Are you buying your first home or selling your existing one and want to know what to expect after you go under contract? The real estate transaction can be broken down step by step to make it a little easier to understand.
For Buyers: What to expect after your offer is accepted
For Sellers: What to expect after you accept an offer on your home
With over 150 different real estate terms in the Real Estate Market Glossary published by the Federal Trade Commission (FTC), it can be overwhelming and nearly impossible to remember what all of them mean. More importantly, which ones MUST you know to be a successful real estate transaction coordinator?
Here are my picks of must-know real estate terms:
Appraisal: An analysis completed by an appraiser used to estimate the value of a property.
Appraiser: A professional who determines the estimated value of a property by analyzing it and comparing it to similar properties that have sold.
Buyers Agent: A licensed real estate professional who represents the home buyer and works with the buyers best interest in mind.
Real Estate Broker: Real estate salespersons who have completed additional training and licensing requirements to help people buy, sell and rent real property. Real estate brokers are allowed to hold other real estate salespersons licenses under them, unlike a real estate salesperson with no additional training.
Clear Title: Ownership that has no liens, defects or other legal encumbrances.
Clear to Close: All required documentation has been reviewed and any additional requirements have been met. In other words the loan is approved and the closing date can be scheduled.
Closing: The buyer and seller sign required closing documents and ownership is transferred to the buyer.
Closing Agent: The person responsible for coordinating the various closing activities.
Closing Date: The date agreed upon by the buyer, seller, lender and title company when the sale of the property is finalized.
Closing Statement: A document showing the financial responsibilities of all parties involved in the real estate transaction.
Commission: A percentage based fee for real estate services provided by a real estate salesperson.
Commitment Letter: A binding offer provided by a lender showing the mortgage amount, interest rate and repayment terms.
Contingency: A condition that must be met before a contract is legally binding.
Default: The failure to fulfill a legal obligation in a contract related to monies or an action or service.
Earnest Money Deposit: A deposit made by a home buyer showing they are committed to buying the home.
Escrow: An item, usually money, deposited with a third party to be delivered once a particular condition is met.
Foreclosure: When ownership rights to a home are terminated after the home owner fails to make payments as agreed to under the mortgage terms.
Home Inspection: A professional inspection of a home that details the condition of the property.
Homeowners Insurance: An insurance policy meant to protect a homeowner in case of structural damages to the home or personal property due to a fire or flood.
Home Warranty: Insurance that is offered by the home seller to cover certain home repairs for a specific period of time.
Homeowners Association: An organization that ensures proper maintenance of homes and and common area facilities in a specific area or neighborhood.
Inspection Period: A specific length of time agreed on by the buyer and seller that allows the home buyer to complete their due diligence (inspections) of the property they offered to purchase.
Settlement Statement: A complete and final list of closing costs associated with the transaction.
Mortgage Lender: A financial institution that loans out money to a prospective home buyer for their mortgage.
Lease Purchase Option: When a seller rents their property to a person who then has the option to purchase the home within a specific period of time.
Lien: A claim or charge on a property for the payment of a debt owed.
Loan Origination: The process where a loan is made. The steps involved are taking a loan application, processing and underwriting the application, then finally closing the loan.
Market Value: The current value of a home that is determined by a professional appraiser and takes into consideration the current real estate market and past similar home sales.
Multiple Listing Service (MLS): The online system used by real estate agents to share their real estate listings with other real estate agents.
Offer: A formal bid by a buyer to purchase real property from a seller.
Pre-Approval Letter: A letter provided to a prospective home buyer by a mortgage lender stating the mortgage amount the buyer is qualified for.
Pre-Qualification Letter: A less detailed, preliminary assessment by a mortgage lender stating the possible amount they will lend to the prospective home buyer.
Ratified Sales Contract: A legally binding contract between a home seller and home buyer showing both parties accept the offer for the purchase of real property. The contract states the sales price and conditions that the buyer and seller must meet.
Real Estate Professional: A licensed individual who is authorized to provide home buying and home selling services after completing required training and education.
Sale-Leaseback: A real estate transaction where the buyer leases the property back to the seller for a specific period of time.
