So you're ready to buy or sell a home? Get caught up quickly and look like a pro by knowing the definitions of some commonly used terminology, and some of the not so common stuff (terms we might use) :
Holding off offers - The seller and their agent believe that the home is worth more than the asking price. To ensure that they are not leaving any $ on the table and to ensure they get the most $ they will hold an offer evening. Other commonly used terms to describe this: Hosting offers on ___(date)___, bid night, etc
Irrevocable: An offer, once submitted, has to have a deadline. i.e. A time the seller has to respond by. A seller can respond by doing one of three things: 1. Accept the offer, 2. Counter the offer, 3. Ignore the offer
Conditions: An offer is usually made up of three major components: Ammount, closing date, and Conditions. The conditions are the terms that (usually the buyer) have to be satisfied in order to move forward with the deal. Once an offer is accepted the conditional period starts, typically for Finance and/or home inspection. Once the buyer satisfies themselves with the conditions and is ready to fulfil them, they will submit a Notice of fulfillment or waiver. If the buyer is half satisfied with the condition but requires something to be changed or something to be fixed, they would submit what's called an "Amendment" for the seller to accept.
Sold conditional: The seller has accepted an offer that is conditional (usually) upon the buyer meeting some criteria of their own, i.e. a home inspection or finance condition. When a home is marked as sold conditional we will not not the offering price until the property is sold firm/ conditions are removed.
Clean offer: No conditions/ condition free. These are much more preferred by sellers/ sellers agents. Depending on the circumstances around the sale this could be worth 10's of thousands of dollars to a seller. I.e. A seller may prefer an offer that doesn't have conditions over an offer that is higher by $10,000 but has conditions. That's because the deal once accepted by the seller, is at the buyer's option to firm up, usually in their sole and absolute discretion. If a buyer decides not to firm up the deposit cheque is refundable to them in full.
Deposit Cheque: Due to the listing brokerage within 24 hours of acceptance of the offer. This amount is used as a credit towards the total purchase price/ downpayment (if you have a mortgage). Typically between 3-5% of the gross selling price is acceptable.
Downpayment: The amount you will be putting towards the deal that is not being financed. Your deposit amount is included within the downpayment amount. i.e. You bought a home for$800,000. You put $30,000 as a deposit. Your are putting a downpayment of $200,000. The difference of $170,000 is payable to your lawyer at closing to complete the Downpayment total of $200,000 (30,000 +170,000)
Mortgage Default Insurance: In order to avoid paying mortgage insurance your total downpayment must be above 20%. You can purchase a home with less than 20% down you will just have to pay the mortgage insurance fee. This fee does not need to be paid up front, but rather, can be built into your new mortgage, and paid as part of your monthly payment. Read more here
Mortgage Insurance: Much different than default insurance. This becomes a depreciating asset over time as you pay your mortgage down. Once/ if your mortgage is paid off there is no benefit left. If you are considering the benefits of what mortgage insurance can do for you/ your family, i'd urge you to consider life insurance instead, as the value is maintained.
Prequalified: A term coined by the bank used to define the fact that they have had a preliminary look at your finances, and before taking a deeper dive based on the information you are giving them at face value, they will give you a number that you can shop around with. Generally, this is the amount they will loan you, however, its always a good idea to double-check
Mortgage Cancellation fee: Depending on the terms of your mortgage their
Interest rate differential
Line in the sand: When you are a buyer who is involved in a bidding process, always have your walk-away number. As your realtors, we will give you a range of where we see it selling. My recommendation is that when you start to crest the top of that range, its time to walk away