Whether you’re a first time home buyer or this is your second time buying a home. Understanding the real estate market and what you need to know to buy, sell or invest in real estate can be challenging. Don’t get confused, stay ahead of the game by knowing common real estate vocabulary. When buying a home in Houston, Texas, it's important to familiarize yourself with some common real estate terms and concepts. Here are some key terms you should know:
With the invention of Realtor, Zillow and a few more listing sites, I can’t tell how many buyers and sellers are confused by the term MLS. The MLS is a database used by real estate agents to list properties for sale. It's a valuable resource for homebuyers to search for available properties. In Houston, Texas our MLS is Houston Association of Realtors (HAR). Once a property is listed for sale in the HAR other website, like Realtor or Zillow can pull from HAR.
Before you start house hunting, it's a good idea to get pre-approved for a mortgage loan. This involves submitting financial documents to a lender who will determine how much you can borrow based on your creditworthiness and financial situation. Please don’t mistake “Pre-Approval” with “Approved”. If you are approved for a loan then that loan has been put through underwriting to finalize formal approval of said loan.
These are the fees and expenses associated with the finalization of the real estate transaction. They can include fees for the lender, title company, insurance, and more. Buyers should be aware of these costs and budget for them.
An appraisal is a professional evaluation of the property's value. Lenders typically require an appraisal to ensure that the property is worth the purchase price. If as a buyer you chose to pay cash for the purchase of property, an appraisal is optional.
Escrow is a financial arrangement where a third party holds funds and documents on behalf of the buyer and seller until all conditions of the sale are met. Escrow is where the title company will hold both option fee money and earnest money. It helps ensure a smooth and secure transaction.
Title insurance protects the buyer and lender from any defects in the property's title history, such as unpaid liens or ownership disputes.
This is the initial payment made by the buyer when purchasing a home. The size of the down payment can vary but is typically a percentage of the purchase price (e.g., 20%).
A home inspection is a thorough examination of the property's condition by a professional inspector. It helps buyers identify any potential issues or necessary repairs before finalizing the purchase. Typically an home inspection can be waived if paying cash, but is still highly recommended. The price of a home inspection varies depending on the type of inspection, but most home inspection prices start out at $250.00 for a basic inspection.
Many neighborhoods and communities in Houston have homeowners associations that may impose rules, fees, and restrictions on property owners. It's important to understand the HOA's rules and fees when buying a property.
Property taxes in Texas can be significant, depending on the location of the purchase of your home. Buyers should be aware of the property tax rate and the exemptions in the area they are considering and budget for this ongoing expense.
The deed or title is a legal document that transfers ownership of the property from the seller to the buyer. It should be recorded with the county clerk's office.
Earnest money is a deposit made by the buyer to demonstrate their seriousness and commitment to the purchase. It is typically held in escrow and applied toward the down payment or closing costs. Earnest is a show of good faith to the seller that you can meet your financial obligation and is typically 1% of the sale price.
If the seller receives an offer from a buyer but wants to make changes to the terms, they can respond with a counteroffer. This can involve adjustments to the price, contingencies, or other terms of the sale.
A contingency is a condition that must be met for the sale to proceed. Common contingencies include financing, inspection, and appraisal contingencies.
The closing is the final step in the homebuying process where all necessary documents are signed, funds are transferred, and ownership of the property is officially transferred from the seller to the buyer. In the days before closing a closing disclosure will be given to the buyer and seller in advance to review and make, if any, adjustment before the day of closing so as to not delay the process.
These are some of the key real estate terms buyers and sellers should be familiar with when buying a home in Houston, Texas. It's also a good idea to work with a qualified real estate agent who can guide you through the process and explain any terms or concepts you may not fully understand. Please, contact me with any questions you have 346-573-4729 or realtorjaclyncano@gmail.com. As always, I’m here to help. Bringing you HOME starts NOW!
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