A

 

Absorption Rate

A very important to number to know, especially as a Seller, this is the number of months it would take to sell the homes that are currently listed for sale if no other homes were listed for sale in the interim. For example, if the current market absorption rate in the Maplewood NJ market is 3.5, it would take three and a half months to sell all the remaining homes that are listed for sale assuming no other properties were listed.

 

Additional Deposit OR Second Deposit

The additional money given by the Buyer to be held in escrow under terms of the purchase agreement or contract. This is usually managed by your attorney and will be due seven to 10 business days after attorney review. 

 

American Home Shield (AHS) Home Warranty

American Home Shield offers you a home warranty through Coldwell Banker. This is different from homeowner’s insurance in that it covers repair and/or replacement of home systems or appliances.  This is completely optional. Signing this document means that you acknowledge that you do or do not want to purchase it.  

 

Appraisal

The estimate of a home’s market value by a licensed appraiser based on comparable recent sales of homes in the area. Appraisals protect the interests of the buyer’s lender. The lender’s underwriter compares the appraisal price to the accepted offer price to ensure the value of the home is equal to or greater than the loan amount. If the home appraises lower than the agreed to offer price, the buyer will need to pay the difference to secure the loan. If the home appraises for less than the list or accepted offer price, a negotiation may occur to keep the transaction alive. 

 

Appraisal Fee

This is paid to the lender, who will send an appraiser to the house to determine market value. This is typically paid before closing directly to the lender. There are times when it is paid at closing.

 

Appraisal Waiver

Similar to the Inspection Waiver option, it is not advised that the Buyers’ completely waive the appraisal, as it puts the them at risk. A reasonable option is to “waive to a floor” (i.e. find a base number, such as the listing price). For example, if the house’s listing price is $500,000 and the buyer offers $525,000, the offer can include wording that says “Buyers’ agrees to waive the appraisal from the listing price of $500,000 to the offer price of $525,000.” or “In the event the home appraises at an amount below the contract price (offer price), Buyers’ agree to proceed with the purchase; however, Buyers’ limit the adjusted purchase price to no more than $25,000 over the appraised value.”

 

Attorney Review

Within three business days of receiving the signed contract, your attorney will send a letter to the Sellers’ attorney either accepting the contract "as is" or voiding the contract with specific changes. Negotiations go back and forth until both sides agree on all issues. Contracts are considered accepted when approved by buyers, sellers, and their respective attorneys.

 

B

 

Bidding War

A bidding war occurs a seller’s market and when potential buyers of a property compete for the winning offer through a series of increasing price bids, sometimes pushing the final price up past the original value of the property. The media loves to embellish this!

 

Broker Open House

A marketing event designed to introduce a new listing to the agents and brokers in a given market. If the home does not sell within a certain time period, the listing agent may host additional Broker Opens. The listing agent will display brochures and perhaps provide refreshments. These events are typically for agents and brokers, but Buyer’s may accompany their Realtor. Neighbors sometimes stop by…

 

C

 

Certificate of Occupancy

A certificate issued to properties when a sale is pending to ensure that all permits have been closed out, all work performed on the home during its ownership has been done to code, and that the property subtype and designated use of the property is recorded correctly. This is done by way of a visual inspection by the town. The inspection and certification process can vary from township to township. It is common for the listing agent manage to manage this process and the seller to pay for it. In Maplewood and South Orange, NJ the following information about each occupant of the property will be compiled and submitted to the township for its records as part of the issuing of the certificate: 1) buyer’s current address; 2) Buyer’s current phone numbers, including mobile and landline, if applicable; 3) driver’s license numbers; and 4) ages of occupants, including children. 

 

Closing

The closing usually takes place at the office of the buyer’s Attorney, or sometimes at the office of the Title Company. The closing has occurred when the deed and title of a property has passed from the seller to the buyer, officially "closing" the transaction through the passing of ownership. 

 

Consumer Information Statement (CIS)

New Jersey law requires that your Realtor® inform you of the four types of business relationships prior to engaging in any client/agent relationship or transaction. The relationships are: Buyer’s Agent, Seller’s agent, Disclosed dual agent, and Transaction broker. This document is part of the Statement of Disclosures.

 

D

 

Delayed Showing Form

Seller and listing broker agree that there will be no showings of the property to prospective purchasers nor any Real Estate agents previews and/or caravans during the delayed showing period. This prohibition against showing, previews and/or caravans covers the listing broker, all agents in the listing broker’s office and all other brokers and agents affiliated with the listing company, as well as brokers and agents from offices not affiliated with the listing company.

 

Dual Agency

When the same agent from a given brokerage represents both the seller and the buyer of the same home. Dual agency also applies to when a buyer’s agent and seller’s agent are affiliated with the same brokerage.

