Words You Will Encounter in a Real Estate Contract

Whenever you’re purchasing a house, you will also have to learn the language of the real estate industry. If you are really looking for houses for sale Sydney and close to submitting an offer, it is particularly vital to be up-to-date.

Before you search for houses, you should ask your real estate agent to provide you a copy of the standard contract. This will help you get acquainted with the terminology of the real estate market.

Title Insurance Affidavit

The document that attests the seller owns the house and can transfer legally to you the ownership is called title affidavit. It helps make sure that there aren’t any claims against the house. This includes the mechanic’s lien. This typically occurs whenever the seller employs a professional to do work on the house but does not pay him/her.

Adjustments at Closing

This part of the purchase contract defines any changes to the purchase price of the house to accommodate the association fees, municipal assessments, utilities, property taxes, and much more.

For instance, the purchaser will have to “compensate” the seller for the last 4 months if the seller completed a semi-annual property tax 2 months before closing.

Escrow of Earnest Money

You will have to show the seller that you are really interested in buying the property as a buyer. You can do this by depositing good faith deposit, commonly known as earnest money, into an escrow account.

Your real estate agent can help you with this. However, as a general rule, the good faith deposit is 1 up to 2 percent of the overall house purchase. You will have to apply this to your down payment at closing.

Disclosures

As a seller, they are obliged to do property disclosures that show different improvements or flaws that might have an impact on the condition of the house. Necessary disclosures differ by market. However, popular examples include revealing the presence of asbestos, lead-based paint, or other environmental threats.

Disclosure documents are typically provided to purchases once the seller has accepted the offer. On a couple of occasions, you might obtain them before you submit the contract.

As a seller, it is ideal to show every single thing about a house upfront since the transaction isn’t going to fall apart. In addition to that, you might have to take legal action against the seller if you find out after closing that the seller lied.

Lawyer Review

Real estate experts aren’t licensed to practice law. However, they are permitted to help home sellers or buyers enter into real estate contracts. That’s why almost every real estate contract includes an attorney review clause. This offers both the seller and the buyer time to lock a Lawyer’s review and possibly cancel the contract.

Price

This is probably the simplest term to understand. However, it is also the most difficult one to agree upon.

If you include other features in the offer, a seller might be willing to accept a lower price. This includes an all-cash purchase or a quick closing date.