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There's no denying that buying or selling a home can be overwhelming. Between the logistics and then throwing in terms like "due diligence" and "earnest", it's easy to understand why you might feel confused. Let's not make things more complicated, so here are some real estate terminologies broken down in an uncomplicated way.
As defined from the MN Real Estate Manual:
Due Diligence -"A term used to describe the process of a buyer investigating a property being purchased in a diligent manner, usually within a period of time (the "due diligence period") prescribed in a sales contract, to determine if the buyer is satisfied with the property and wishes to proceed with the purchase" This is the period that inspections, appraisal, and repair negotiations are made. A buyer gives a "due diligence fee" check to the seller, which the seller keeps if the contract falls through or the buyer backs out during the due diligence period. If the buyer closes on the home, the due diligence fee is credited at closing.
Earnest Money - "A sum paid by a prospective purchaser of real estate as evidence of good faith, usually paid to the broker at the time an offer is made" This is a check a buyer pays that is held by the closing attorney. If a buyer cancels a contract during the due diligence period, the earnest money is returned but the due diligence fee is kept by the seller. If a buyer cancels a contract after the due diligence period, the due diligence and earnest money fees are forfeited to the seller. If a buyer closes on the home, the earnest money is credit at closing.
Contingency - "A provision in an offer or contract that makes performance and consummation of the offer or contract dependent or contingent upon the occurrence of some act".
Comparative Market Analysis (CMA) - "An estimate prepared by a licensed real estate broker that details the probable selling price or leasing price of a particular parcel of or interest in property"
Appraisal - "An estimate or opinion of quantity, quality, or value. As applied to real property, it is an opinion as to a property's value, marketability, usefulness, or suitability. Also, the process of deriving a conclusion as to value, and the report setting forth this conclusion". This is ordered by the lender and required when obtaining a loan for your purchase.
Comps - "Comparable - a term used to describe a recently sold property that has similar characteristics to a property that is the subject of a CMA or appraisal being appraised (the "subject" property) and that is used for comparative purposes when estimating the probable selling price or value of the subject property."
Tenants by the Entirety - "a form of joint tenancy held only by husband and wives in which each spouse holds an equal, undivided interest in the whole property. The most important characteristic of a tenancy by the entirety is the right of survivorship which exists on behalf of each spouse; upon the death of one spouse, the surviving spouse automatically acquires ownership in severalty of the entire property without the need for probate".
Power of Attorney (POA) -"an instrument authorizing a person to act as the attorney in fact of the person granting it; it may be a general power or may be limited to the performance of a specific act or acts".
Mineral, Oil, Gas (MOG) - "Land ownership includes owning any minerals or water beneath the surface. A landowner may use water from underground rivers or reservoirs under their property and may also remove minerals, oils, and gas from the subsurface. Once removed, minerals become personal property. Mining rights for subsurface minerals, oils, and gas can be conveyed separately from full ownership of the land. Conversely, full ownership of the surface rights can be conveyed with the grantor reserving subsurface mineral rights".
Grantee -"the buyer of real estate"
Grantor -"the seller of real estate"
And there you have it folks, a little insight on some of the most common used words in the real estate inductry.
Let us know if this was helpful.
Author:Grimes Realty Dated: December 11th 2020 Views: 189 About Grimes: Grimes Realty Admin...
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Grimes Realty has been serving Northern Minnesota since 1962. Over the years we have been able to successfully adapt to an ever changing real estate market by constantly adding new technologies and practices. Together our sales associates have over 100+ years of experience giving them the knowledge and tools to guide our clients through the buying and selling process. Grimes Realty is a member of the National Association of Realtors and the Northwest Minnesota Multiple Listing Service (MLS). Our Realtors are professional and trustworthy above all. We specialize in residential home sales, lakeshore, land sales, and commercial real estate. Come visit us in Bemidji and meet our friendly and courteous staff. Grimes Realty is a full service real estate agency serving the greater Bemidji, Cass Lake, Blackduck, Bagley, Laporte areas.