An as-is contract removes repair obligations from the seller.  The buyer can still negotiate repairs and/or seller credits and cancel the contract during the inspection period if they can’t come to terms.  The seller is still legally bound to disclose known material defects under an as-is contract.

A property appraisal is a written estimate of a home’s current market value by an impartial licensed appraiser.  The value is determined by comparing the subject property to recent sales of similar homes in the neighborhood.

The appraisal contingency gives the buyer the right to cancel the contract if the home doesn’t appraise at the purchase price.  If the home is valued below the purchase price, the price can also be renegotiated.

An assessed value is the property value determined by a local or state government for property tax purposes. Once a value is assigned, the government applies the property tax rate to the assessed value. A home’s assessed value is usually a different amount than its appraisal, or market value (about 85%).

Closing costs are fees associated with buying a house. These fees include lender charges, appraisal fees, title insurance, homeowners insurance, sales tax, attorneys fees, and other third-party charges. Always ask your agent which are negotiable, which can be paid on a credit card, which can be “gifted” and which can be paid by your lender or the seller as a closing credit.

Commission is a percentage of the sale that is paid to the real estate professional. In most situations, commissions are paid by the seller of the property and negotiated before the property is put on the market.

A comparative market analysis, often referred to as a CMA, is a real estate agent’s estimate of market value based on recent sales of similar homes in the same neighborhood.  A CMA is useful for sellers to determine a list price for their home, and for buyers to come up with a reasonable dollar amount when submitting an offer to purchase.

A condominium or “Condo” is an ownership concept, often in an apartment building. The owner receives a deed for the apartment and pays real estate taxes on their unit.  Condo owners share ownership of common areas such as hallways, property grounds, elevators, and community amenities like pools and fitness centers.

Owners pay fees to maintain the grounds and the building (or buildings, for a larger complex). The owner pays fees to contribute to the building maintenance, the land, and the collective utilities.  What maintenance fees cover will vary from association to association. Roof and exterior maintenance, pool care, landscaping, water, trash collection, and building insurance are common items included in the maintenance fee.  It is common for maintenance fees to increase.  You should ask if there are any proposals to raise the dues when purchasing a condo in Florida.

Contingent is a Multiple Listing Service (MLS) status in which a house has accepted an offer but relies on meeting certain criteria, such as passing a home inspection or appraisal.

Real Estate contingencies are conditions of the contract that are in place to protect the buyer and seller from things that could go wrong during the transaction. Each condition must be met according to a predefined schedule to ensure that the sale progresses in a timely manner.

A conventional loan is originated in the private sector and is not insured by the government.  They are more difficult to qualify for than government-insured loans because they pose a greater risk to the lender. Conventional loans offer 3% down payment options, but select lenders are able to qualify buyers with 0% down.  Borrowers can avoid private mortgage insurance with a 20% down payment.

A co-op is a non-profit company that owns and operates a residential complex. Buyers lease one of the building’s units by buying shares of stock in the building’s corporation along with a proprietary lease that claims their rights to exclusively inhabit.  The land is often leased on a 99-year land lease and renewed every century.  Most purchases are cash transactions, but you can finance a co-op with a share loan rather than a traditional mortgage.

Desktop underwriter is an automated system that is used to evaluate a borrower for loan approval.  A true pre-approval will include a desktop underwriting report to demonstrate that the lender has done his or her due diligence in examining the borrower’s ability to obtain loan approval.  In hot seller’s markets, most listing agents will not entertain an offer without a preapproval letter accompanied by desktop underwriting.

Discount points allow you to prepay interest on your mortgage.  Basically, you pay more at closing to secure a better interest rate.  Each point is equal to 1% of the loan amount, but the reduction of the interest rate for each point varies among lenders so make sure that you understand each lender’s discount point calculation while shopping for a mortgage.

The amount of your home’s purchase price you pay upfront when financing a home.  The amount required largely depends on the type of loan you choose.   Sometimes the type of property you purchase and the homeowners association’s requirements can impact the required down payment as well.

The earnest money deposit, also known as the good faith deposit, is collected from the buyer and placed in escrow during the transaction.  If the buyer fails to meet his or her contractual obligations, the seller can claim the deposit.  If the transaction makes it through to closing, the deposit is applied to the buyer’s amount due at closing.

Escrow is a legal arrangement in which a third party holds funds until conditions of a contract are met.  When purchasing property, buyers are required to deposit earnest money into an escrow account to prove their intent to purchase.

Fee simple is the highest form of ownership and grants title to the property, the land, and any improvements to the land in perpetuity to the buyer. Single-family homes offer fee simple ownership but condos don’t because the owner owns the unit but not the land.

It’s common to take a final walk-through the day before closing. Do not skip this step! You want to make sure there hasn’t been any serious damage to the property since you entered into the contract. You’ll also want to check that all agreed-upon repairs have been completed to your satisfaction.

The finance contingency provides a specified timeframe in the real estate contract for the buyer to obtain loan approval.  The buyer is obligated to deliver a loan commitment or denial letter to the seller by the finance contingency deadline.  If the buyer fails to qualify for the loan, he or she will not forfeit the earnest money deposit as long as the deadline is met.

