When it comes to real estate transactions, no matter how many times you’ve experienced the process, the vocabulary involved can be daunting. That’s where a real estate glossary can help. While a seasoned and experienced real estate broker is there to guide and represent your interests, it’s still beneficial to have a basic understanding of what’s going on – especially since purchasing a home is most likely the biggest investment you’ll ever make.
We’ve compiled a real estate glossary of terms most commonly used in North Carolina’s home buying and selling transactions, and have presented them in a way that should be palatable for all. This may be your first time buying or selling property in North Carolina and there may be some differences from other states. Whether you are a buyer or seller, our real estate agents are here to help make the process easier.
Frequently Asked Questions About Real Estate Terms
Here are some common real estate terms defined to get you started. Our goal is to make the home buying and selling process easier. If there is something we didn’t define in our real estate glossary and you’re wondering what it means, let us know! If you’ve had a chance to browse our homes for sale and you have an interest in a property, don’t be shy. Give us a call so we can schedule a showing.
In order to qualify for a loan from a financial institution, an appraisal or assessment, conducted by a licensed appraiser, must be conducted on the property to determine the actual value. Many factors are considered when determining the proposed value of a home or business including recent comparable sales and the property’s structural and aesthetic condition and features.
This is the value of a property as determined by your local jurisdiction’s Property Appraiser.
Is there a difference between a Broker, a Broker-in-Charge (BIC) and a Realtor?
With so many professional designations, it can be confusing figuring out who your real estate representative is and what they do. That’s where our real estate glossary comes in. What differentiates a broker from a broker-in-charge? Is a real estate broker different from a Realtor? What kind of training is required for each? Let’s break it down to the basics.
Real Estate Broker – Also referred to as an “agent” in many states, here in North Carolina, a real estate broker is most likely the person you think of when it comes to buying or selling a property. A broker is a state licensed individual who works on the client’s behalf to find and secure the purchase or sale of a property. It is the real estate broker’s responsibility to accurately processall required paperwork associated with the transaction.
Broker-in-Charge – The broker-in-charge, or BIC, is an individual who has additional experience and management certification. Every real estate office in North Carolina must have a broker-in-charge managing the administration and transactions of each broker in their office.
Realtor – A Realtor is a real estate broker who has a paid membership with the National Association of Realtors (NAR). Realtors must follow the strict Code of Ethics defined by NAR. Collectively, Realtors are members of local, state and national chapters of the organization.
Calculating Revenue Stamps in the State of North Carolina
Revenue stamps are collected by many states across the United States, including North Carolina. The monies collected are used to pay for improvements within the state and may include the development and support of public services. This tax is meant to improve the quality of life within a community. The revenue stamp is the sole responsibility of the seller and is calculated at a rate of $2 per $1,000 of the purchase price. Thus, if you sell your property for $600,000, your revenue stamp amount due is $1,200.
The closing of a real estate contract refers to the final transaction of the process. At this point, all negotiations have been agreed upon and the transfer of the property is complete. This can involve the exchange of monies between the buyer and the seller, but is dependent on whatever their agreement and contract defines. After your closing, and all financial documents and payments have been finalized, your contract is considered closed. However, you cannot take possession until documents have been recorded at the local county courthouse.
During the closing of a real estate transaction, closing costs will be required to satisfy several commitments. These can include, but are not limited to:
County taxes and transfer fees
Appraisals and inspections
Comparative Market Analysis
The Comparative Market Analysis (CMA) or “comps” is a report that your real estate broker completes to show examples of sales of properties that are comparable to your property and are in the same geographic location. The CMA is valuable in determining at what price a property should be listed for sale. This is helpful when selling the property, to ensure you are listing it at the right price, and when purchasing to ensure you are paying the right price.
Contingencies are stipulations from the buyer or the seller requiring an act to be agreed upon or completed before the final sale of the property. For example, the buyer could request that the seller replace/and or pay for the replacement of damaged siding on the structure’s exterior.
With dual agency, a real estate broker is representing the client as both the buyer’s and the seller’s agent. It is important to note that the client must be informed about and must agree to this designation before any real estate transaction can commence. Your broker should be knowledgeable and able to address any questions regarding dual agency in the state of North Carolina.
Once an agreement or “meeting of the minds” has been reached by both the buyer and the seller regarding the purchase of a property, and the offer to purchase has been signed and becomes a contract, the due diligence period begins. This is the period of time allotted to the buyer to research the property further, in order to determine if they wish to proceed with the purchase. In North Carolina, the buyer has the right to terminate the contract for any or no reason during the due diligence period.
Due Diligence Fee
An option sometimes desired by a seller is to request a due diligence fee. This is a non-refundable fee from the buyer directly to the seller, and is typically due upon signing an offer to purchase contract. The fee is meant to give confidence to the seller that the buyer is seriously interested, and intends to make up for any missed offers while the property is under contract.
Unlike a due diligence fee, earnest money is a refundable down payment held in a trust account until closing. The amount varies, but can be as much as or more than 1% of the purchase price, though many sellers will accept less. Should the contract be terminated by either party for any reason during the due diligence period, the monies will be returned to the buyer.
Fractional ownership is when real estate has been purchased as a multiple-week deeded ownership at a resort-style property. The terms are typically five weeks a year, but can be as much as 26 weeks. These resorts are often high-end, well-furnished and located in a popular resort destination. Fractional ownership usually includes some resort amenities and services during the time of the stay.
After signing an offer to purchase contract, and upon entering the due diligence period, a home inspection is typically conducted by the buyer. The purpose of the inspection is to assess the condition of core elements such as the foundation, plumbing, electrical and HVAC, roof, appliances, etc. The result of the home inspection may have an impact on the final purchase price.
The listing agent is the licensed professional who represents the seller in a real estate transaction. Additionally, the listing agent is responsible for listing the property in the Multiple Listing Service (MLS).
When a buyer is interested in purchasing a property for sale, they will communicate an initial offer to the seller. The seller may then accept or reject the offer, or submit a counteroffer.
After the due diligence period ends, the real estate transaction moves to the next stage: Pending. This is the final stage of the process before closing. Typically, this is when all financial arrangements such as loans are being finalized, and each party’s attorney completes their review of the transaction.
Use This Real Estate Glossary to Help you Buy and Sell your Next Home
Use this basic real estate terms glossary as a guide during the buying and selling process, or to brush up on your real estate jargon. Here at Landmark Realty Group, our brokers are educated and informed about all North Carolina real estate policies, procedures and vernacular. We take the utmost pride in our community and enjoy sharing it with our clients and friends. As with any major purchase, it is beneficial to familiarize yourself on the procedures and rights afforded to you by the law. Let us guide you through the buying or selling process in an educated and efficient manner. If you are in the market to buy or sell residential or commercial property, contact a Landmark Realty Group broker today so we may help you better understand real estate in North Carolina.