Terms of engagement
Selling a house is complicated enough without stumbling over words
Selling a home involves pages and pages of paperwork. Things like disclosures, contracts, addendums and more can quickly complicate a transaction. If you dont buy and sell homes on a weekly basis these things can be confusing, so here are a few pointers from the National Association of Realtors about commonly used terms:
1. Net sheet: Sellers want to know what is their check amount to be after all the fees and closing costs are done. What is the amount you are taking home to the bank? The net sheet does just that by outlining each item and estimating those costs for you and how they affect your bottom line; and a net sheet should be one of the first things you review when discussing selling price. (Similarly, the cost sheet is the same thing for the buyer; namely what is the final cost of the potential new home including closing costs).
2. Contingencies: A contingency is a condition of the sale that allows a party of the sale to walk away if not met. Typical contingencies include loan contingency (obtaining a satisfactory loan for the home), appraisal contingency (home is worth what I am paying), inspection contingency (home inspection satisfies buyer) and a host of others. Its important to negotiate your dates upfront and adhere to those dates unless both parties agree to adjust. In a sellers market like the one were in now, offers with a lot of contingencies may not look as attractive as others, so be sure to talk about this with your agent.
3. Escrow: Escrow is the third party who holds onto all monies and facilitates the terms of the contract. When someone says they have a 30-day escrow that means escrow is holding onto the funds until both parties have completed their obligations as set forth in the contract.
4. Earnest money deposit: This is the initial deposit you give to the escrow company to show you are a serious buyer. This amount can be anything agreeable to both parties, but a larger deposit is still considered to signify a serious buyer. Earnest money deposits are given back to the buyer if they walk away from the sale within their contingency time frame.Add a comment