An FHA mortgage is a home loan that that is insured by the Federal Housing Administration (FHA). FHA loans are “designed” to make housing more affordable, and are easier to qualify for than conventional mortgages. However, they are often more expensive than a low money down conventional mortgage especially since FHA loans now require mortgage insurance for the life of the loan.

Foreclosure is the process of a mortgage lender taking possession of a property when the homeowner fails to make mortgage payments.  In hopes to recover the balance of the home loan, the lender will sell the house.

A four-point inspection is also known as the ‘Insurance Quote’ inspection. Once a home reaches a certain age, many insurance carriers would like to take a peek at the four main sources of insurance claims: the roof, plumbing, electrical, and HVAC

FSBO is a property that is being sold by the current homeowner without the aid of a real estate agent. Always consider getting your own representation for this type of transaction. Don’t forget your contract needs to be reviewed by a professional and your escrow should be held by an impartial party.  Inspections, appraisals, and title insurance will also need to be arranged.

Governing documents or “HOA docs” spell out the rights, rules, and responsibilities for the board and HOA members.  Governing documents include the Bylaws, Articles of Incorporation, Declaration of Covenants, Conditions, & Restrictions (CC&Rs), and Rules & Regulations.  HOA docs do change over time.  When purchasing in a community governed by an HOA, be sure you receive the most current version containing any amendments that have been made.

HOA stands for homeowners association.  Homeowners associations are governed by a board of directors that set and enforce the rules and regulations in the community.  The rights, rules, and responsibilities for the board and HOA members are spelled out in the association’s governing documents.  Aside from following the rules and regulations in the community, residents are required to pay maintenance fees known as HOA dues.

The Florida homestead exemption provides a tax exemption of up to $50,000 for a permanent residence.  The homeowner must establish Florida residency and they must own the home on January 1st of the tax year that they want to apply the exemption to.  This important tax benefit is not automatic, homeowners must apply at the county property appraiser’s office.

A home warranty is a residential service contract that can be purchased for a flat fee at closing by the buyer or seller to cover repairs or replacement of the home systems for one year.  If repairs are needed, the buyer will pay a service fee. The home warranty can be renewed each year.  This can save new homeowners a lot of money when purchasing a resale property.

A home inspection is an evaluation by a professional inspector to determine the current condition of the home and its systems. The buyer will receive a written report for all inspections they choose to have. Comprehensive inspections, four point inspections, termite inspections, wind mitigation inspections, radon gas inspections, and mold inspections are common.

The inspection period is the timeframe that the buyer has to get home inspections of the property.  The length of time is negotiable, but in Florida averages ten to fifteen days. The buyer may cancel the contract without penalty for any reason during the inspection period.

A kick-out clause is a contingency that provides a seller with alternative options when the contract is contingent on the sale of the buyer’s current home.  While the seller agrees to a home sale contingency, he or she can add a kick-out clause stating that the seller can continue to market the property. If another qualified buyer steps up, the seller gives the current buyer a specified amount of time (such as 72 hours) to remove the home sale contingency and keep the contract alive. Otherwise, the seller can back out of the contract and sell to the new buyer.

A list of information about a home that is currently on the market.  Key elements of a listing are the list price, a description of home features, and photos.  Listings are published on the Multiple Listing Service (MLS) and are syndicated out to real estate websites.

The MLS is a database that includes all available homes for sale in a particular area. Only licensed real estate professionals that belong to the local real estate association have access to the MLS. Not all sites on the internet are created equal, real estate agents always have the best information.

Private mortgage insurance is a policy that protects the lender (not the borrower) by covering a percentage of the lenders loss if the borrower defaults on the loan. Premiums range from 0.25% to 2% of the annual loan balance. Buyers that put less than 20% down are required to pay private mortgage insurance. Conventional mortgages require PMI payments until a 78% loan-to-value ratio is achieved, but borrowers can request to stop payments at 80%. FHA loans can require PMI payments for the life of the loan.

Pending is a Multiple Listing Service (MLS) status in which a home for sale is under contract with a buyer but hasn’t closed yet.  Generally, most or all contingencies have been met and the listing agent is confident that the transaction will make it to closing before a home is put into pending status.  Transactions that still have open contengencies are placed into a “contingent” status.

A mortgage pre-approval is an evaluation by a lender that determines if the potential buyer qualifies for a loan and, if so, the maximum amount the lender would be willing to lend. This is different from a pre-qualification.

REO is an acronym for “Real Estate Owned.” A REO property is owned by the bank due to a foreclosure. REO properties can be purchased from the bank; however, they are often sold “as is” and are not always a great “deal” when you consider the cost of repair.

A seller credit is money given from the seller to the buyer at settlement to pay for part of the closing costs. The amount varies depending what the mortgage company allows (3%-6% depending on the mortgage product). Seller credits can also be granted for home repairs. Negotiating repairs after the inspection can make or break a transaction. Remember- there is no harm in asking! 

A seller credit is money given from the seller to the buyer at settlement to pay for part of the closing costs. The amount varies depending what the mortgage company allows (3%-6% depending on the mortgage product). Seller credits can also be granted for home repairs. Negotiating repairs after the inspection can make or break a transaction. Remember- there is no harm in asking!