The home buying process can be overwhelming, especially with all the crazy industry jargon. With a few simple selling tips, however, you can calm frazzled buyers before they go AWOL.
Selling homes can be a battle when buyers don’t understand the plan…
When your buyer gets that deer-in-the-headlights look, ditch the fancy jargon and break down these common real estate terms:
Estimated value of the property, which ensures sellers don’t get jipped, and buyers don’t overpay.
- Closing costs
Additional expenses beyond the cost of the home, including appraisals, surveys, title searches, inspections, escrow, loan and lawyer fees – usually about 6% of the sale price.
- Comparative market analysis
Compares a listed property to similars sold in the area to determine if the asking price is realistic.
A get-out-of-jail-free card to renege on the deal if something doesn’t go as planned: financing, appraisal, inspection…
- Due diligence
The buyer’s obligation to do his homework before purchasing a property (as ending up with a “lemon” falls squarely on their shoulders).
- Earnest money
“I promise I’ll buy this property. If I walk away you can keep this moolah.”
- Escrow account
Holds funds for the closing and pre-payment of annual insurances and taxes.
- Good faith estimate
List of interest rate and fees from potential lenders so buyers can compare/shop for loans.
- Loan-to-value ratio
The amount of the mortgage divided by the appraisal value. High = pushing the limits of the home’s worth (a higher-risk loan).
Buyer’s permission slip from the bank to purchase a home within a specific price range.
- Principle, interest, taxes, and insurance
Sums up the total monthly mortgage payment.
- Private mortgage insurance
PMI insurance protects the lender on high-risk loans in case the buyer walks away after the purchase.