Frequently Asked Real Estate Questions

An Active Property

The property is actively for sale and on the market. The sellers may have received offers but have not accepted any yet.

When an offer is accepted the property will become Pending the completed sale.

If the contract falls through, typically the property will go Active again.

Active contingent in real estate is a status of a property listing indicating that it is under contract, but that the sale is contingent on certain conditions being met.

These conditions may include the sale of the buyer’s current home, the receipt of satisfactory inspection reports, or the approval of a loan.

If the conditions are not met, the listing may revert to active status.

A professional analysis used to estimate the value of the home.

This is a necessary step in validating a home’s worth to you and your lender as you secure financing.

What does As-is mean?

A contract or offer clause stating that the seller will not repair or correct any problems with the property. Also used in listings and marketing materials.

What does Back on Market mean?

The property was under contract with another buyer and their contract fell through, so it is Active again.

What is a backup offer?

When an offer is accepted contingent on the fall through or voiding of an accepted first offer.

Once you have made your offer and the offer is accepted by the seller, the following questions may arise.

What does “under contract” mean?

Under contract means that all parties have agreed on terms, have signed the contract, and the signed contract has been delivered to both buyer and seller. Payment of the escrow deposit is expected but is not a requirement to make a binding contract.

What is escrow?

The escrow money, escrow deposit, or good faith deposit is money that is included with an offer, or as soon as an offer is accepted, to show the seller that you are serious about moving forward with the purchase of the home.

Because you forfeit this deposit if you back out of the purchase for any reason not allowed for in the contract, the larger the escrow deposit, the more seriously your offer is taken.

This is not the same as the down payment.

Do I need an inspection?

We always recommend that you have a home inspection done. In the grand scheme of things, paying a few hundred dollars to have peace of mind that there are no hidden dangers or problems is well worth the money.

The inspections you may need or want will vary depending on the home you are buying and the contract terms. Your agent will thoroughly discuss the inspections with you once your offer is accepted.

How much are inspections?

The cost of the home inspection depends on the size of the house and additional inspections requested, such as swimming pool, septic tank, termite/pets report, insurance, four-point (HVAC, plumbing, roof, and electrical,) wind mitigation, and radon. An average home inspection, without additional inspections, is about $300.

I will give you my recommendations for inspectors, but you can choose your own if you wish.

What if my loan doesn’t get approved?

If you have gone through the pre-approval process and have been forthcoming with all the information requested by your lender, it’s unlikely you will be turned down, but it does happen.

Make sure you do not change jobs, purchase big-ticket items on credit, take out a car or boat loan, or open any other new credit accounts while your mortgage is being processed.

If your loan does fall through, talk with your lender about changing to a different loan type.

When can I start moving?

When you have the keys! When you are financing your purchase, it takes four to six weeks for your loan to be processed. Once the lender gives the all-clear, closing is scheduled. You will sign your loan documents and both parties will sign documents transferring ownership to you.

Unless other arrangements have been agreed upon by both parties, the sellers should have completely vacated the home when they sign the closing papers. You can have your belongings ready to move, and a moving company scheduled before you go to closing.

At closing, you will receive the documentation you need to provide utility companies with proof of your new residence.

Buyer’s agent: The agent who shows the buyer’s property, negotiates the contract, or offer, and works with the buyer to close the transaction.

Closing: The end of a transaction where documents are signed, and funds are dispersed.

Closing costs are the fees that the buyer and seller will owe associated with the home-buying process, such as the real estate brokerage commission and title insurance.

Most are paid by the buyer, but the seller pays for some.

The fees will vary with each transaction. Your lender or title rep will let you know what the fees are and how much you will need at the close of escrow.

The fees required to complete the real estate transaction include points, taxes, title insurance, financing costs, and items that must be prepaid or paid through escrow.

Comparative market analysis or competitive market analysis, aka CMA, compares the sales price of similar properties in the area to help determine the price of a property.

A CMA estimates a home’s price based on recently sold, similar properties in the immediate area. Real estate agents and brokers create CMA reports to help sellers set listing prices for their homes and help buyers make competitive offers.

If you need more details about CMAs, read “What Is Comparative Market Analysis (CMA) in Real Estate?“.

What is a conforming loan?

A conforming loan is one that is limited to $647,200 for most of the U.S., which means you may be able to avoid the stricter requirements of a jumbo loan.

