9 Real Estate Terms You Need to Know if You’re Selling a Home
When you bought your home, you were probably introduced to the rich language of real estate. Confusing terms and odd words that you had never heard before no doubt became commonplace during the buying process. If you’re thinking of selling up, prepare to flex your linguistic muscles once again!
During the sales process, you’re likely to recognize numerous phrases, but there are also a lot of new terms to learn. It’s good to get to grips with the following 9 real estate terms if you’re selling, especially if you are trying to sell your home fast; this might even help you avoid some of the usual mistakes and pitfalls. And who knows, some of them may even open the doors to possibilities you weren’t previously aware of!
APS (Agreement of Purchase and Sales)
When you’ve found a buyer for your home, you will be required to fill in and sign an APS. This legally binding contract details the various conditions of the sale and enables the seller to stipulate inclusions and exemptions for fittings and chattels, and rental items. Additionally, it dictates the final purchase price, the closing date and numerous other important details.
All conditions and time limits will also be described. As a seller, it’s worth speaking with your real estate agent to ensure you stipulate the exact terms and conditions that you want. Both seller and buyer are required to sign this contract.
Also known as ‘unattached goods’, chattels are those items of personal property that you will take with you upon selling your home. Chattels are often confused with fixtures, by buyers and sellers alike, so it’s worth staying ahead of the game. Typically, any movable personal property qualifies as a chattel, TVs and other appliances, vehicles and livestock are some examples.
However, the seller is free to take items that may not be considered a chattel as long as they stipulate this in the APS. Exclusions can be made and it’s worth doing this in advance to avoid arguments on closing day. Expensive fittings such as ornate curtain rails, mirrors, and cabinets are common points of contention, so be sure your APS clearly states exactly what you plan to take with you.
CMA (Comparative Market Analysis)
Occasionally referred to as ‘comps’, the CMA is a report of all similar homes that have been sold in your area recently, as well as those that are currently on the market. This is one of the best ways to determine an accurate listing price for your home. Your listing agent will typically carry out the necessary research and compile a CMA report before listing your home.
A conditional sale is the sale of a property that is subject to meeting predetermined criteria. Often, such a sale comes about as a result of a potential buyer making a conditional offer. As the seller, if you accept this offer, you may be required to provide additional documents.
Typically, conditional sales are subject to obtaining a satisfactory home inspection report, the buyer securing financing or the buyer selling their own property within a specified time frame. If the conditions are not met, the buyer is free to walk away. It’s important to note that when you as a seller accept a conditional sale, you cannot legally accept any other offers until the required time period has passed.
When you bought your home, you will have obtained a deed, registered against your new property in your name. You will be required to present the deed during the sales process. Both seller and buyer must sign the deed in order to transfer ownership of the property.
The equity on a property is the difference between the appraised market value of your home and the remaining mortgage amount. For example, if your home is valued at $200,000 and you still owe your lender $70,000, the equity is $130,000. When you sell your home for profit, the equity will be the money you receive after paying off your mortgage.
MLS (Multi-Listing Service)
MLS organizations collect and distribute home sale information to their members, who are typically Realtors®, real estate agents and brokers. Such services are not available to the public. The data collected by MLS organizations is used to generate content for home listing websites and services, ensuring your home is well advertised. There are several MLS organizations across the country, all working to create private databases that are paid for and maintained by real estate professionals. These services are an invaluable resource when both selling and buying property.
Mortgage Prepayment Penalties
When you pay your mortgage off early, you may be subject to penalties from your lender. These penalties are designed to compensate lenders for any potential losses from interest income as well as making it difficult to break your mortgage. Penalties typically cost around 3 months’ worth of interest, but are subject to change case by case.
During the sales process, you may come across the term ‘staging’. This simply describes making your home look as attractive as possible to potential buyers. You can do this yourself, by decluttering and removing personal effects from your rooms, or you can hire professionals. The latter is advised for houses that haven’t been lived in for some time, as furniture can be provided for the sole purpose of staging. Perfect for photos and visits alike, staging can make your home stand out from the crowd.
Vendor Take-Back Mortgage
A VTB describes a home sale in which you as the seller, or vendor, agree to finance some or all of the buyer’s mortgage on your home. The buyer would then pay you monthly installments, rather than paying their lender. A VTB offers many advantages to the seller, including monthly cash flow, higher sale price for their home, avoidance of tax penalties and a higher chance of selling in a slow market.
It doesn’t come without risks, however, and it’s well worth discussing this option with your real estate agent or lawyer.
REALTOR®, REALTORS® and the REALTOR® logo are certification marks owned by REALTOR® Canada Inc., a corporation jointly owned by the National Association of REALTORS® and CREA.
MLS®, Multiple Listing Service®, and the associated logos are all registered certification marks owned by CREA and are used to identify real estate services provided by brokers and salespersons who are members of CREA.