Not only does buying a home involve its own language (https://homesweetdesmoines.com/buyers-real-estate-dictionary/), but selling a home does too! We at Home Sweet Des Moines speak the language of selling real estate fluently as well! Here, we’re focusing on the terms that we most often use with our sellers.
abstract
In the state of Iowa, this is a written history of the land’s ownership going back to when the state was brought into the Union. It is required in the sale of land/property. If you own your home, hopefully you have your abstract or you know where it is stored. When you sell, you will need to give the abstract to your REALTOR®; replacing the abstract can cost ~$1,200 and delay your closing.
appraisal
A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby. The appraised value is the opinion of a property’s fair market value, based on an appraiser’s knowledge, experience, and property analysis. When selling, almost all purchase agreements will include a condition that the home be appraised at or above the purchase price.
closing costs
This refers to specific costs paid by both buyers and sellers in order to close the deal. On the buyer side, this can include: lender origination fees, prepaid homeowner insurance, prepaid property taxes, credit reporting, and inspection fees. On the seller side, this can include: abstracting costs, termite inspections, attorney fees, transfer taxes, and real estate commissions, and property tax credits.
Part of the purchase agreement negotiation process may also include asking the seller to give the buyer a credit towards some of the buyer-paid closing costs.
For more details, check out:
CMA (comparative marketing analysis)
This report looks at similar homes in your area that have sold within the past year or are currently on the market to suggest a list price for your home. In general, the CMA includes houses of the same style (two story, ranch, etc), within the same area, with comparable square footage and condition, and built about the same time. The CMA is also known as “comps”. Your REALTOR® will run a CMA before suggesting a list price for your home.
competition
While your home is listed, the competition is any other home with similar features that is currently on the market in a similar price range and in a similar area (not necessarily the same area). In this case, this can include homes of different sizes, styles, and areas, as buyers will often pick a price range in which to see houses as one of their biggest criteria.
contingency
A condition that must be met before a contract is legally binding. Typical contingencies include:
- Home must appraise at or above the purchase price (appraisal to be covered by buyer or buyer’s lender)
- Buyers have a specific inspection time period to have the house inspected and to request repairs, if needed.
- Subject to sale contingency: Buyers must sell their current house before purchasing this home.
In general, an offer without contingencies is preferable to one with contingencies.
listing agreement
A contract between a real estate broker and an owner of real property (land, buildings, etc.) granting the broker the authority to act as the owner’s agent in the sale of the property. Note: The listing agreement is between the broker and the owner, but the broker will typically appoint a specific agent to represent the owner.
MLS (multiple listing service)
A marketing database set up by a group of cooperating real estate brokers to provide accurate and structured data about properties for sale.
net proceeds
The amount of money you will receive after you sell your house after you have paid seller-paid closing costs, real estate commissions, the remaining mortgage balance, etc. Your REALTOR® should give you an estimate of your net proceeds before you list your house for sale.
purchase agreement
The agreement between the buyer and seller of real property that outlines all conditions of the sale. In Iowa, these conditions include:
- Purchase price
- Earnest money
- Method of payment (loan, cash, etc)
- Contingencies
- Closing date
- Possession date
- Closing costs (to be paid by buyer, seller, or both)
real estate commissions
The fee paid to the real estate broker to represent the buyer or seller in a sale of real estate. In general, the seller pays a commission specified in the listing agreement upon the sale of the home. In the MLS, the listing broker will specify the commission to be paid to a buyer’s broker. After closing, the full commission goes to the listing broker, and the listing broker will disburse the buying commission to the buyer’s broker. This commission split on the listing side enables buyers to purchase property with less money at closing, since they don’t pay their broker. Note: A buyer’s broker still has a duty to represent the buyer’s best interests.
seller property disclosure
A document (or set of documents) completed by the seller of a home, listing any known issues, past repairs, or large remodel projects completed during the time that the seller owned the home.
staging
The process of preparing your house for sale in order to make it as attractive as possible to prospective buyers. Staging can include making minor repairs, painting, replacing carpeting, decluttering, and more. Some listing real estate agents will hire or recommend a stager to help the seller stage effectively.
Have questions about other terms, or the full process to sell your house? We can answer them. Contact Nora or Tawnia today to get started.