Loan limits vary over time and by location so you should check with your lender or Realtor for the latest information.

Other loan types include jumbo loans, FHA, and VA.

What is a Contingency?

A provision of the contract that keeps the agreement from being fully legally binding until a certain condition(s) is met.

For example, the purchase of a home can be contingent upon the buyer selling their home first.

Common contingencies include loan approval, satisfactory inspections, and appraisal.

• An appraisal contingency gives the buyer the right to back out if a professional property appraisal comes in lower than a specified minimum, usually the asking price of the property.
• A financing contingency loan approval gives the buyer time to obtain a mortgage and the right to cancel if financing is denied.
• An inspection contingency gives the buyer the right to have the home inspected by a set date.

In real estate, a contingent offer is an offer made on a property, which says that certain conditions must be met in order for the sale to be completed.

A counteroffer is a response to a buyer’s original offer on a house to make changes that better fit a seller’s goals.

A counteroffer is one step closer to an accepted offer!

A counteroffer shows that the seller is willing to work with the buyer, but on slightly different terms (usually a change in the price or contingencies).

Here’s how your real estate agent can help you navigate a counteroffer:

☑️ Buyers, we negotiate on your behalf and provide guidance on how to get your offer accepted.

☑️ Sellers, we help you stay clear of red flags and make sure you accept the right offer.

Negotiation is a BIG part of what we do as real estate pros! Connect with our team to learn more about how we provide 5-star representation for our clients.

A number ranging from 300-850 that’s based on an analysis of your credit history.

Your credit score helps lenders determine the likelihood you’ll repay future debts.

You’ll need a score of 620 or better, but you’ll get better financing rates with a score of 720 or higher.

Days on market (DOM) means the number of days a home has been listed on the market.

The number of days the property has been on the market may reflect the desirability and/or pricing of the home.

If the home has been on the market too long, the property may be stale.

What is a Disclosure Statement? 🤔

A legally binding document in which the seller reveals any potential flaws and issues the buyer needs to know about the property.

Also known as a “Seller’s Disclosure,” this is a legal document that outlines any known flaws that a home seller is aware of that could negatively impact the home’s value 🏡

💡 TIP: Buyers should scrutinize this document closely with their real estate agent to fully understand the condition of a home.

Our best advice? When it comes to buying a home, make sure you get an inspection to confirm what has been disclosed is accurate and discuss any potential deal breakers with your agent.

The three rules of this document are disclose, disclose, disclose.

What is a down payment?

The sum in cash that you can afford to pay at the time of purchase of a home or property.

A conventional loan down payment is usually 20% of the sales price, but other types of financing require as little as 3.5% to 15%. Some 0% down programs are also available.

A mortgage lender can tell you what types of loans you qualify for.

The representation of opposing principals (buyers & sellers) at the same time.

That is, one real estate agent represents both the buyer and the seller in one transaction (sale of a home).

What is Due Diligence?

When a homebuyer investigates facts about the physical and financial condition of the property and its area before they make an offer and after their contract is accepted.

When buying a home, it’s extremely important to do your “due diligence.” During this period, you’ll look into the condition of your chosen property and compare it to other homes like it to make sure it’s really a good fit.

Due diligence is reasonable steps taken by a person in order to satisfy a legal requirement, especially in buying or selling real estate.

As your agent, we’ll guide you through this process by pointing out and addressing any of the home’s red flags so you feel completely confident about your purchase.

What is Earnest Money? 🤔

A deposit made to a seller that represents a buyer’s good faith to buy a home. It’s typically around 1% – 5% of the sale price.

Earnest money is a deposit from the buyer to the seller, made in good faith to show dedication to purchasing the property 🏡

IMPORTANT FACTS 👇

💰 The amount varies by market
💰 Goes towards the purchase of your home
💰 Protects the seller if a buyer backs out
💰 A buyer may get this money back – due to failed inspections or contingencies

💡 TIP: In a seller’s market, you may consider making your earnest money non-refundable.

Our best advice? When it comes to buying in a low inventory, competitive market, it’s essential to partner with a Buyer’s Agent who understands how to make your offer stand out to sellers 🥊

What is an easement? 🔎🏡

A right to cross or otherwise use someone else’s land for a specified purpose.

