Entering the market for the first time? Whether you’re a new buyer or seller, here are some key real estate terms to learn about.
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Buyer’s/Seller’s Market
Certain market conditions can be more favorable either to buyers or sellers. A buyer’s market refers to a location where real estate conditions are more advantageous to those looking to purchase a home. This usually happens when purchase demand is lower than the supply of homes for sale.
The opposite is called a seller’s market, which offers more advantages to sellers rather than buyers. For example, a neighborhood with a great location or school district may experience more demand than there are available homes for sale, turning it into a seller’s market.
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REALTOR®
REALTOR® is a trademarked term that refers to a real estate agent who is a member of the National Association of REALTORS®. They are trained and licensed to handle real estate transactions. What sets them apart from the average agent is that they must adhere to NAR’s strict code of ethics when serving buyers and sellers.
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Broker
When buying a home, you may work with a real estate agent or broker. The difference is that an agent likely works under the supervision of a real estate broker or brokerage. Brokers are agents who have invested in continuing education and have received a broker’s license. Brokers can either work independently or hire other agents to work with their supervision.
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Pre-approval
Mortgage pre-approval is a process that establishes how much a buyer can reasonably afford when purchasing a home with a loan. During pre-approval, the lender will come up with a rough estimate of how much home you can afford by evaluating the details of your financial status, including your annual income, credit score, assets, debts, and more.
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Co-borrower
When taking out a mortgage for your home purchase, you have the option to bring in a co-borrower to co-sign the loan. The co-borrower takes financial responsibility for paying off the mortgage along with you.
For example, a husband and wife may decide to apply for a home loan together. One will be the primary borrower and the other will be the co-borrower. Their finances combined can help them qualify for a larger loan amount, which can help them afford a more expensive property. -
Debt-to-income Ratio
When reviewing your mortgage application, the lender will review your debt-to-income ratio, which is the percentage of your monthly debts (i.e. mortgage, car, credit card, student loan payments, etc.) divided by monthly gross income. This helps them determine your capacity to repay a home loan.
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Purchase Agreement
A purchase agreement is a contract that indicates the terms of the sale of a home. It includes conditions and important information, including sales price, major appliances included in the sale, and the buyer’s move-in date
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Refinance
Refinancing is the process of applying for a new mortgage to pay off an existing one on the same property. This is done under favorable market conditions as it lets buyers get better loan terms and conditions, such as a lower interest rate, depending on various market and economic factors.
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Comparables
When determining the price and fair market value of a home, it’s common for agents and appraisers to look at comparables, which are similar properties that were recently sold in the area. Known as comps for short, comparables are similar to the listed property in size, features, amenities, and location.
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Sellers’ Disclosure
Sellers are required to produce a Seller’s Disclosure, which is a legal document stating any known major defects that may affect the value of the home. Requirements on what kind of information must be disclosed vary with each state.
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Contingency
A contingency refers to a condition that must be fulfilled before the sale of the home can be considered legally binding. For instance, the buyer can make their purchase offer contingent on a satisfactory inspection or the sale of their existing home.
Work with a local expert in New Jersey
If you’re buying or selling in Bridgewater, Warren, Basking Ridge, and the surrounding areas, Pagnotta Homes is ready to assist you. Call the team 908.436.7947 or send them a message here. Pagnotta Homes is the recipient of the NJAR Circle of Excellence Sales Award (Platinum Level) from 2011 to 2015.