Buying your first home can feel like a daunting task. Real estate is the single biggest investment you will make in your lifetime so being well versed in the lingo is key to success. As they say, knowledge is power, and we want to make sure you are knowledgeable in everything real estate! Below are four key terms to understand when you’re considering buying or selling.
Let’s start with “pending.” This means that the home you are looking at is under contract with another buyer. In essence, the home is on its way to closing! The seller and buyer have come to a mutual agreement and the home will be listed as pending until all closing documents have been completed.
On the other hand, we have “contingent” listings. This means that the seller has accepted an offer from a willing and able buyer but they still have certain terms that need to be agreed upon.
There are many reasons an offer can be contingent, but just a few of them are:
- Financial contingency
- Appraisal contingency
- Inspection contingency
If all goes according to plan and both parties can come to a mutual agreement on the remaining items, the home will go from contingent to pending.
Due diligence is a negotiated period of time that the seller and buyer agree upon during the contract period. During this agreed upon time period before closing, the buyer has the opportunity to get all the necessary inspections completed, such as a:
- Land survey
- Pest inspection
- HVAC inspection
During this time, the buyer can back out of the deal for any reason at all. The only penalty the buyer would incur is the loss of their due diligence money that they gave up front at time of a signed contract.
Escrow is a sum of funds that is held by a third party while the real estate transaction is in process. It’s used as a way to protect the buyer and seller in the transaction. Escrow is normally between 1-3% of the total purchase price of the house. Escrow can be held by attorneys or real estate firms with a trust account. It is later applied to the purchase price of the home.
Declaration of Covenants, Conditions, and Restrictions (CC&Rs)
This term is only used for homes that are part of a community that has a Homeowners Association or HOA. It is a legal document that breaks down a roadmap for homeowners in the community on what the HOA handles and what restrictions the homeowners have.
We hope you'll leave this blog more knowledgeable and ready to take on all things real estate! If you still have questions, our real estate experts are at our model homes daily in all of our communities in Atlanta, GA, Greenville, SC, Columbia, SC, Charleston, SC, Charlotte, NC, Raleigh, NC, the Triad, NC and Richmond, VA.