Glossary Of Real Estate Terms

I know that this is definitely not the most exciting post in the world… But due to many requests by consumers and clients, here it is:

Glossary Of Real Estate Terms

AVM: An automated method of valuing real property. Currently very inaccurate. For examples of AVMs and how they work, click here.

Acceptance: The date when both parties, seller and buyer, have agreed to and completed signing and/or initialing the contract.

Adjustable Rate Mortgage (ARM): A mortgage that permits the lender to adjust the mortgage's interest rate periodically on the basis of changes in a specified index (i.e. Libor). Interest rates may move up or down as market conditions change.

Amortized Loan: A loan that is paid in equal installments during its' term.

A.P.R. (Annual Percentage Rate): A term used in the Truth In Lending Act. It represents the relationship of the total finance charge (interest, discount points, origination fees, loan broker, commission, etc.) to the amount of the loan.

Appraisal: And estimate and opinion of real estate value usually issued to standards of FHA, VA and FHMA. Recent comparable sales in the neighborhood is the most important factor in determining value. This should be contrasted to the Home Inspection.

Appraiser: An individual who is licensed to perform an appraisal. Not to be confused with an AVM.

Appreciation: An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.

Assumable Mortgage: Purchaser takes ownership to real estate encumbered by an existing mortgage and assumes responsibility as the guarantor for the unpaid balance of the mortgage. Not a common way of securing a property due to a common lenders' clause stating that a sale of the property requires immediate payment of remaining balance by the borrower.

Bill Of Sale: Document used to transfer title (ownership) of PERSONAL property.

Buyer's Agent: A real estate agent representing a buyer in a real estate transaction rather than, by default, representing the seller either directly or as a sub-agent.

Closing Costs: A general term used to describe the fees associate with the purchase of property such as lender and settlement agent fees, title insurance, the appraisal and survey fees, etc. Closing cost are typically 2 to 5% of the loan amount, but vary by region.

Closing Statement (HUD-1): A financial statement rendered to the buyer and seller at the time of transfer of ownership that gives an account of all funds received or expended.

Cloud On Title: Any condition that affects the clear title to real property.

Common Grounds: Those grounds owned by the Home Owner's Association and/or by a small fraction by every home owner in the development.

Comparable Sales (Comps): Recent sales of similar properties typically within the same neighborhood used as a tool to establish market value or for appraisal purposes.

Condominium Association (Condo Association): The association which governs the condominium community usually comprised of owners within that community.

Contract: An agreement to do or not do a certain thing. In the case of real estate, when an offer for purchase and sale of property has been ratified and all contingencies have been removed.

Consideration: Anything of value to induce another to enter into a contract (i.e. money, services, a promise).

Contingency: A condition specified in a purchase contract, such as a satisfactory Home Inspection.

Counter Offer/Counter: An offer by a seller back to a buyer's original offer with a different price and/or terms than the original offer made by the buyer.

Credit Score: Your credit report contains a history of how you've paid your bills, how much open credit you have, and anything else that would affect your creditworthiness. Your credit score boils down all of that information into a three-digit number. Scores vary from 300 to 900. Though there are several scoring systems, the one used most commonly used by lenders is known as a FICO (Fair Isaac and Company).

Deed: Written instrument, which when properly executed and delivered, convey title to real property.

Depreciation: A decrease in the value of a property due to changes in market conditions or other causes. The opposite of appreciation.

Direct Lender: A lender who approves and supplies funds for their loans directly from the bank or financial institution which they are a part of. They do not receive final approval or funding from a third party (i.e. another bank).

Discount Points: A loan fee charged by a lender to increase the yield on the investment (aka lower the interest rate to the consumer). One point equals one percent of the loan amount.

Earnest Money Deposit: A deposit or promissory note from the buyer held in escrow by an agreed upon party which illustrates the buyer's commitment to purchase a property. In the event of default by the buyer(s), the earnest money deposit may be withheld by the seller as damages.

Easement: The right to use the land of another (i.e. utility company easement on your lot in order for them to run cable underground).

Encumbrance: Anything that burdens or limits the fee title to property, such as a lien, easement or restriction of any kind,

Equity: The value of real estate over and above liens against it. It is obtained by subtracting the total liens from the value of the property.