The term often crops up after buyers have made an offer on a home that’s been accepted, at which point a title search brings up the easement—which is essentially the legal right for someone else to use the property, or part of the property for a specific purpose.

Say what? You bend over backward to buy a home and now you have to share?! Don’t worry, in most cases, it’s not as bad as it sounds.

Types of Easements:

📝 Right of way: This is where a neighbor may need to pass through the property via a driveway to access the main road, a neighborhood playground, or a community feature (like a lake).

📝 Utility maintenance: This easement is typically granted to utility companies to run power and cable lines on a property.

📝 HOAs/condos: If you live in a condo or home managed by a homeowners association, odds are these institutions own much of the property—while residents have rights to pass through.

What is an expired listing?

A real estate listing that has expired and is no longer active, usually because it didn’t sell in the amount of time agreed upon by the listing agent and the owner of the home.

Other reasons for a listing to expire are the asking price was not met, or there were other issues with the property.

If you see an Expired listing, the owner may still be interested in selling. Ask your agent about it.

What is an FSBO?

FSBO stands for “For Sale by Owner”. Often pronounced “fisbo”.

The owner of the home has it listed without an agent representation.

The buyer’s agent can usually still show the home, as many FSBOs will agree to work with agents representing a buyer.

Be wary of FSBOs since rarely does the homeowner have the requisite knowledge, experience, and understanding needed to sell a property.

A home inspector examines your home for integrity – such as the HVAC system, electrical, plumbing, attic, flooring, foundation, etc.

If you know where you want to live, have a steady and secure income, and are ready for the responsibilities of homeownership, then it might be time to invest in a home.

Read “5 Questions to Ask Before Purchasing Your First Home” to learn more about determining if now is the right time to buy for you.

What is a Jumbo Loan?

Conforming loan limits are $647,200 for most of the U.S., so anything above this would be a jumbo loan.

Jumbo loan requirements are stricter and there are more requirements you will need to satisfy.

Find out more about jumbo loans here.

What is a Listing?

In real estate, the word “listing” is typically used to refer to the for-sale home or property itself, although it technically means the agreement between the broker and the owner of the home to market and sell the property.

This is not the same as listing the property on the MLS (Multiple Listing Service).

What is the MLS?

MLS stands for Multiple Listing Service. They collect, compile and distribute all information about homes listed for sale.

The MLS is the organization real estate brokers use to search for and list properties for their clients.

Membership isn’t open to the general public, although selected MLS data may be sold to real estate listing websites, like Realtor.com or our own MLS listing search where the public can search the MLS at no charge.

See also the term “listing“.

The interest rate on a mortgage loan you pay to borrow that money when buying a home.

The lower the rate, the better.

What does Pending mean?

With a property that is pending, the property owner has accepted an offer from a buyer and they are under contract with that buyer.

Their agreement may be subject to a variety of contingencies: inspections, appraisal, financing, and more.

The home is not sold just yet. Typically if the sale does not go through, the house will return to “Active” status.

What is a Pre-Approval Letter?

It is a letter from a lender indicating you qualify for a mortgage of a specific amount.

Getting Pre-Approved

You’ll fill out a mortgage application, provide documents, and bank statements, get a copy of your credit report, etc.

Getting pre-approved is what you need to do before starting a home search. The person selling your dream home will want to make sure you really are qualified to buy. Most sellers aren’t willing to accept your offer with only a pre-qualification.

What is getting Pre-Qualified?

You contact a lender, provide a bit of financial information to them, and they tell you about how much you can afford to buy. That’s about it. It’s usually done over the phone, and your credit report is not needed at this point.

WARNING! 🔥 It’s NOT a promise of a loan. You are not guaranteed any particular interest rate. And you are not ready to purchase a home. What you have is an idea of what you may be able to buy. It’s a starting point, and a good way to start planning.

You’ll want to get a Pre-Approval Letter from your lender before you start shopping for a home.

One of the first steps in purchasing a home is getting either pre-approved or pre-qualified for a mortgage. Unless of course, you’re buying with all cash. 😁

It’s very easy to get confused between the two things. So, should you get Pre-Qualified or Pre-Approved for a mortgage loan?

Without getting into too much detail, we’ll give you just the essentials in understanding the difference, not the complete procedure for each.

