Commission —The fee charged by a broker for providing services such as transaction coordination, facilitating the search process, negotiating the terms and conditions of the contract, etc.
Contingency —A provision placed in a contract that requires the completion of a certain act, or the happening of a particular event before that contract is binding.
Credit Scores —A numeric representation of a borrower’s financial responsibility, based on their credit history. Typically based on a scale of 300 to 850, these scores are the measure that most lenders will look at when evaluating a credit or loan application.
Customer —A party who is not represented by and does not have a relationship with a REALTOR.
Deed —The legal document conveying title to a property.
Designated Representation —Occurs when a REALTOR® represents a Buyer who chooses to purchase a listing from the same company for which the Realtor works. The REALTOR® continues to represent the interests of the Buyer Client and the managing or principal broker becomes a Dual Agent.
Dual Agency —Occurs when a REALTOR® represents both the Seller and the Buyer in the same real estate transaction; legal in Virginia.
Earnest Money Deposit —A deposit made by the prospective purchaser to show that he/she is serious about buying the property.
Encumbrance —A claim, lien, charge or liability attached to real property that may lessen its value or obstruct the use of the property; also a right or interest in property held by one who is not the legal owner of the property.
Equity —A homeowner’s financial interest in the property.
Exclusive Listing —A written contract giving a licensed Realtor the exclusive right to sell a property for a specified time, but reserving the owner’s right to sell the property himself without the payment of a commission.
Fair Credit Reporting Act— A consumer protection law regulating the disclosure of consumer reports by credit reporting agencies and establishing procedures for correcting mistakes on one’s credit record.
Home Inspection —A thorough inspection of the property that evaluates the structural and mechanical condition of a property.
Kick-out Clause —A special clause in a contract permitting a Seller to continue to offer a property for sale after accepting a contract from a purchaser that is contingent on the sale of the purchaser’s home. If the seller receives an offer from another buyer before the first purchaser’s home has sold, the seller can “kick-out” the first purchaser and accept the second offer.
Lien — The legal cla i m against a property that must be satisfied before the property may be sold.
Lock-in Rate — A written agreement in which the lender guarantees a specified interest rate if a mortgage goes to closing within a set period of time.
Mortgage — A legal document pledging a property to the lender as security for a payment of a debt.
Mortgage Banker / Lender — A person or firm, not otherwise in banking and finance, that provides its own funds for mortgage financing.
Mortgage Broker — A person or firm that acts as an intermediary between the borrower and the lender, who may sell the loan or continue to service the loan.
Mortgage Insurance — A contract that insures the lender against loss caused by a mortgagor’s default on a government mortgage or conventional mortgage.
Net Worth — The value of all of a person’s assets, including cash, minus all liabilities.
Note — A document which serves as evidence of the debt which is signed by the borrower of a loan and states the loan amount, the interest rate, the time and method of repayment and the obligation to repay; may also be called a Mortgage Note.
PITI — Acronym for Principal, Interest, Taxes and Insurance, commonly found in an all-inclusive mortgage package.
Point — Generic term for a percentage of the principal conventional loan amount; a lender may charge a borrower service- charge points for making the loan. Each point is equal to 1 percent of the loan amount.
Prime rate — The interest that banks charge to their preferred customers.
Principal — Amount borrowed or remaining unpaid.
Principal Broker — The licensed broker directly in charge of and responsible for the real estate operations conducted by a real estate brokerage company.
Ratified Contract — Confirmed and written approval of a pending contract by both the seller and the purchaser.
Real Estate Agent — A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.
REALTOR® - A registered collective membership mark which identifies real estate professionals who are members of the National Association of Realtors and adhere to it’s strict Code of Ethics.
Settlement / Closing — A meeting where the sale of the property is finalized by the buyer signing the mortgage documents and paying closing costs.
Settlement Attorney / Agent — An attorney or professional settlement expert who facilitates the closing.
Survey — A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, encroachments, rights of way and any other physical features.
Title Insurance — A comprehensive document under which a title insurance company warrants to make good a loss arising through defects in title to real estate or any liens or encumbrances thereon. This type of insurance protects the lender anf the new owner against loss from past occurrences, such as a forged deed somewhere in the chain of title.
Title Search — A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.
Truth in Lending — A federal law that requires lenders to fully disclosed, in writing, the terms and conditions of a mortgage, including the annual percentage rate and other charges.
Underwriting — The process of evaluating a loan application to determine the risk involved for the lender.
Walk-Through Inspection — A final inspection of the property just before closing which assures the buyer that the property has been vacated, that no damage has occurred and that the seller has not taken or substituted any property contrary to the terms of the sales agreement. If damage has occurred or items have been taken, the buyer might ask that funds be withheld at settlement.