Escrow Payment: That portion of a mortgagor's monthly payment held in trust by the lender to pay for taxes, hazard insurance, mortgage insurance, lease payments and other items as they become due.

Fannie Mae: Nickname for the Federal National Mortgage Corporation (FNMA), a tax-paying corporation created by Congress to support the secondary mortgages insured by FHA or guaranteed by VA, as well as conventional home mortgages.

Federal Housing Administration (FHA): An agency of the U.S. Department of Housing and Urban Development (HUD). Its' main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting, but does not lend money or plan or construct housing.

FHA Insured Mortgage: A mortgage insured by the Federal Housing Administration according to its' regulations.

Fixed Rate Mortgage: A loan that has a set interest rate at a prescribed rate for the entire duration of the loan.

Foreclosure: Procedure whereby property pledges as security for a debt and is sold in the event of a default.

Freddie Mac: Nickname for the Federal Home Loan Mortgage Corporation (FHLMC), a federally controlled and operated corporation to support the secondary mortgage market. It purchases and sells residential conventional home mortgages.

Graduate Payment Mortgage: Any loan where the borrower pays a portion of the interest due each month during the first few years of the loan. The payment increases gradually during the first few years to the amount necessary to fully amortize the loan during its' life. NOT to be confused with an Adjustable Rate Mortgage (ARM).

Grantor's Tax: A tax in Virginia paid by the seller at the time the property is sold (typically settlement date). The current tax rate is $1 per $1000 of the sales price or assessed value, which ever is higher.

Hazard Insurance: This provision of homeowners insurance covers damage by fire, wind or other disaster. It is required by all lenders before a loan is approved.

Home Inspection: An thorough inspection of a property by a qualified third party who is typically hired by the purchaser(s).

Home Owner's Association (HOA): The association which governs the community of homes usually comprised of owners within that community.

Home Owner's Insurance: The general term for insurance on real property.

Improvement: In real estate, typically refers to any permanent structures on the property. Also refers to changes to the overall property which affect value.

Investor: The holder of a mortgage of the permanent lender for whom the mortgage banker services the loan. Any person or institution that invest in mortgages. Also known as an individual or institution that purchases one or more properties for investment purposes, not as a primary residence.

Lease Option: A contract which gives one the right to least property at a certain sum with the option to purchase at a future date.

Lease Purchase Agreement: An agreement to the future purchase of a property with the right to lease the property for the interim.

Lender: An bank or financial institution which lends money.

Lender Letter: A letter from the lender stating that a buyer is approved for specified financing contingent upon a ratified contract, satisfactory appraisal, underwriting approval and/or other conditions. Unlike a pre-approval letter, the lender will have processed all the necessary paperwork and ran a credit check making a lender letter much stronger than a pre-approval letter.

Loan To Value (LTV): The ratio of the mortgage loan principal (amount borrowed) to the property's appraised value (i.e. An appraised value of $100K and a mortgage loan principal of $80K equals an LTV of 80%).

Mechanic's Lien: A lien filed by an individual or company that has made an improvement on the property, but has not been compensated to their satisfaction (i.e. payment dispute). Also known as Contractors Liens and Construction Liens.

Mortgage: A legal document that pledges a property to the lender as security for payment of a debt.

Mortgage Broker: A company that does not make final approval or fund the loan directly rather, sells the loan to a third party bank or lending institution. In essence, they are a "middle-man".

Mortgagor: The borrower of money of the giver of the mortgage document.

Non-prime: (see Subprime)

Note: A written promise to pay a certain amount of money.

Offer/Purchase Offer: An offer of price and terms by a buyer to purchase property from a seller. The seller may accept, reject or counter the offer with a different price and/or terms.

Origination Fee: A fee paid to the mortgagee (i.e. lender) for paying the mortgage before it becomes due. Also known as a prepayment penalty or reinvestment fee.

Personal Property: Property other than the real property (i.e. furniture, TV, computer, appliances). Often called movable property which can be moved from one location to another.