 

Dual Agency Consent Form

Required in all Compass transactions in New Jersey, this document states that both the buyer and seller have consented to Compass acting as dual agents should that situation arise (Statements of Disclosure Brochure) or if a dual agency situation has arisen because the buyer and seller or multiple buyer clients are working with a Compass Sales Associate(s). 

 

Down Payment or Earnest Money or Good Faith Deposit or Initial Deposit

Determined by the buyer, the initial deposit is the first down payment in the purchase of a home. This amount is held in escrow, along with the additional deposit/s by the party determined in the contract of sale until closing.

 

E

 

Earnest Money or Down Payment or Good Faith Deposit or Initial Deposit

Determined by the buyer, the initial deposit is the first down payment in the purchase of a home. This amount is held in escrow, along with the additional deposit/s by the party determined in the contract of sale until closing.

 

Escalation Clause

An offer of an undetermined amount with a clause that states that the buyer will pay a certain amount over the highest bid, up to a certain limit, in order to secure a property during a multiple bid situation.

 

Exclusive Listing Agreement

An agreement between a broker and seller wherein the Seller signs paperwork to sell the property through a given brokerage. This is sometimes used prior to entering into the GLMLS Listing Agreement so that the listing agent and seller may: 1) discuss and agree to the best time in which to list your home; 2) prepare the home (repairs, renovations, or staging); and 3) discuss and agree to List Price. During the Exclusive Agreement period, prior to the property "going live" on the GSMLS, the Listing Agent may market the property either exclusively to Agents in their own Brokerage, or as well as to Agents outside of their Brokerage. This is known as "cooperating with other Agencies".

 

F

 

Flood Certification Fee

Cost to assess if the property is in a flood zone and requires flood insurance.

 

Flood Insurance

Insurance that protects homeowners against losses from a flood. If a home is located in a flood zone, a lender will likely require a buyer to purchase this type of insurance.

 

G

 

Garden State Multiple Listing Service (GSMLS)

The National Association of Realtors® (N.A.R.) defines the MLS as "a means by which information is accumulated and disseminated to enable authorized participants to prepare appraisals, analyses, and other valuations of real property for bona fide clients and customers." Different regions each have their own MLS, which Realtors® of the region pay dues to as members who may access information for their clients. The GSMLS stands for "Garden State Multiple Listing Service."

 

Garden State Multiple Listing Service (GSMLS) Listing Agreement

The official and standard document created and used by the GSMLS, which, once signed and executed, lists a home on the GSMLS as an "Active" property. GSMLS listings feed to many online home buying resources (i.e., Zillow, Trulia, Realtor.com, etc.) so that the buying public has access to the listing information of the given property.

 

Garden State Multiple Listing Service (GSMLS) Property Change Form

If a listed home requires a change such as a price adjustment, withdrawal, expiration date, back on market date, and agent commissions, it needs to be officially through this document.

 

Good Faith Deposit or Down Payment or Earnest Money or Initial Deposit

Determined by the buyer, the initial deposit is the first down payment in the purchase of a home. This amount is held in escrow, along with the additional deposit/s by the party determined in the contract of sale until closing.

 

H

 

Home Equity Line of Credit (HELOC)

A loan for a maximum amount during a specified time period which often has a variable interest rate, in which the collateral is the borrower’s equity in his/her house.

 

Homeowners Insurance

A form of property insurance that homeowners purchase to cover losses and damages to a property and provide liability coverage against accidents in the home or on the property. Buyers are required to obtain homeowners insurance and pay the first year upfront.

 

Home Sale Contingency

A contingency clause added to a Real Estate sales contract for an offer to purchase a property that states that the purchase is dependent (contingent) upon the sale of the buyer’s home. If the buyer’s home sells by the specified date in the contract, the transaction moves forward; if not, the contract is terminated. Because this poses a potential liability to the sale of the seller’s property, it affects the strength of the buyer’s offer.

 

I

 

Initial Deposit or Down Payment or Earnest Money or Good Faith Deposit

Determined by the buyer, the initial deposit is the first down payment in the purchase of a home. This amount is held in escrow, along with the additional deposit/s by the party determined in the contract of sale until closing.

 

L

 

Lead-Based Paint Brochure

This brochure is a co-publication by the three government agencies: the EPA, the CPSC, and HUD. It is meant to educate the buying and selling public of the dangers of lead-based paint. Realtors® are required to share this information with buyers putting an offer on any property built before 1978. It is important to realize that most homes built prior to 1978 have lead paint--by signing/initialing the document, buyers indicate that they have read the pamphlet. 

 

Lead-Based Paint Disclosure

This document discloses whether or not the seller of a given property has any definitive knowledge of lead paint, based on testing they or any previous owners of the property have conducted. Upon the buyer’s signature of the document, the buyer acknowledges the information set forth.  The Lead Paint Disclosure is a requirement of an offer submission.

 

Letter to Seller

A home sale is financial transaction and technically, emotion shouldn’t come into play. That said, sometimes, a letter to the seller by the prospective buyer is a nice way to introduce themselves to the sellers and help them stand out against the competition.

