What Does That Mean? Real Estate Terms 101

Dated: May 7 2020

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Have you ever had wondered what some of those terms mean when you are talking about real estate? It can be confusing! Let's go over a few of them below.   

  • Earnest Money
  • Home Appraisal
  • Closing Costs

1. Earnest money lets the seller know that you are serious about your offer to purchase their home.  It is a deposit made to the seller that represents a buyer's good faith to buy a home.  The amount of earnest money is negotiable between the buyer and seller, but is usually about 1% to 2% of the purchase price.  These funds are held in an account managed by the buyer's real estate agent or the title company.  The deposit is then applied to your closing costs.

2.  A home appraisal is an unbiased estimate of the true (fair market) value of what a home is worth.  All lenders order  an appraisal during the mortgage loan process so that there is an objective way to assess the home's market value and ensure that the amount of money requested by the borrower is appropriate.  

3.  Closing costs are the fees over and above the price of a property that a seller and buyer pay to complete a real estate transaction. They are paid at the closing of that real estate transaction.  This point in time called the closing is when the title to the property is conveyed to the buyer.  Homebuyers typically pay between 2%-4% of the purchase price, however who pays closing costs can be negotiated between buyer and seller.  

Thanks for reading my blog post! I hope that you found it helpful! If you have any questions regarding the buying and selling process or about real estate in general I would love to visit with you and help you out! Have a great day!

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Suzy Talley

I am a native Oklahoman who is very passionate about helping others and I always have a smile on my face! I have a wonderful husband and three amazing children whom I love very much. I am a second gra....

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