Lots of terms are thrown around during a real estate transaction. What does it mean to be “ratified?” What’s the difference between a “title company” and a “settlement company?” Keep up by reading on.
As-Is – Indicates that you must assume ownership of the home in its current state, without asking for home inspection repairs or work to be done. Common with short sales and foreclosures.
Contingency – A part of the contract that protects the buyer. Common contingencies are home inspection, appraisal and financing. Ultimately allows the buyer to walk away from the contract at no penalty within a certain timeframe in certain situations.
Conveyances – Specific items in the home that will remain once the purchaser takes ownership. Common conveyance examples are appliances, window treatments and light fixtures.
Deed – The document serving as proof of ownership of a property.
EMD – Earnest money deposit. Usually equal to around 1-2% of the sales price, it is a check submitted with an offer. If the offer is accepted, the EMD is deposited in an escrow account and applied to your down payment at closing.
HOA – Homeowners association. The governing body of a community.
HUD-1 – The settlement statement summarizing all the costs associated with the transaction. It spells out what both buyer and seller owe and/or will gain in proceeds.
Post-occupancy – Also called a “rentback.” An arrangement when the seller needs to remain in the home for a short time (usually up to a month) after closing. They pay rent to the new owner at a rate equal to the new owner’s mortgage.
Ratified – The same thing as “under contract.” When both buyer and seller agree to all terms and sign all parts of the contract.
Settlement vs. Closing – These terms are used interchangeably but mean exactly the same thing. Settlement, or closing, is typically held at the title company’s office. A title company is also referred to as a settlement company.
Subsidy – Also referred to as a “closing cost credit” or “concessions.”
Title – A buyer’s legal interest in the ownership of a property.