 

Limiting Inspection

One way to “sweeten an offer” is to limit inspection. This in no way puts the buyer at risk as the language used covers all substantial mechanical, structural, safety, and environmental. This includes wood destroying insect infestation or damage, water damage or mold. There are additional ways to use inspection “sweetners” that your Realtor® can discuss with you.

 

M

 

Multiple-Offer Situation

In the simplest of terms, this means someone else is also bidding on the property you made an offer on. This could be one other buyer or multiple other buyers. It occurs more often in a seller’s market.

 

O

 

Offer

All written offers on a property must be presented to the seller/seller’s agent, and specify the offer price and all other terms and conditions of the purchase. The offer information is compiled in a contract of sale which is prepared by the buyer’s agent. A verbal offer carries no validity until it is written up. In New Jersey, the seller’s agent must present an offer to their client within 24 hours of its receipt.

 

Oil Tank Sweep

Ensures that there are no underground oil tanks on the property. If an underground oil tank is found, the tank must be removed. If the soil is contaminated from a leak in the tank, remediation must occur.

 

P

 

Pre-Approval Letter

A written statement from a Lender preliminarily approving the borrower for a loan, based on income and credit information. A Pre-approval is different than a Pre-qualification as it requires more documentation.

 

Pre-Qualification

95% approved, but this won't get your offer in front of a Seller! This gives you a good idea of how much a bank will lend you. It's quick and in most cases, can be done over the phone. Be prepared to discuss your income, assets, debts, and cash available for a down payment.

 

Public Open House

Usually scheduled for the Sunday after a home is newly listed, a public open house allows the public to view the home. Viewers are not required to attend with an agent, but if a buyer visits an open house without their agent, it is important that they notify the listings/hosting agent of their agent's name and contact information for the host/listing agent to follow up with. In addition to Sundays, Saturdays are also becoming popular days in which to open the home.

 

Property Taxes

A levy placed on a property by the town or state that the homeowner is required to pay. To learn more about property taxes, it is advised that you speak directly to the town tax assessor.

 

R

 

Radon

Radon is a naturally occurring radioactive gas that can’t be seen or smelled. Testing is the only way to know the level of radon in a home. Testing is included in a basic home inspection for an additional fee.

 

Realtor Contract of Sale

The buying agent prepares the contract of sale on the behalf of their client. The offering contract outlines the details of the offer, including price, the breakdown of deposit monies, relevant dates, contingencies, etc. The buying client signs and initials the contract before submitting.

 

S

 

Seller’s Disclosure

This document is downloaded directly from the MLS and offers the Seller’s knowledge of any defects, repairs, and/or additions to the home that they are aware of, as well as discloses any knowledge of the age and condition of the systems, structure and operations of the home. Upon the Buyer’s signature of the document, the buyer acknowledges the information set forth.  The Seller’s Disclosure is often a requirement of an offer submission.

 

Seller’s Disclosure Declination

A document signed by the seller when he or she declines to sign the Seller’s Disclosure for the property being sold. This is sometimes used when the property is owned by an investor who “flipped” the home.

 

Seller’s Preferred Terms or Wish List

Typically, in a multiple offer situation, the seller has the upper hand in deciding which offer to accept. They, with the help of their agent, will comprise a “wish list” and send it to each agent representing a buyer who submitted a first round offer.  Items include, “highest and best” offer, appraisal waiver or limit, and inspection waiver or limit. The listing agent is not required to provide a wish list or the seller’s preferred terms. Furthermore, if they do, once they are delivered, the seller may change the asks at any time. Your Realtor® will discuss each item, making sure you understand them completely.  You and you alone will decide how you wish to respond.

 

 

 

 

Supra Keybox

Supra electronic keyboxes have been used on millions of homes. Current models of keyboxes can be opened using Bluetooth or infrared signals. Supra's system records events and the name of each agent who accessed it each time a keybox is opened.

 

W

 

Waiver of Broker Cooperation

When a Seller declines to use the exposure other Brokerages or Agencies can offer in marketing his or her home. 

 

Walk Through

Before closing, the buyer and buyer’s agent walk through the property to ensure that everything is in order, “broom swept” and left in the condition agreed upon in the contract. 

 

Wish List or Seller’s Preferred Terms

Typically, in a multiple offer situation, the seller has the upper hand in deciding which offer to accept. They, with the help of their agent, will comprise a “wish list” and send it to each agent representing a buyer who submitted a first round offer.  Items include, “highest and best” offer, appraisal waiver or limit, and inspection waiver or limit. The listing agent is not required to provide a wish list or the seller’s preferred terms. Furthermore, if they do, once they are delivered, the seller may change the asks at any time. Your Realtor® will discuss each item, making sure you understand them completely.  You and you alone will decide how you wish to respond.