Various aspects and people you encounter in a house
purchase transaction, some things to know about them.
When you are in the market to buy or sell your
first or next house, there are many aspects and people you will meet
in the buy-sell transaction process, and they include the following,
all of which you should come to know:
This is a term for a written legal document in which certain
statements are voluntarily affirmed by the signing party as true
before an officer of a court authorized to preside over and
witness such an affirmation, namely a notary public.
This is a real estate agent who is retained by a house buyer to
help the house buyer buy real estate property, advancing the
interests of the house buyer at all times.
This is a time period of the housing market when such a market becomes
so "overloaded" with houses--inventory--that there are far too
many houses on the market than usual compared to the noticeably
fewer amount of potential buyers seeking to buy houses.
So, with this high supply (i.e., a robust amount of houses) and
low demand (i.e., a relatively small amount of buyers) ratio,
sellers are more inclined to make their houses more sellable
than others by offering more enticements, such as significantly
lower purchase prices, and are otherwise more willing to
negotiate purchase terms than they otherwise would be during a
occupancy. This is a legal document issued by a local
building authority that establishes the fact that a certain
building has met all applicable building codes in order to be
suitable for occupancy.
market analysis. This is a term for a type of a written
property analysis a real estate agent prepares as it relates to
a real estate property/house the agent may be retained to sell
on the market, providing relevant information of this real
estate property/house in relation to at least three comparable
real estate properties/houses that are also on the market for
sale or have just previously been sold. This analysis is a means
by which an agent can help gauge what should be the asking price
for the real estate property/house that they are to sell on the
This is a term for a type of ownership of a dwelling that takes
the form of a single unit that is a part of a multi-unit
building; each single dwelling unit of the multi-unit building
is subject to the enjoyment of the common facilities and areas
found on the premises of the multi-unit building. The
multi-unit building, including each single unit (i.e.,
condominium) that makes up the building, is subject to a
governing body that is called a homeowners association ("HOA");
each condominium owner automatically becomes a member of this
association by design.
This is a term for a building that is owned or leased by a
corporation, the building space of which is subleased to the
shareholders. Unlike a condominium structure, in a
cooperative structure, no one shareholder has fee-simple title
to any one part of the cooperative (building).
This is a term for the failure to act in accordance with a legal
obligation that is usually expressed in a contract.
This is a term for two dwelling units that are separated by a
common wall, but are otherwise a part of the same building.
This is a term for an ownership value that is ascertained by
deducting the balance of a mortgage from the up-to-date value of
a real estate property. In other words, it is the total
value of one's assets after all monetary liabilities are taken
This is a term for an account established in the process of a
real estate transaction in which a third-party neutral agent,
known as an escrow agent, holds money in such an account that is
deposited by a house buyer, the money of which is ultimately
released by the escrow agent to the house seller upon the
fulfillment of certain contractual obligations (e.g., such as
the conveyance of real estate property to the house buyer); an
escrow account can be used in different situations, too.
Fee simple estate
(or "fee-simple title"). This is a term for a real estate
owner's status of having full ownership of the real estate
property, enabling the owner full use and enjoyment of the
subject property--the highest state of rights a land owner has.
relationship. This is a common law term for a relationship
an individual/firm/agency has with another individual/client
that is based upon trust. With this trust comes certain
responsibilities to one another, and many states have prescribed
such responsibilities in their respective state laws. A
real estate agent you retain, in effect, has a fiduciary
relationship with you as their client.
is another term for an apartment unit.
This is a term for four dwelling units that are separated by
common walls, but are otherwise a part of the same building.