Pre-Approval Letter: A letter from a lender that a buyer is potentially approved for specified financing, but an application nor paperwork has been submitted nor has anything been verified by the lender. Much weaker than a lender letter and may get rejected by a seller as an approval for financing.

Private Mortgage Insurance (PMI)/Mortgage Insurance Premium (MIP): The amount paid by a mortgagor (borrower) for mortgage insurance. This insurance protects the investor from possible loss in the event of a borrower's default on a loan. It is typically charged is the Loan To Value (LTV) is higher than 80%.

Promissory Note: A written contract containing a promise to pay a definite amount of money at a definite future time.

Radon Inspection: A determination of whether the amount of radon gas is below, at or above the EPA's acceptable level (currently at 4.0 ppl).

Ratification Date: The date of final acceptance in writing of all the terms of the Offer and delivery to all parties as agreed upon in the Offer.

Real Estate Agent: An individual who has a state license to represent a buyer or a seller in a real estate transaction in exchange for a commission. Most agents work for real estate brokers.

Real Estate Broker: A party who acts as an intermediary between sellers and buyers of real estate and attempts to find sellers who wish to sell and buyers who wish to buy. Also the name for an individual who has a state license to supervise one or more real estate agents working out of the same office as the broker.

Real Property: A legal term encompassing real estate and ownership interests in real estate (immovable property). It is a type of property differentiated from personal property.

Realtor: A member of the National Association Of Realtors (NAR). The NAR has many local chapters such as NVAR and DAAR.

Rent With Option: A contract which gives one the right to least property at a certain sum with the option to purchase at a future date.

Second Mortgage/Second Trust/Junior Mortgage/Junior Lien: An additional loan imposed on a property with a first (primary) mortgage. Generally, a higher interest rate and shorter term than a first mortgage. An alternative to obtaining financing above an 80% Loan To Value (LTV) and paying a Mortgage Insurance Premium (MIP or PMI).

Settlement: the process of exchanging the consideration (i.e. real estate) for financial instruments  (i.e. money) once a deal has been executed.

Settlement Agent: An individual or company which perform settlement duties for the purpose of sale and purchase of real property.

Subprime: (also known as "B paper" and "non prime") Describes loans to customers with FICO credit scores less than 620. Typically, subprime customers are those that do not qualify for prime market rates due to a blemished or limited credit history. Subprime customers are therefore charged a higher interest rate to compensate for the increased probability of future default.

Survey: The process by which a parcel of land is measured and its' area ascertained.

Tax Assessment: The value set on taxable property.

Tax Assessor: An official who evaluates property for the purpose of taxing it.

Tenants In Common: Ownership by two or more persons who hold an undivided interest without the right of survivorship. In the event of a death of one owner, his/her share will pass to his/her heirs, NOT the other owner(s).

Tenants By The Entirety: Only possible when the joint owners are husband and wife. Tenants by the entirety provides for a common law right of survivorship. The property goes automatically to the surviving spouse. No Will, probate or other legal action is necessary. One spouse can not use a Will to leave an interest to someone else.

Title Company: A general term for a company which performs settlement duties for the purpose of sale and purchase of real property.

Title Insurance: An insurance policy which protects the insured (purchaser or lender) against a loss arising from defects in the title. Lender's Title Insurance is mandatory for almost every lender while Owner's Title Insurance is optional, but recommended.

Sources: Inmanwiki, Wikipedia, Merriam-Webster

Dislcaimer: These definitions may vary by jurisdiction, region, state and country and were compiled from public sources who's content could be altered by anyone with a browser and an internet connection. Therefore, I cannot guarantee the accuracy, thoroughness or validity of any information contained herein.

Foreclosures, Pre-Foreclosures, Bank-Owned and Short Sales in Eastern Loudoun County

Two topics dominating real estate headlines over the last couple of weeks have been Foreclosure Rates and Subprime Lending.  This post deals with foreclosures and the other various stages of financial distress regarding home ownership such as pre-foreclosure, short sales and bank-owned and how it’s affecting Eastern Loudoun County. 

