Important Terms to Know in Real Estate

The world of real estate can be complicated for those who don’t live in it every day, but it’s important for buyers and sellers to keep up with what’s going on. The following is a list of commonly used real estate terms that you should be familiar with when looking to buy or sell your home.

1) Appraisal. An appraisal is also known as a property valuation because it involves evaluating a property to determine its value. Appraisals are needed due to the fact that every property is different from the next, and real estate transactions occur relatively infrequently compared to other types of transactions. The goal of every appraisal is to be able to determine market value on the home in order to be able to compete effectively with other properties in the surrounding area. Keep in mind that appraisals take into account not only the property itself, but its location as well.

2) Contingency. A contingency is a condition that must be met before a transaction can be made. In real estate, this can take place in a number of different ways and you will undoubtedly hear it used at some point. For example, a buyer may make an offer on a house that is contingent upon the seller fixing something that is wrong with it. A sales agreement may also be contingent on the potential buyer being able to obtain financing for the property. If you’re a buyer, be aware that contingencies are a possibility when you make an offer.

3) Disclosure. Disclosure is the act of making information public. To prevent a seller from hiding any faults that may be present in a property, it is required that any and all information about the property is disclosed to potential buyers. The seller of a property must sign a disclosure form that outlines anything wrong with the property that may affect whether or not it is sold.

4) Encumbrance. An encumbrance limits the ownership of real property by diminishing the value without prohibiting the passing of a title. Encumbrances come in many forms, including liens, mortgages and any other type of limitation. The purpose of an encumbrance is to represent some sort of claim that another person (other than the owner) may have on a property.

5) Recurring Costs. These are costs that the buyer should expect to pay on a regular basis. Required recurring costs vary from place to place and may include expenses such as property taxes, interest and earthquake insurance. Buyers should always be sure to factor recurring costs into their financial plan while looking for a new home.

Buying and selling property can be complicated, so if you have questions be sure to contact a Chester County real estate agent to learn more.