This is an individual who buys a house/real estate property, and
is, thus, also known as the house buyer. In this case, the
grantee is conveyed real estate from the grantor, the house
This is an individual who sells a house/real estate property,
and is, thus, also known as the house seller. In this
case, the grantor conveys real estate to the grantee, the house
This is an individual who specializes in conducting house
inspections that a house buyer may retain, before the purchasing
of a house, to inspect the physical integrity of such a house in
an effort to verify the physical condition of the house as
presented by the seller and/or the seller's agent. An
established home inspector may be a member of the American
Association of Home Inspectors, a national, non-profit
association ("HOA"). This is a term for a governing body
created to govern the owners of condominiums found on a real
estate property; each condominium owner automatically becomes a
member of this association by design. The HOA specifically
regulates and maintains the common areas and facilities of the
condominiums for the benefit and welfare of all members, and
accomplishes such functions by virtue of legally enforceable
bylaws (i.e., rules) and funding generated from the collection
of monetary assessments/dues from members.
This is a term for a title that a reasonably prudent insurance
company would be willing to insure at a normal insurance
premium, but such a title may not necessarily be free of
defects, just that it has passed the risk assessment of the
insurer even though it has one or more known defects that the
insurer has decided to ignore in insuring such a title.
People often mistakenly confuse "insurable title" with
description. This is a term for a sufficient description
courts of law have adjudged as being capable of definitively
identifying and locating certain real estate property without
the need for any additional evidence.
department. This is the department of the loan/mortgage
company that is designated with the function of preparing all
legal documents for all approved loans/mortgages; these
documents are what ultimately seal your loan/mortgage deal.
agreement/listing contract. This is a legal document that
a house seller and their real estate agent will sign together to
effectively establish the essential terms of how the house,
between and your agent, will be marketed and sold. There
are basically three types of listing agreements/contracts:
Net listing. A net listing agreement/contract is illegal
in some states. This kind of an agreement specifies that
the house seller will get a certain amount from the actual house
sale price paid by a buyer, and any remaining money left over
will be provided to the agent as his commission.
Exclusive agency. An exclusive agency listing
agreement/contract permits a bit more flexibility for the house
seller: As the type of agreement indicates, the house
seller agrees to permit only one agent the exclusive right to
sell the house seller's house for a certain period of time so
that the agent can get a commission if a house buyer buys the
house, but at the same time, the house seller is also permitted
to find, on their own, a house buyer to buy the house and, in
this case, no commission would be paid to the agent because the
house seller found their own buyer.
Exclusive right to sell. An exclusive right to sell
listing agreement/contract, the most common type of agreement,
guarantees the agent a commission of the house sales transaction
irrespective of who causes the house to be bought by a house
buyer, enticing the agent to spend much more time, effort and
money into getting the house sold, even permitting the agent,
without hesitation, to list the house on a multiple listing
service/multiple listing system (MLS0 database that provides the
house with enormous exposure to potential house buyers, their
agents and even agents who would be willing to collaborate with
the house seller's agent in selling the house.
This is an individual who, in seeking a loan/mortgage, you will
initially meet in order to start the process of a loan/mortgage
application. This individual will ask of you certain
questions that concern your assets and financial liabilities and
help you find a loan/mortgage product that fits your needs.
As part of this initial step, you may be asked to pay an
application and/or credit check fee. The information the
loan officer collects from you orally and through an application
filled out by you will then ultimately be forwarded to another
actor in the loan/mortgage process, who is usually called the
home. This is a term for a house that is a factory-built
This is a term for a title that is free of liens, encumbrances
and defects and, in this sense, is generally considered more
perfect than an insurable title. A reasonably prudent
insurance company's willingness to insure a title does not
necessarily make a title a marketable title; a title can be
marketable and yet not insurable, and vice versa.
This is a term for the act of legally informing an individual of
This is a term for a dwelling unit located on the highest floor
of a building.
are letters that stand for the elements of a mortgage payment:
P stands for the Principal or original amount of the
loan/mortgage; I stands for the interest charged for the lending
of the loan; T stands for the Taxes assessed by the local tax
assessor in which the real estate property is located; and I
stands for the insurance premium that the lender mandates the
owner have for liability purposes.