First a definition of the four common terms used by real estate professionals when talking about financial distress:

• The main one is Foreclosure.  In layman’s terms, this means that the owners of a property fell behind on payments and the bank or mortgage company has decided to sell the house to pay off the loan.  There are plenty of other more comprehensive definitions, but you get the point. 
• Pre-foreclosure is a term used to describe a situation where the owners have fallen behind and the bank or mortgage company has started the process of foreclosure but has not yet auctioned it off.  The owners are trying to sell the property before the bank actually forecloses.
• In some cases the owner tries to sell the house before foreclosure but the house is no longer worth as much as the loans on the property.  In this instance, the owner is trying to do a Short-sale.  Sometimes banks will authorize this if the costs for foreclosing are more than the loss that will be incurred in the Short-sale.  It’s sometimes the lesser of two evils.
• Bank-owned property are also known as Real Estate Owned (REOs).  These are properties that have gone through the foreclosure process and an auction, but neither brought anybody willing to pay more than what the bank was willing to pay to protect its original loan.  Therefore the bank bought the house and is now trying to sell it.

Now the question is how many of these distressed properties are on the market here in Eastern Loudoun County and what effect does that have on real estate market values. 

In Ashburn, there are about 22 homes that are in one of the various stages of distress.  This represents about 5% of the total listings.  A closer look at the properties shows very few of the homes appear to be priced significantly below market value.  And when considering that most of these properties have an AS-IS clause that precludes the seller from making any repairs, the prices are very much in line with current market valuations. 

In most cases the list prices of the distressed properties are actually higher than other properties and because of this they are lingering on the market for hundreds of days.  This can be attributed to a number of factors.  Agent knowledge, market conditions, property conditions,  seller indifference, etc. 

A closer look at the properties shows a number of interesting facts.  The list prices of the distressed properties in Ashburn range from $309,000, up to $1,195,000 with no price range being inundated with distressed properties.  There are also no more than 5 distressed homes in one community so the properties are not concentrated geographically within Ashburn.

The level of distressed properties in both Sterling and Leesburg is approximately 60.  This represents almost 10% of the available listings in both areas.  Also, 60% of the Leesburg distressed listings and over 70% of the Sterling distressed listings are priced below $400,000.  This indicates that many of the first time buyers who tried to stretch in order to get into a house during the boom have found the payments are now beyond their means. 

Fortunately, first time buyers make up about 40% of the buying activity so these properties will more than likely be snatched up by the next wave of first time buyers.  Or investors who have been on the sidelines for much of the last 2 years will step in and establish support.

How Long Will It All Last?

You may be wondering how long the things that your home has will last…the stove, the fridge, the roof, etc. Now that you’re a home owner, you’re responsible for the maintenance and upkeep of your home and need to budget accordingly (or should start budgeting if you haven’t already).

I came across a post on PressReal and thought I’d share it with you here on Loudoun Stats. They came across an article that shows the results of a Bank Of America Home Equity and National Association of Home Builder’s survey.

Here are some of the results:

• Refrigerator - 13 years
• Dishwasher - 9 years
• Deck - up to 20 years
• Windows - 15 to 30 years
• Roofing - 20 to 50 years

There were many other items covered so feel free to read the complete article on CNNMoney.com at your leisure.

Sorry, I Can’t Tell You That.

As a real estate agent there are certain topics we are not allowed to discuss with our clients.  Fair-housing laws forbid us from discussing neighborhood demographics.  There are other areas of concern for home buyers such as schools and crime that we as real estate agents are not a very good source of information.  However, there are many online sources that can compliment the knowledge (or lack thereof) of a real estate agent.

A very informative article regarding these resources was written by Amy Hoak at MarketWatch.  It has links to websites that have statistics and information on the following topics:

• Schools
• Crime
• Sex Offenders
• Neighborhood Statistics

These links are a good starting point for anyone trying to gather more information about the neighborhood they plan on moving to.

It Could be Worse - We could be in Detroit

I ran across this article and it made me put into perspective the Loudoun County market over the last two years and the current market conditions.

It has been difficult and prices have gone down, but at least we don’t live in Detroit, Michigan.

Mortgage Interest Rates and Financing Options - To Pay Or Not To Pay A Discount Point?

