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Hey, you're in the real estate zone--YOUR HANDYMAN ZONE!

Buying a House Category

Real Estate :

Various aspects and people you encounter in a house purchase transaction, some things to know about them.

Guide:

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:

  • Affidavit.  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.

  • Buyer's agent.  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.

  • Buyer's market.  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 seller's market.

  • Certificate of 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.

  • Comparative 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 market.

  • Condominium.  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.

  • Cooperative.  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).

  • Default.  This is a term for the failure to act in accordance with a legal obligation that is usually expressed in a contract.

  • Duplex.  This is a term for two dwelling units that are separated by a common wall, but are otherwise a part of the same building.

  • Equity.  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 into account.

  • Escrow account.  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.

  • Fiduciary 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.

  • Flat.  This is another term for an apartment unit.

  • Fourplex.  This is a term for four dwelling units that are separated by common walls, but are otherwise a part of the same building.

  • Grantee.  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 seller.

  • Grantor.  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 buyer.

  • Home inspector.  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 professional association.

  • Homeowners 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.

  • Insurable title.  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 "marketable title."

  • Legal 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.

  • Lender's closing 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.

  • Listing 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.

  • Loan officer.  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 processor.

  • Manufactured home.  This is a term for a house that is a factory-built house.

  • Marketable title.  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.

  • Notice.  This is a term for the act of legally informing an individual of certain information.

  • Penthouse.  This is a term for a dwelling unit located on the highest floor of a building.

  • PITI.  These 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.

  • Principal.  This is an individual who gives consent to have another act on their behalf.

  • Processor.  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 obtain.

  • Procuring cause.  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.

  • Prorations.  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 seller.

  • Real estate.  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").

  • Real estate 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.

  • Real estate 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.

  • Real estate contract.  This is a legally enforceable agreement that acts as an instrument that effectively sells or otherwise conveys real estate between two parties/individuals.

  • Realtor.  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.

  • Riparian.  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.

  • Seller's agent.  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.

  • Seller's market.  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.

  • Settlement agent.  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.

  • Studio.  This is a term for a one-room dwelling unit/apartment.

  • Survey.  This is a term for the official measurement of real estate property, from one legal boundary to the other.

  • Title insurance.  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 the title insurance section.

  • Townhouse.  This is a term for dwelling unit that encompasses more than one floor of living space and shares walls of other similarly-built attached houses.

  • Underwriter.  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 complications.

  • Warranty.  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.

Ed the Handyman

            &

Your Handyman Zone Team 

 

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