Important Terms to Know When Selling or Buying a Home

1. Appraisal
   An appraisal is a certified appraiser's assessment of a property's value. Lenders require appraisals to determine if the home's value justifies the loan amount. This step helps prevent overpaying for a property and is essential for securing financing.
2. Closing Costs
   Closing costs refer to the fees incurred during the completion of a real estate transaction. They can include charges for legal services, title insurance, property taxes, and other related expenses. Buyers and sellers should budget for these costs as they can significantly impact the financial picture.
3. Escrow
   Escrow is a third-party account where funds are held during the home-buying process. The escrow agent ensures that all conditions of the sale are met before releasing the money to the appropriate parties. This safeguards both the buyer's and seller's interests.
4. Contingency
   A contingency is a condition in a purchase agreement that must be met for the sale to proceed. Common contingencies include home inspections, financing, and selling a buyer's existing property. The contract can be canceled without penalties if a contingency is not satisfied.
5. Pre-Approval
   Before house hunting, it's wise to seek pre-approval from a lender. A pre-approval letter confirms that you're eligible for a mortgage up to a specified amount. It strengthens your offer and provides a clearer understanding of your budget.
6. Title Insurance
   Title insurance protects buyers and lenders against any issues with the property's title, such as undisclosed liens, ownership disputes, or other claims. It ensures that you have a clear and marketable title to the property.
7. Home Inspection
   A home inspection is a thorough examination of a property's condition by a certified inspector. Buyers often request inspections to uncover potential issues that might not be visible during a casual walk-through. The results can influence negotiation or repair requests.
8. MLS (Multiple Listing Service)
   The MLS is a comprehensive database that real estate agents use to list properties for sale. Buyers and sellers can access this information to search for homes or list their property for sale. It provides valuable data on property details, pricing, and market trends.
9. Contingent vs. Pending
   These terms describe a property's status. "Contingent" means a property has an accepted offer, but some contingencies must be met before the sale is finalized. "Pending" indicates that all contingencies have been satisfied and the sale is in progress.
10. Down Payment
    The down payment is the initial amount paid by the buyer toward the purchase price of the home. It is a percentage of the total price and varies based on the type of mortgage and lender requirements.