Many buyers ask me if they should pay a point (aka "buy down the rate") or not when securing a loan. They ask if and how it actually effects their mortgage interest rate and monthly payment and whether it’s even worth doing in the grand scheme of things.

Though I offer my buyers an explanation verbally, I will begin recommending that they read an excellent post entitled "What’s The Point?" by mortgage expert Rhonda Porter, active contributor on Rain City Guide.

Rhonda does an excellent job explaining how mortgage interest rates can be priced with or without a discount point along with a case study showing if/when it’s worth paying a discount point(s).

If you are curious about this topic, definitely take a look at the post and the comments and check out the links for additional resources.

The Real Estate Buyer’s Guide To The Home Buying Process-Part Two

To use or not use a Buyer’s Agent, finding the right home for you and preparing and negotiating an offer in your best interest. Part two of a three part series. (If you missed Part One, click here )

So now that you’ve finished digging through boxes to find all the necessary paperwork the lender required, finished filling out the long application, looked over all the Good Faith Estimate and finally secured financing, what is the next step?

If you haven’t already decided to utilize your own Buyer’s Agent, now is the definitely the time to decide. 

• What are the duties and responsibilities of a Buyer’s Agent
• Why should you have your own Buyer’s Agent?
• What are the laws regarding agency and how do they effect you as a buyer? 
• What happens if you don’t use your own Buyer’s Agent? 
• Do I need a Buyer’s Agent when buying a new construction home?

You’ll be able to check out the answers to these and other questions in a "white papers" post coming in the near future. In the mean time, feel free to check out my previous post regarding whether you need your own Buyer’s Agent or not when purchasing a new construction home. For the sake of this discussion, we’re going to assume that you’re using your own Buyer’s Agent.

Though inventory levels have dropped drastically over the last 18 months, there are still hundreds of homes on the market to choose from and builders are constantly making changes to their new home communities including incentives, available lots, etc. To go through all of them would waste hours and hours of your time, energy and gas money and drive you crazy. The MLS, local agent’s web sites, Realtor.com, Homesdatabase.com, Zillow, Trulia  and other sites in general and are not very good at painting a true picture of a property nor the neighborhood. You may think you like a property, but it may be much different in person and you may not like it after all. On the flip side, you may think that you don’t like a property only to find out you really do once you’ve seen it in person.

That’s where an experienced and knowledgable Buyer’s Agent comes in. Part of what your Agent does is to sift through all the properties on the market including new construction lots, homes and communities and find the top 10 that best fit your criteria and are of the best value. They accomplish this by constantly previewing the market inventory and knowing the area that you are looking to move into. While previewing the market, they will know with much more certainty what properties fit your needs because they’ve seen the homes first hand.

But, in order for your Agent to know which properties best fit your criteria, you need to provide your Agent with the most accurate and complete information possible regarding what you are (and are not) looking for in a property. The best way to do this is to compile a list of "Must Haves", "Would Be Really Nice To Haves" and "Nice, But Just An Added Bonus" and provide that to your Agent.

Start with the "Must Haves", the things that are certain deal-breakers if the property does not have them. List the 5 or so things you must have in a property. For example:

1. one car garage
2. four bedrooms upstairs
3. walk-out basement
4. not a corner lot
5. certain subdivision and/or school district

Then move on to the "Would Be Really Nice To Have", the things that are not necessarily deal breakers, but you would really like to have. List the 5 or so things that you would really like to have in a property. For example:

1. center island in the kitchen
2. kitchen flowing into the family room so that you can watch your kids while you’re preparing dinner
3. first floor study because you work from home a lot
4. large walk-in closets for all the outfits and shoes
5. fenced backyard for the kids and/or dogs

The move on to the "Nice, But Just An Added Bonus". The best way to explain this one is that you wouldn’t mind if the property did not have these things if the price reflected it so that you could put them in later and still have the property be of great value.

1. upgraded light fixtures
2. deck already present
3. neutral paint throughout
4. finished bathroom in the basement versus a rough-in
5. finished basement versus unfinished basement

If you’re having a hard time figuring out which category to put each criteria in, rate each of your criteria on a scale of 1 to 10, 10 being the most important. You’ll more easily determine which category each criteria falls in once you’ve done that.