Selling Agent: A licensed real estate professional who represents the home seller and works with the sellers best interest in mind.
Settlement Statement: A document provided by the title company listing all of the closing costs associated with the purchase of real property.
Survey: Precise measurements of a property completed by a professional surveyor that shows the legal boundaries and dimensions of the property as well as the location of improvements.
Title Company: Title companies run a detailed search of the property's history to verify the title is lawful and that the seller has the right to sell the property.
Title: The right to and ownership of real property.
Title Insurance: Insurance that protects the home buyer and mortgage lender from possible legal problems with the title.
Underwriting: The process of evaluating a property, the borrowers credit and their ability to pay the mortgage. This process determines if the buyers loan is approved.
Walk-Through: A clause in a real estate contract stating the buyer is allowed to examine the property, usually within 24 hours of closing, to ensure the home is still in the same condition as when they went under contract.
While there are many other terms you may run into during a real estate transaction, the terms mentioned here are what I believe to be the basic "must-know" terms for any new real estate agent or transaction coordinator.
Are there any real estate terms you would add to the list? Share your response in the comments!
All transaction coordinators have a list of services they offer, some may look longer than others leading you to believe that a certain real estate transaction coordinator will do more work than another. You can see the services we offer to real estate agents here. To most real estate agents, at first glance it may not seem like there is much work to offload to a transaction coordinator. I am giving you a behind the scenes look, by the numbers, at how much a transaction coordinator actually does for you during a real estate transaction.
- 78+ emails sent (the transaction example I am using doesn't close until 1 day from now... yes there are more emails to be sent and tasks to complete for this transaction, even though we are so close to closing)
- 94+ documents completed (signed, reviewed, sent and/or uploaded... yes every document has to be reviewed, with more to come before closing)
- 51 transaction details input (commissions, dates, times, contacts, and property details)
- 15 text messages sent (urgent communication with the client, real estate agent)
That is 238 emails, texts, documents and tasks completed before the transaction is even closed. Every transaction and every transaction coordinator is different but this is a look into what we do for you!
1. Not Following Up During The Transaction
Following up with other parties (lender, listing agent, buyers agent, title company, seller, buyer, appraiser, home inspector) during a real estate transaction is a very important and often overlooked part of closing a real estate transaction that many agents fail to do. Most real estate agents would prefer not to "babysit" their transactions or simply aren't aware of the importance of it. Without every party in the transaction being on the same page, deadlines and details could be missed or overlooked, numbers could not add up and the transaction could fall apart.
2. Failing To Meet Critical Deadlines During The Transaction
Dates and deadlines are put into place during a transaction for a reason. Most parties in the transaction have a deadline to complete their tasks by, that is just the way real estate transactions work. Getting properly completed documents to the correct parties in a timely manner is a crucial part of a transaction and is something that can be easily forgotten when a real estate agent is handling multiple transactions on their own.
3. Not Hiring A Transaction Coordinator
Transaction Coordinators are an overlooked benefit to real estate agents during a real estate transaction. Transaction coordinators help prevent mistakes such as not following up during the transaction and failing to meet critical deadlines during a transaction. Other ways a transaction coordinator can benefit real estate agents is by looking over documents to ensure all information is completed and correct, reminding agents of the critical deadlines, following up with other parties in the transaction, keeping and delivering copies of all documents in the transaction to the real estate agent.
If you've made any of these mistakes during a real estate transaction and want to prevent them from happening again, contact us today!
One of the key duties of being a Real Estate agent - even greater than helping your client buy or sell their home - is making sure that once they are under contract, the transaction closes. The many moving parts of a Real Estate transaction can quickly become overwhelming considering the million other things Real Estate agents have to juggle on top of making sure their contracts close. A transaction coordinator can take one of the most stressful and time consuming tasks of a real estate transaction off your shoulders. Here's what contract closing experts does for you:
If you're a Real Estate agent looking to free up more time in your busy schedule or just want a second set of eyes on your contracts to ensure nothing is missed, contact us here or call us directly.
Ask yourself these questions to determine whether or not your brokerage and its agents could benefit from the services of a Transaction Coordinator.