CASH DEAL- This DOES NOT mean that the home must be paid for in cash. Line 88 on the “AS IS” Residential Contract for Sale and Purchase allows you to make a (a) cash offer for the purchase, or (b) one that is contingent upon financing. The wording was recently changed in November 2021 to (a) “This is a cash transaction with no financing contingency.” A cash deal can also be a financed deal, this just means that the deal is not contingent upon financing. If you were to check (a) and didn’t qualify for financing, you would have to pay cash or lose your deposits. In today’s market, the strongest offers win, and cash offers are the strongest. If you know that you qualify for a mortgage, and/or can buy the house with cash, you should consider making a cash offer. This is something you need to carefully consider.
INSPECTION PERIOD- When you submit an offer, one detail you choose is the amount of time you must inspect the property and/or cancel the deal without penalty, even if you don’t have the property inspected. Short inspection periods make a deal the strongest, and I typically put 7 days since I can order an inspection and get it completed in 1-3 days. Inspection periods are a creative way to win bids when your schedule may not allow you to view a property promptly. Ask Me How!
APPRAISAL CONTINGENCY- An appraisal contingency protects you from overpaying and helps ensure a property is worth what you are paying. If the property does not appraise for at least the specified amount, the contract can be terminated, and in most cases, the earnest money is refunded to you. There are situations where the agent must include a specific appraisal contingency to protect you, but in most finance situations, this protection is already included as part of the financing contingency.
ESCROW DEPOSIT- When you win a bid, you will be required to give a deposit. The deposit will be anywhere from 3%-10% of the purchase price and usually is in the form of two separate deposits. One deposit will be made immediately after a contract is accepted (usually within 3 days), and a second shortly after. I prefer to make the second deposit after the inspection period so that in the event you want to back out, you need only to wait for the initial deposit to be returned. Since inspection periods can be extended for various reasons, I will generally write in the contract “Second deposit to be made within 2 days of inspection period.” This way, no one will need to sign any amendments to the contract if this date changes. These funds are held in a neutral third-party escrow account and ARE NOT controlled by the seller.
HOPA- The Housing for Older Persons Act of 1995 means it is an age-restricted community where owners MUST be 55 (or 62) and older. Some occupants may be under 55 and they still maintain this certification however, when the unit is purchased at least one occupant must be over 55.
ESCALATION CLAUSE- An escalation clause in a real estate contract, sometimes called an escalator, that lets a home you say: “I will pay X price for this home, but if the seller receives another offer that’s higher than mine, I’m willing to increase my offer to Y price.” This creative clause is a great idea in today’s market when there is a multiple-offer situation. There are also times when this type of clause puts you in a weakened position.
POST CLOSING OCCUPANCY- Occasionally, the date on which you and the seller agree to close on may not exactly align with the desired timeline of the parties. Usually, buyers wish to occupy the property right after closing. However, sometimes, if the home is in a desirable location and priced well, you may agree to the seller’s demand for a post-occupancy agreement in order not to lose the opportunity to buy the home. In these situations, prospective sellers may not have to immediately vacate their homes, but instead, can be allowed to remain on the property as a tenant. Sometimes this is necessary for sellers in order for their children to finish the school year, or while they wait for the next home to be completed.
AS IS- An “as-is” residential contract for sale and purchase is a contract you and the seller sign that stipulates that the seller will not pay for any repairs. With a conventional sale, there is usually room for negotiations regarding payment for repairs. However, when you sign an “as is” contract, you waive that opportunity
and agree to purchase the property in its current condition, flaws, and all.
SQUARE FEET-TOTAL (SqFt-Total)- The entire length and width of any covered area of the home.
LIVING SQUARE FEET (LivSqFt)- The entire length and width of any covered area of the home, minus any areas that are not heated or cooled with the system that controls the rest of the house. This can include Florida rooms and basements if specific criteria are met.
LISTING AGENT- A listing agent is a licensed real estate agent who represents the seller in a transaction. Listing agents are responsible for helping sellers navigate each step of the sales process.
BUYERS AGENT- A buyer’s agent is a real estate professional who guides a buyer through the process of purchasing a home. As a representative of a purchaser in a real estate transaction, a buyer’s agent has a legal obligation to protect the interests of the buyer and work to ensure they’re getting the best deal possible. Sometimes buyers desire to go directly to the listing agent. This is usually not a good idea since you give up having an advocate working directly for you.
SELLER DISCLOSURE- Seller knows of no facts materially affecting the value of the Real Property which are not readily observable, and which have not been disclosed to you. Except as provided for in the preceding sentence, Seller extends and intends no warranty and makes no representation of any type, either express or implied, as to the physical condition or history of the Property. Except as otherwise disclosed in writing Seller has received no written or verbal notice from any governmental entity or agency as to a currently uncorrected building, environmental, or safety code violation.
ACTIVE/PENDING / ACTIVE UNDER CONTRACT / BACK-UPS- An Active listing is a property that is available for sale according to the details that are listed on the MLS. A Pending listing is a property that has a contract on it, is moving through the financial process towards a closed sale, and is no longer accepting showings or being actively marketed. When a listing is Active Under Contract, that property is under contract but is still accepting showings and being actively marketed. Taking Back-Ups is when you accept an offer contingent upon the first one falling through.
FORECLOSURE / REO- I often get asked to look for foreclosures for clients, but what clients don’t always realize is that the only way to get a true foreclosure is at the courthouse steps at auction. If a property is listed on the MLS, as an REO, it’s not actually a foreclosure. There’s one key difference between a property that’s in foreclosure and one listed as “real estate owned,” or REO. A foreclosure home is in the process of being taken back by the mortgage lender; an REO home has already been taken back, but the lender hasn’t been able to sell it. In this market, banks realize home values and how quickly they are selling, so the great deals that were available even five (5) years ago, aren’t anymore. In addition to having to pay for foreclosures in cash, you also can’t inspect the property prior to the sale, and all title, lien, and tax issues are assumed by you!