The Power is Now

Learning the language of real estate | Business | thenewsenterprise.com – Elizabethtown News Enterprise

In 1967, Rex Harrison won an Oscar with his song, “Talk to the Animals,” for the musical Doctor Dolittle.

The tag line of the song is, “If I could talk to the animals, learn their languages, maybe take an animal degree … .” The premise is that we would have more understanding and be better if we just understood.

Real estate is no different. It has its own language and can be overwhelming. However, if we learn the language or, at least have an understanding, it will make the process and the transaction smoother.

So, this month, I would like to give you some insight to a working knowledge of the concepts of a transaction.

Mortgage is a type of loan used to finance property. When you are buying a home, you will need to speak to someone about the amount of money you are able to borrow. This is your pre-qualification.

A prequalification letter is proof that a loan officer has run your credit, looked at your assets and debts to establish the amount a buyer is able to use to purchase a home or property. It does not guarantee the loan, as many times, this approval process has contingencies, which must be worked through.

Contingent is another word, which means something else must happen prior to this occurring. It is during this time that you will need to work closely with the loan officer.

When you find the property and are ready to make an offer, the agent who is helping you will ask you about earnest or escrow money.

Escrow is simply other people’s money. When one makes an offer on a property, it is typical to put some money down as earnest money, escrow money. A good, though technically not correct analogy, is a security deposit. This money is held by the broker to be sure all the conditions of the transaction are fulfilled.

Home inspection and Appraisal also are concepts that arise. Many times, these get confused.

A home inspection is a buyer’s expense to find out the condition of the property. It is a snapshot of the home on a specific day and a specific time.

The appraisal is completely different. It is ordered by the mortgage lender, and it is to establish the value of the property. Another way to say this is the appraisal is to protect the lender’s interest in the home.

Clear to close are the most joyous words you will hear in the process. This phrase means all conditions of the loan have been met, and the home has appraised for at least the contract price.

It is at this time all the parties are ready to meet and sign the final documents that will transfer the property into the name of the new buyer. This is the day, that you typically get the keys to your new home.

Listening to real estate jargon can be overwhelming. If you are not in the business, it can leave you feeling like you are at the mercy of another.

The real key is not to be an expert but find an expert who will take the time to walk you through the process slowly and answer all your questions. Who knows? You might talk with the agents and pursue a real estate degree.

Charles Hinckley, a local Realtor, is immediate past president of the Kentucky Realtors organization and was named 2019 Realtor of the Year by the Heart of Kentucky Association of Realtors.

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