Once you’ve compiled the lists, give them to your Agent and go over them in detail. Explain each category in detail so that they fully understand what you mean and your personal taste. The better your Agent understands what your looking for and need, the more efficient and effective they will be in narrowing down the playing field to the properties best suited for you.

Your agent should then provide you with a a list of the top 5 to 10 properties for your review. Set a time to preview these properties in person and with your Agent. Your Agent will take care of efficiently routing and arranging the showing times for you. Please keep in mind that usual showing times are 9:00AM to 6:00PM. Some are available to be previewed a little earlier and a little later in the day, but that’s the exception. And make sure that you see the home while the sun is still up in order to clearly see the property and to see how much daylight is present inside the property without the lights on.

Important note: It’s strongly suggested that you do not preview more than 5 to 7 homes in one day. If you do, they will all start to blend together and you will forget the differences between them. One of the only exceptions to this is if you are relocating to the area and will only be in town for a day or two and need to see all 10 properties in the limited time you are in the area.

The typical buyer takes about 20 to 30 minutes to preview one property. If you are previewing 7 properties that are all within a short distance of each other, give yourself about 3.5 to 4 hours, including travel time. Make sure that you have something to drink with you and that you’ve eaten something recently or have a snack in your pocket/purse.

If you know you will need more than 30 minutes per property, let your agent know so that they arrange the showing times with the Listing Agent and/or sellers accordingly. Most buyers are uncomfortable with the sellers being home so help alleviate that situation by letting your Agent know that you will need more than 30 minutes to preview each property. There’s nothing worst than showing up later than expected to find the sellers at home and trying to be sales people and give you a "tour of the property".

Now, if you’re looking at 6K to 8K+ square foot homes, that’s a different story. The average time for buyers in that category is 45 to 90 minutes and your Agent should already know that.

Make sure you bring the following things with you while previewing the properties:

• a comfortable pair of shoes that you will easily be able to take off and put back on (you’ll be walking through homes a bit and many sellers wish for people to take their shoes off)
• a note pad and pen/pencil to take notes of the properties as you’re going through them
• a camera to take pictures of properties so that you can remember them later (the pictures online and in the brochures are not always accurate or of high quality)
• if you have a significant other that will be helping you make the decision, make sure that they are present.

Once you’ve seen all the properties, you will probably know which one is the most appealing to you. If you’re waivering between a few, go back to your lists (see above) and rate each one of them on a point system to see which one is at the top of the list. Some people know the second they see a property whether they want to place an offer on it while others like to sleep on it. Whatever works for you is what you should do.

But keep in mind that you are not the only one that may know that these are the best valued properties in that price range and that there may be other interested buyers looking to place on offer on the same property. This is not meant as a sales pitch to get you to rush in and buy something. It is simply a disclaimer so that you don’t yell at your Agent (or me) for not warning you beforehand. I’ve had competing-offer situations many times even in this market because I’m always looking for the best value and typically not the only one doing so.

After deciding that you want to move forward with presenting an offer on a property, you’ll need to figure out what strategy to take with this particular seller. A great Buyer’s Agent will have great negotiating skills and know what to look for in order to negotiate in your best interest. But here’s the "Catch 22"…if you’ve already found the best/under valued properties to begin with, their may not be much room to negotiate on the price so keep that in mind.

But price is not the only thing that you should consider. That’s where the terms and contingencies come in. Here’s a list of some commonly seen terms and contingencies that you may consider:

1. Do you wish to have a Home Inspection?
2. Do you wish to have a Radon Inspection?
3. What is your preferred settlement date?
4. Do you wish for the seller or you to pay for a Home Warranty Policy?
5. Do you wish to have a copy of the seller’s Owner’s Title Insurance Policy in order to save money on your Owner’s Title Insurance Policy?
6. Do you need a pre or post-settlement occupancy agreement for you or the sellers?
7. Do you wish for your closing costs to be paid for by the seller in the form of a seller concession?
8. Do you wish for the seller or you to pay for the termite inspection?
9. What amount will your Earnest Money Deposit be?
10. What personal property and fixtures do you wish to convey with the property?
11. Do you wish to have an appraisal contingency?
12. Do you wish to have a financing contingency? 
13. Are there any other terms or contingencies you wish to have a part of the offer (Sale Of Home Contingency, Coinciding Settlements, etc)?

