If you’re thinking of selling your home in the near future, now is the time to brush up on some of your real estate knowledge. After all, when you first purchased the home your real estate agent may have left you feeling confused with some of the terms and jargon used in the industry.
Before you put your property on the market take a bit of time to familiarize yourself with some of the following real estate terms and acronyms. When it’s time to speak to your real estate agent you’ll be in a stronger position to understand the terms of the sales contract with confidence and you might even avoid some of the more common mistakes sellers make when selling a home.
Chattels are any unattached goods or items in your home that you intend to take with you after the property sells. Common chattels might include your fridge, TVs, washing machines and other personal items the buyer won’t get as part of the sale
Some buyers and sellers commonly confuse chattels with fixtures. Generally speaking, fixtures are those items that are attached to the property or that will remain with the property after it’s sold. Common fixtures might include curtain rods, dishwashers and ovens, among other things.
When it’s time to sign the contract, make sure you stipulate exactly what you intend to list as a chattel and what you’ll list as an exclusion. If you intend to take mirrors, floor coverings, or any other items that a seller could commonly believe they’ll get as part of the sale be sure it’s itemized clearly as an exception. Being crystal clear about chattels and fixtures could mean avoiding arguments on closing day.
Staging is the real estate industry term that simply means dressing up your home to make it look fabulous to buyers. Most real estate agents will offer some basic tips for staging your home yourself to highlight its potential, including removing any clutter to make rooms look more spacious and packing away any personal items. If you don’t feel confident doing it yourself you can choose to hire a professional staging company to showcase your home for you.
CMA (Comparative market Analysis)
A CMA is a report that lists comparable homes that were recently sold in your area, which is one of the more reliable ways to reach a realistic listing price for your home. Sometimes real estate agents might refer to a CMA as a comp. Your chosen listing agent should research recent sales in your area and put together a CMA report for you before your list your home for sale.
MLS (Multi-Listing Service)
Multi-listing services are organizations that collect data about home sales in private databases and distribute that information to real estate agents. Data collected by MLS organizations may also be used on home listing websites
An example of the data used may include MLS home sale listings, allowing prospective buyers to see what properties are available for sale in a particular area and sellers to ensure their home is advertised effectively. Collected data can also be used to display listings of sold properties, allowing buyers and sellers to gauge how much properties in a particular area were sold for in the past and how long those homes have been on the market.
APS (Agreement of Purchase and Sales)
Once you find a buyer for your home, it’s time to complete and sign an Agreement of Purchase and Sales, or APS. Your APS is a legally binding contract that sets out the exact conditions of the sale, including the final purchase price and the closing date.
The APS should also specify all of the inclusions and exemptions for chattels and fixtures so there is no confusion about what’s staying and what’s going on closing day.
A conditional sale is one that includes a clause on the APS that stipulates the sale is subject to certain criteria being met before the sale can proceed. If the conditions listed on the contract are not met, the buyer can walk away from the sale.
For example, some buyers may make an offer on your home that is conditional on them receiving a satisfactory home inspection. Another common condition is including a ‘subject to finance’ clause, in which the buyer needs to obtain finance approval prior to closing the sale.
Other buyers may enter a ‘subject to sale’ clause within the APS that specifies that the purchase is conditional on them selling their own property within a certain timeframe before closing on the sale of your home.
Home equity is the difference between the property’s market value and the outstanding balance of any mortgages owed. For example, if your home is valued at $200,000 and you owe the bank $120,000, then your equity is $80,000.
Mortgage Prepayment Penalties
Once your home is sold and closing day arrives, the transaction will include paying off any outstanding mortgage balance you have on the property. Your lender may have included a clause in your mortgage contract outlining any mortgage prepayment penalties that may be due if you pay off your home loan earlier than the agreed term date. The actual mortgage prepayment penalty you will pay depends on your lender and the terms written into your mortgage contract.
VTB (Vendor Take-Back Mortgage)
Sometimes also known as owner financing, a VTB is when the seller agrees to offer finance for some of the buyer’s mortgage in conjunction with a traditional mortgage. Most buyers already have a mortgage loan in place through a traditional lender, so a VTB is often listed as a second lien on the home.
For example, a buyer has obtained a fixed-rate mortgage of 80% of the purchase price and needs to come up with a 20% down payment to complete closing. The home seller might offer that buyer a VTB mortgage to cover that down payment.
If the home purchase price is $300,000, then the 80% mortgage amount is $240,000. The vendor may offer to lend the seller a VTB mortgage for $60,000, leaving the buyer with two separate loans to repay.
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Selling your Home in Jasper Indiana – Why List with Sell4Free®
Sell4Free® is here for you! Before we list your house on the MLS, our agent will so a walk though of your home inside and out and give you suggestions on ways you can stage your home and increase its selling value. We also offer our sellers a FREE 3D Matterport Tour when you list with us! Our Marketing plan includes more than the average Dubois County Real Estate company AND we offer even more incentives to Sellers who also BUY with us. Sell4Free® offers all of our clients our “Buy From Me, Sell For Free”® program. That is the Sell4Free® advantage! Call us today to find out more!
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