This is an individual who gives consent to have another act on
This is an individual who takes the information provided by you
through a loan officer and processes such information for
independent verification. This verification process
usually involves verifying your employment and your credit score
by contacting the four credit reporting bureaus (also known as
consumer reporting agencies): Experian, Equifax, TransUnion and
Innovis. All of such verified information is then passed
along to the underwriter of the loan/mortgage you have sought to
This is a term for the assertion of credit for a successful
sales transaction a real estate agent makes when reasoning their
entitlement to a commission of such a sales transaction.
This is a term for the proportional splitting of costs and fees
as of the date of the close of escrow between a buyer and
This is a term that is used in the realtor market and in
general, which means the physical land and all of which has been
built on it (also known as "improvements").
agent. This is an individual/firm, working under a real
estate broker, who is licensed to buy and sell real estate
property on behalf of a buyer or seller, respectively, all for a
commission of the sales transaction to be received by the
individual/firm as a form of full payment for such a service.
broker. This is an individual/firm that is far superior to
a real estate agent as a matter of training and certification,
conducting the same action as that of a real estate agent in the
buying and selling of real estate property on behalf of a buyer
or seller, respectively, all for a commission of the sales
transaction to be received by the individual/firm as a form of
full payment for such a service. Such an individual/firm
supervises a group of real estate agents.
contract. This is a legally enforceable agreement that
acts as an instrument that effectively sells or otherwise
conveys real estate between two parties/individuals.
This is a licensed real estate agent who is also a member of the
National Association of Realtors ("NAR").
Right of first
refusal (or "RFR"). A right, usually prescribed in a
contract, that affords an individual the ability to purchase
certain real estate property before others are invited to
attempt to purchase the same property. This further means
that an individual with this right may exclusively present a
second offer if their exclusive first offer for purchase is
rejected before other individuals are able to try to purchase
the same real estate property.
This is a term for certain rights of a property owner concerning
the use of a body of water in the vicinity of the property
owner's real estate property.
This is a real estate agent who is retained by a house seller to
help the house seller sell real estate property, advancing the
interests of the house seller at all times.
Opposite to a buyer's market, this is a time period of the
housing market when such a market is
experiencing a significant reduction in the amount of houses
available on the market--inventory--at a time when the pool of
buyers seeking to buy has become a bit overcrowded. In such a
seller's market, with many more buyers and, thus, many more purchase
offers a seller can choose from for every house on the market, a
seller can usually afford to hold off on sealing a deal until the seller's
demands are met.
This is an individual of a loan/mortgage company that receives
all prepared legal documents for an approved load/mortgage from
the lender's closing department, and from there determines that
all loan/mortgage terms are met in order to effect the
loan/mortgage and permit the conveyance of the real estate in
question that hinged on such a loan/mortgage.
This is a term for a one-room dwelling unit/apartment.
This is a term for the official measurement of real estate
property, from one legal boundary to the other.
This is a term for an insurance policy that is purchased during
a real estate transaction that, depending on the type of policy
purchased, can protect both the house buyer and lender, or
either one of them, in the event the real estate property in
question suffers from defects to its title or encumbrances that
cause losses to either party. For more information, see
title insurance section.
This is a term for dwelling unit that encompasses more than one
floor of living space and shares walls of other similarly-built
This is an individual who takes and analyzes all of the verified
information provided by a processor of your loan/mortgage
application, together with any appraisal information of the
property you own, to determine whether you qualify and should be
approved for the loan/mortgage you applied for, and, if so,
whether such an approval should come with
restrictions/conditions. If this individual finds that
your application is incomplete, they will ask you for more
information, which you should supply as soon as possible in the
interests of securing your loan/mortgage without unnecessary
This is a term for a guarantee or promise made by individual #1
to individual #2 that what individual #1 has said is true or
that in the event that an advertised condition is not met,
individual #1 will remedy the situation so that the advertised
condition is actually met or otherwise any loss incurred by
individual #2 is absorbed by individual #1; restrictions to the
above usually apply to each unique guarantee/promise.
The above are just some of the various aspects and people you
will encounter in a house purchase transaction, so it would pay
dividends to know a little about them as shown above.