These are all contingencies and terms that will effect the amount of leverage you have while negotiating. As a general rule, the more contingencies you have and the impact of the particular contingencies on the seller, the less leverage you have when negotiating on the price. You and your Agent should also go over the comps when deciding on a price to offer. "Comps"  are comparable/similar homes in the same and possibly neighboring community that have sold as well as gone under contract within the last 3 months along with comparable active properties. You should also review the latest market conditions in detail.

Once you have agreed on the offering price and terms, your Agent will prepare the offer, review it with you and have you sign and initial where applicable. Your Agent will need to have the Earnest Money Deposit check and lender letter in hand in order to make a copy of them and submit them with the offer. This is to strengthen your leverage as a buyer and necessary in today’s market.

And in case you’re wondering, the new Regional Sales Contract is 10 pages; the Virginia Jurisdictional Addendum is 5 pages; the Disclaimer is 2; the Contingencies and Clauses addendum is either 2 or 3 pages depending on which ones apply; the Buyer’s Agency Agreement is 3 and the Disclosure Of Brokerage Relationship is 1 (if you haven’t already signed them) and it typically takes 45 to 90 minutes to go over all the paperwork. It’s not as bad as you think, either.

Once you’ve got the offer finalized, your Agent will either hand-deliver, fax or email the offer to the Listing Agent or seller (if FSBO). They should call the agent before delivering it as a professional courtesy and what we call "Registering An Offer" in Agent lingo. This makes it so the Listing Agent can contact the sellers and make themselves as well as the sellers available to review your offer. The typical response time is within 24 hours though it may be longer if the sellers are out of town, had an emergecny, etc. But the Listing Agent will usually make your Agent and you aware of that ahead of time.

So now the nail biting and possible sleepless night begins. You’ll probably be thinking to yourself:

                                 "What will the sellers response/reaction be?"

            "Will they accept, counter or reject my offer?"

                         "What if they counter or reject - I really like the house!"

It’s not fun, but every buyer goes through it. But keep in mind…Sellers usually want to sell their home as much as you want to buy it so they will want to get a response back to you as much as you want a response back.

The sellers have the option to accept, reject or make a counter-offer. If the reject it, you have to evaluate why and if it’s worth presenting an offer higher in price and/or with better terms. That’s something you have to decide along with a discussion with your Agent.

If they make a counter-offer, that’s better than a rejection! And they’ve already shown you that they are willing to negotiate. You have the option of accepting their counter-offer, rejecting it or making a counter-offer of your own. Typically, you end up meeting somewhere in the middle and everyone is happy. But once again, thats something you have to decide along with a discussion with your Agent.

Hopefully, you’ll have your offer accepted in its entirety. There may be some slight clerical or administrative changes, but they’ve accepted the price and terms. It’s been delivered to both parties and is now a Ratified Contract - congratulations!

So now what? What do you next? How does the Home Inspection work and when is it? Who notifies the appraiser to get the appraisal complete? What about the title search and survey? What about packing and hiring movers? What is settlement like? What all do you have to do before settlement date/moving in?

Ah, the suspense continues… We’ll cover this and more in Part Three-"From Ratified Contract to Settlement Date". Check back shortly!

Click here to request a free copy of the Real Estate Buyer’s Guide To The Home Buying Process to be sent directly to you via email.

Related Articles: The Big Picture: Rules For Real Estate Agents

Additional Resources:

• Official Loudoun County Web Site
• Loudoun County Public Schools
• Official Fairfax County Web Site
• Fairfax County Public Schools
• Loudoun County Real Estate Market Update-March 2007
• The Ashburn Community Blog

2007 Loudoun County Tax Relief For The Elderly and Disabled - Deadline Approaching

If you or someone you know is eligible for the 2007 Loudoun County Tax Relief for the Elderly and Disabled, make sure you act quickly. The deadline for filing is April 1, 2007. For details on eligibility requirements and how to file the application, please visit the Loudoun County Tax Relief web page.