Pre-Qualified

This is the simpler of the 2 processes. You contact a lender, provide a bit of financial information to them, and they tell you about how much you can afford to buy. That’s about it. It’s usually done over the phone, and your credit report is not needed at this point.

WARNING! 🔥 It’s NOT a promise of a loan. You are not guaranteed any particular interest rate. And you are not ready to purchase a home. What you have is an idea of what you may be able to buy. It’s a starting point, and a good way to start planning.

Check out Investopedia for a more in-depth explanation if you’re curious. https://www.investopedia.com/articles/basics/07/prequalified-approved.asp

Pre-Approved

This one is where the rubber meets the road. Paperwork, and plenty of it. You’ll fill out a mortgage application, provide documents, bank statements, get a copy of your credit report, etc.

It takes more time and there are more questions. It’s best to start with plenty of time before you plan to start looking for a home. That way you can deal with finding the papers you thought were in that one file cabinet, get your updated investment info, and try to fix any credit issues you may have.

Getting pre-approved is what you need to do before starting a home search. The person selling your dream home will want to make sure you really are qualified to buy. Most sellers aren’t willing to accept your offer with only a pre-qualification.

Again find out more here. https://www.investopedia.com/articles/basics/07/prequalified-approved.asp

Conclusion

Save yourself some heartache, heartbreak, and hair-tearing-out. Get pre-approved before shopping for homes.

Better yet, call me, Libby Guthrie at 925-628-2436 and I’ll answer your questions about getting started, and if you like, I’ll connect you with the right lender for your situation.

Just so you know, before my 27 years as a real estate agent and broker, I spent 15 years in mortgage banking. I know what I’m talking about and I love to share my expertise with you and your family.

Contact me today, share this article with a friend, and please, share on your favorite social site. Thanks!

What are Property Taxes?

A levy or tax imposed by a municipality on real estate and personal property. The amount of tax varies depending on the property value.

Property taxes are an annual tax that local municipalities collect each year, based on the assessed value of your property (not on the appraised value of your home). These funds help pay for services that benefit the community, such as schools, roads, maintenance, etc.

First-time homeowners often forget to factor property taxes into the overall cost of their new home, which can come as a nasty shock come tax season. So let this be a reminder to all homeowners to calculate property taxes into their annual budget!

💰 BONUS TIP: If you own a rental property, your property taxes may be tax-deductible 💰

Buying a home is one of the most important purchases you’ll ever make. We’re here to help you understand the home-buying process so you know what to expect. Today, we’re talking about what you need to do before you even begin.

What can I afford?

Figuring out what you can afford will determine the course of your home buying process. This all depends on a few different factors including how much you make a year, how much you pay towards your debt every month, and how much of a down payment you expect to make.

Other things to consider are your debt-to-income ratio, property tax, loan term and interest rate, home insurance, and possibly monthly Home Owners Association (HOA) dues. All of this can add up!

Zillow has a good home affordability calculator that can get you started.

What do I want?

Make a list of your wants and work from there. Maybe you have young children and want a friendly neighborhood with kids that play on the street. Perhaps you are older and enjoying retirement and want to walk out to the golf course.

Ask yourself what’s important to you and the way you live and work. Do you want good schools? Nice parks? Lots of shopping with great restaurants? Questions like these will help you narrow down what you’re looking for.

How’s my credit?

Unless you’re going to be buying your home for cash, you are going to need to finance. It’s important to pick the right lender, but even before all that, you need to review your credit situation. After all, your lender will look at your credit and so should you!

You can start the process on your own by getting a copy of your credit report. There are a lot of different ways to do this. Credit Karma is a popular free website that gives you an updated credit report every month. This is a great way to keep track of precisely what is going on with your credit.

Once you have the credit report, take a good look at it. Make sure that everything is correct and up to date. If you notice anything wrong, work to correct those immediately. If your credit isn’t great, there are ways to improve it.

Remember: the better your credit, the better your mortgage rates will be. A reasonable mortgage rate can save you a lot of money in the long run.

Need more help? Give me a call! I’m an expert on credit and mortgage information and may be able to help you better understand your situation.

Define Real Estate Professional.

An individual who provides services in buying and selling homes.

Real estate professionals are there to help you through the confusing paperwork, find your dream home, negotiate any of the details that come up, and so you know exactly what’s going on in the housing market.

There are several types of real estate professionals including Realtors^®, real estate agents, and real estate consultants.

