller explaining what they’re willing to pay as well as any terms. The seller can accept the offer, make a counter-offer, or reject the offer outright.
Acceptance: When an offer or counter offer is accepted, then both parties enter into a contract to purchase the home, as outlined in the accepted offer.
Earnest Money: Also sometimes known as a good faith deposit, this money — the exact amount will be defined in the offer, but is often 1%-5% of the purchase amount — is put into escrow by the buyer after an offer has been accepted. Putting down earnest money shows a seller you’re serious about buying and when the transaction is completed, it can go towards your closing costs or a down payment. If the buyer backs out of the sale for reasons not covered by contingencies in the offer (i.e. breach of contract), the seller typically gets to keep the earnest money.
Home Warranty: Often already offered by sellers, buyers can ask for sellers to pay for a home warranty as part of an offer. They are typically in place for the year following the sale of the home, and usually have an option for the buyer to continue the warranty thereafter. Coverage usually includes plumbing, electrical, appliances, cooling and heat, but each plan is different.
Contingencies: When making an offer or counter-offer, you’ll probably want to include provisions to cover yourself in case the deal doesn’t wind up working for you. For example, you might have a contingency that says the purchase of a home will be dependent on being able to sell a current home, obtaining the necessary financing to purchase the home, or the home passing an inspection. The McGuire Cooley Team will be able to help you make an offer or counter-offer that suits your needs, with the appropriate contingencies.
Appraisal: Though a home may be appraised for many reasons, the most common reason to appraise a home during a real estate transaction is to secure a mortgage to pay for it. Lenders will require an appraisal of the property to determine its value before agreeing to lend the money to purchase it — and may not be willing to lend beyond the appraised value of the property.
Inspection: A common contingency is the home passing an inspection, in which an inspector will thoroughly examine the home for any damage. If any damage is found, the buyer and seller may renegotiate the cost or other terms of the original offer.
Closing: The purchase is finally done at the closing, which is when the title is transferred, paperwork is signed, and money changes hands. A day or date range for closing may be specified in the offer.
Closing Costs: There are a number of costs in addition to the purchase price of the home that come with closing a real estate transaction — these are often lumped together as “closing costs.” These cover all additional fees required to complete the transaction, the cost of an appraisal, attorney’s fees, lender’s fees, title fees, and more. You should get a good faith estimate of closing costs but you’ll get a final statement outlining all costs shortly before closing.