The A B Cs of Demystifying Real Estate Terms
Whether you are buying your first home or have experience selling homes, you will need to comprehend real estate terms for each process. As we don’t buy or sell homes every day we tend to forget real estate lingo in between times. Here are some common terms that can help you during your buying/selling process.
Amortization:
This is the term set out by your financial institution to pay off your mortgage loan. It also means spreading out your payments over a specific period of time.
As Is Condition:
In simple terms, this property needs work. This could run into a money pit if major repairs are needed. There are no warranties or disclosures on the property.
Bridge Financing:
Short-term loan that bridges the gap between your old mortgage and new mortgage. It allows you to close on your new home purchase while waiting for your current home to close.
Closing Costs:
This are costs above the purchase of your home. For example: lawyer fees, land transfer taxes, etc.
Closing Date (Date of Completion):
The date where the ownership is transferred from the seller to the buyer. The date that the home purchase or sale will be finalized.
Conditional Offer:
An offer to buy a home with certain conditions or restrictions. (e.g. financial approval, home inspection or even the sale of your present home)
Equity:
The value of your home over and above the amount owed on your mortgage.
Escrow:
Money held (usually by a lawyer) until all conditions are met during the sale or purchase of a property.
Firm Offer:
This is an agreement to purchase with no conditions or all the conditions have been fulfilled.
Fixtures and Chattels:
Fixtures are improvements to the home that are attached and cannot be removed easily without damaging the property. (I.e. Water heaters, cabinets, lighting).
Chattels are movable items that you may wish to take with you but must be listed in your agreement of purchase and sale. (I.e. Drapes, appliances etc.)
Lien:
A legal claim that may be held against a property for specific money owed.
Mortgage Loan Insurance:
If your down payment is less than 20% of the cost of your home, you will need to pay CMHC mortgage insurance which will be finance as part of your mortgage. This insurance protects lenders in case of mortgage default but it also allows you a minimum 5% down payment.
Offer to Purchase:
A written contract to purchase real estate that becomes binding once agreed to by the vendor.
Power of Sale:
The right of a mortgagee to force sale of a property if it comes in default
Right of First Refusal:
When you have already put a conditional offer on a property, the seller in the meantime may still receive offers on the property. The right of first refusal is given to the first buyer to allow them to purchase this property with the same terms and conditions contained in a new offer that the buyer would like to accept. Sometimes the new offer may have no conditions whatsoever (i.e. they don’t need to sell their present home) or perhaps they will offer a higher monetary value for the property. The first buyer is given the option to drop their conditions from their present contract or agree to a higher purchase price that compares with the second offer. If they do not wish to do so, the second offer may be accepted by the seller.
Title Insurance:
Although this insurance isn’t mandatory it will protect you against mortgage fraud, identity theft and forgery. The cost is dependent on the price of your home and is well worth the investment.
These are only some of the more common terms you need to know for the purchase or sale of property. As this is just a guide, you should always seek advice directly from the professionals.
The Winch Walton Team can help you navigate through your agreement of purchase and sale and answer any questions you may have. They have a proven track record of many years in the real estate industry and can help you with the purchase, sale or staging of your home.
Access the Winch Walton Team for all your Ottawa real estate and free home staging needs.