This post is the last in a three-part series on essential real estate terminology. If you haven’t seen them already, please check out Part 1 (terms for everyone) and Part 2 (terms for buyers)! Here we look at terms that all home sellers should know before putting their property on the market.
The California Department of Real Estate has published a comprehensive glossary with the legal definitions for most terms involved in transactions. While authoritative and accurate, Mosaik Real Estate feels its clients should have access to these terms in plain language.
Here are the key terms we think sellers should know before listing their home:
“Multiple Listing Service” (“MLS”)
The MLS is a local database that allows brokers and agents to share information about residential properties. Putting your listing on the local MLS shows that property is “on the market”. This means it will garner more attention across marketing channels. On the other hand, listing your property “off market” means it will not appear on the local MLS.
Co-Listing means that two listing agents both represent you, and then share the commission from the sale. There are a number of pros and cons of co-listing, which you should feel free to discuss with your agent.
Disclosures allow potential buyers to understand any non-obvious issues with the property. These issues can range from small (like a broken light fixture) to large (like a structural flaw) in scale. However, each state has its own laws about what needs to be disclosed in a residential property transaction.
“Appraisals” vs. “Inspections”
While often conflated, these steps are very different. In short, an appraisal determines the value of a property, an inspection determines its condition.
- “Appraisals”: An appraisal is an unbiased assessment of your property’s value by a qualified Appraiser. This is one of the first steps you take once you accept an offer and the property is in contract. Appraisals protect the interests of the mortgage lender by ensuring the buyer isn’t overpaying for the home. As a result, a lower-than-expected appraised value may require you as the seller to adjust the sale price.
- “Inspections”: Like appraisals, inspections are unbiased assessments of your property by a qualified professional (i.e. the Home Inspector). There are two types of inspections. First, you as the seller can order a Seller’s Inspection before putting the house on the market. After that, you can then add any issues found with the property to the disclosures. The second type is a Buyer’s Inspection, which the buyer will order after their offer has been accepted. A Buyer’s Inspection will identify any undisclosed issues you as the seller should address before the sale closes.
Contingencies are conditions a seller must meet in order to complete the sale of a property. They typically fall under three categories: appraisal, home inspection, and mortgage approval. All three protect the buyer from losing their deposit in case something goes wrong. As such, “waiving contingencies”, or giving up these protections around their deposit, is one way buyers can strengthen their offer.
While you’ll already understand what an normal offer is, there are a few different ways of responding:
- “Counter-offer”: If a buyer makes an offer that appeals you, but you are not ready to accept, you can make a counter-offer. This establishes a sales price that that buyer must meet in order for their next offer to be accepted.
- “Multiple counter-offer”: If multiple buyers make appealing offers, you can respond to all of them simultaneously by making a multiple counter-offer. A “multiple counter” allows you to name a price those buyers must meet (or exceed!) to complete the sale.
While we hope this series has answered many of your questions, buying or selling a home is still incredibly complicated. We expect that these posts may beg more questions than they answer.
If you are thinking about buying or selling a home, we would be happy to offer any advice we can. Click here to get in touch!