Realtor Lingo - Some helpful vocab.
There are a lot of terms that Realtors and Loan officers use in their common lingo. I put some of these terms below with quick definitions for reference. I will be updating the information as I feel additional words or terms can be helpful and may include an occasional outside article link or too to hopefully provide further insight on the topics for you!
- DAC - Days After Close: The number of days after you close on a house that you will be able to take possession. If you close on the 1st, and have possession 15 DAC, you get into your home sweet home on the 16th.
- DOM - Days on Market - This is the number of days the house has been actively listed.
- SEV - State Equalized Value - The County Board of Commissioners and the Michigan State Tax Commission must review local assessments and adjust (equalize) them if they are above or below the constitutional 50% level of assessment. So in theory, the SEV should be 1/2 of the properties value. That being said, please don't hold this as law when home searching, you'll find areas where SEVs are consistently higher or lower that 1/2 the home values. SEV does not "cap". it can change by any amount from year to year.
- Taxable Value - The amount your home is taxed on. It is often the same as the SEV amount, but there are also times it is not. The taxable value is the lesser amount between the SEV, or 1.05 times last year taxable amount. (meaning your taxable amount can't go up by more than 5% if you stay in the same home). If you purchase a home new, the taxable value does reset to the current SEV (it does not have a capped amount)
- Zestimate - Zillow will tell you it is their estimated market value based on a formula and that it is Not an appraisal. But I will tell you this number should be taken with a grain of salt (or maybe half a grain). There is more art to home valuation that just a formula can understand, and you should not use only this number in judging a property's value. For more on how it's calculate --> (http://www.zillow.com/zestimate/)
- PMI - Private Mortgage Insurance: If you have a home loan with less than 20% down, you will pay PMI. The more you put down and the higher your credit score, the lower the PMI charge will be. This amount can vary slightly from bank to credit union, so ask your loan officer for more details. PMI remains on the loan for the entire life of an FHA loan, you can only refinance to have it removed. PMI automatically falls off your conventional loans when you have reached 22% value in your property paid off. (although, when you reach 20%, you can request it taken off). FYI: If your property has increased in value and you believe your loan amount is now less than 80% of your property's worth, you may be able to able to have PMI come off earlier by talking with your loan officer and potentially setting up an appraisal.
- Closing Costs (as a Buyers) - As a buyer, you will have to come to closing with your down payment amount + the amount needed for closing costs (unless you have asked the seller to pay for those closing costs in your offer). They generally range in the 2-4% range. These costs can be more completely itemized by your loan officer, but generally can include the following: loan origination and processing fees, appraisal, inspection (if requested), survey (if indicated), Title insurance (you buy it for your lender), interest, and escrow funds which include your first year of home insurance, plus a pro-rated tax amount.
- Closing Costs (as a Sellers) - Yes, there are closing costs for you too. Assuming you are not underwater with your mortgage, this will not be an upfront cost for you, it will be subtracted from the amount you'll receive at closing. These include: Title insurance (you buy for the new owner's), survey (if indicated), home warranty (if indicated), Realtor fees/commission, and transfer tax/recording fees.
- Listing Agent - The agent representing the person selling their home.
- Buyers Agent - The agent representing the person buying a home.
- Transaction Coordinator - An agent who represents neither the buyer nor the seller, just coordinated paperwork.
- Dual Agent - An agent who represents both the buyer and the seller in the same transaction.
- Appraisal - The valuation of your property. This is generally required for all mortgages so the lender knows they loan amount is a sound investment.
- Inspection - After an offer is inspected, the buyer will set up a home inspection to check the condition of many of the aspects of the house including things like roof, foundation, electrical, heating/furnace etc. Different inspectors have different pricing and can offer additional options not generally included like testing for mold or radon.
- Survey - A document stating the properties boundaries. Metes and Bounds survey will include the placement of sticks on the corners/edges of the yard so you can see exactly where the property lines are. These are helpful for larger properties with "grey area" of property lines. For smaller yards, it can also be helpful to ensure there are no encroachments (like a fence or driveway of a neighbor being on your property) or opposite, a fence you thought was yours actually being on the neighbors land.
- Loan Officer - He or She is the one you work with at the bank. They should be able to assist with estimating closing costs, monthly payments, and will be the one to order and coordinate the appraisal. It's important to communicate with your loan officer so they have all the information they need timely as the most often reason closings get postponed is due to the longer time frames lenders need to coordinate.
- Comps - Sold properties that are comparable to your own. Helpful when looking at estimating a homes value. The best comps are in the same area (school district, neighborhood, the closer the better) and should have sold within the last 12 months. However, the faster the market changes, the more important it is to look within 6 or even 3 months. Ideally the property should be of similar size, condition and features as well. It just depends on what has recently sold in the area. Appraisers use comps when producing the appraisal for your lender.
- EMD - Earnest Money Deposit - As the Buyer, when you make an offer on a house, buyers will typically be expecting you to write an EMD (also known as a Good Faith Deposit) that your Realtor deposits and holds at the brokerages bank. EMDs indicate a serious offer, but have become the norm for most offers and are generally 1% of the sale price in $500 increments.
- Seller’s Disclosure - A form that a seller fills out about their property explaining the known condition of many key elements of the property
- Lead Based Paint Disclosure - All property's before 1978 have the potential to still contact lead based paint which can be hazardous. This is a form completed by any seller in regards to their knowledge if lead based paint is known or unknown to exist in the home if built before 1978.
- Broker - A Real estate agent who has continued their education and passed additional exams to become a broker. Brokers have the option of working on their own, however many still remain within the company/brokerage they work within.