Here are 6 questions and answers about looking for your first home to buy.

What should I do when I see a house online that I like?

Call the agent you are working with to find your home. It’s best that you work with one real estate agent throughout your search because that person learns what you like and dislike and will invest a lot of time vetting properties for you. That person also represents your best interests only. When you call the agent advertising the home, you are dealing with the seller’s agent, so, while they can assist you, they are also trying to get the best price for the seller.

Can you show me a house if it’s not your listing?

Yes, I can show you any house listed in our MLS system. As mentioned above, working with me as your agent ensures that your interests are protected.

How do we write an offer?

When you find the property you want to make an offer on, I will run a Comparative Market Analysis (CMA) to help you determine a fair offer amount. I will also guide you through the additional terms of the contract, such as the escrow amount, closing date, and any additional terms you want to be added to the offer. I will write the offer on a contract form and submit it to the seller’s agent.

What if I want to back out of a contract?

You always have the right to back out of the purchase, but you may lose your escrow deposit. If the contract is contingent on a property inspection, you usually have the right to cancel for any reason during the inspection period. Once the inspection period has passed, you cannot back out and keep your deposit unless the seller agrees, or an additional term has not been met.

That said, the ability to back out of a contract will depend on the details of the offer and the specifics of the contract. We will discuss these details before submitting an offer.

What happens if there are other offers on the house I love?

If a seller receives multiple offers on their home, usually their agent will inform the buyer’s agent that multiple offers have been received and the buyers have another opportunity to alter their original offer to present their “highest and best” offer.

Keep in mind that many factors may influence the seller in addition to the offer price, such as the down payment amount, closing date, and inspection terms.

What happens when my offer gets accepted?

Once both parties have agreed on all terms and signed the contract, your escrow deposit must be made and you should schedule the home inspection. Your lender will receive a copy of the contract and will begin processing your mortgage application.

Your agent will further discuss the full process with you at that time.

The property is Sold

The property has been sold and is off the market. The transaction has been completed and the new buyers own the home.

The property is no longer available to purchase or take offers on.

Time to look for another home to buy. 😉

What does Temporarily off the market (TOM) mean?

The owner has decided to take the listing off the market for an undetermined amount of time. Typically, this is because work is being done, or the home is unavailable for showings at the time.

Usually, the home will be back on the market in the near future. If not, the listing status will go to Cancelled.

What is Title Insurance?

An insurance policy that protects a mortgage lender’s or owner’s interest in real property from assorted types of fraudulent claims of ownership. This is typically paid for by the buyer.

Even though you’ll pay for this policy only once, your coverage will last as long as you own your home.

Learn more about title insurance here.

Along the same vein as a contingent offer, we often get the question about the meaning of “active contingent” in real estate.

Active contingent is one of a variety of status updates given to a home listing. If a property has an active contingent label, it means the seller has accepted an offer from a buyer. But the home sale has certain contingencies that need to be met, and the seller is taking backup offers in case the first deal does not go through.

Similar to contingencies being protection for the buyer, having the listing be active contingent offers protections for the seller.

Having a home be active contingent can influence a buyer to release contingencies prematurely, or when they shouldn’t be, just so the “other guy” doesn’t get the house. This would be a mistake!

Buying and selling real estate can be a very emotional time. Relying on your agent to guide you through the process is the best way to end in a result that you will be happy with!

In real estate, a contingent* offer is an offer made on a property, which says that certain conditions must be met in order for the sale to be completed.

These contingencies usually involve the home appraisal (the home value determined by an appraisal), home inspection, and receiving approval for your mortgage.

They may also include an offer contingent on the sale of the home the buyer (you) needs to sell before purchasing the new property.

Contingencies offer important protection for home buyers and are rarely waived.

Should I accept a contingent offer on my house?

If you are both buying and selling, should you take a contingent offer on the property you are selling? Typically, the answer is yes. But this is a decision you should discuss thoroughly with your Realtor®. Every situation is unique, so having an experienced agent is essential for determining if this is the right move for your situation.

* Contingent – occurring or existing only if (certain circumstances) are the case; dependent on.

What does Withdrawn mean?

The listing was withdrawn from the market by the owner. This could be for various reasons: The owners may have decided they do not want to sell anymore, or maybe they didn’t like the offers they received.