We saw an ad today for an acreage community offering barndominium shells during their Grand Opening special. That’s right, barndominium shells.
Don’t know what that is? Yeah, neither did we (they’re apparently structures built with prefabricated materials like metal shells, which can then be customized to individual specifications.
Because much/most of the structure is prefab, the construction can be quick, and cheap). Great. Good to know.
Anyway, it got us thinking that there may be a lot of real estate terms out there that are confusing or misunderstood. So, behold our first real estate terms rundown. We’ll be back with part two soon.
Alley-loaded: This is a type of home that puts the garage in the rear of the home, accessed by a common alley.
Appraised Value: When you are buying or selling a home, an appraiser will tour the home and assign a value according to several factors including similar homes in the neighborhood and condition, size, and location of your home.
As-Is: An as-is home is typically sold without a warranty and without any commitment to making repairs. As-is homes are commonly foreclosures.
Backup Offer: This is an offer that’s second (or third or fourth…) to an accepted offer on a home. The idea is that if the home falls out of escrow for some reason, the backup offer can move up in line.
Buying down your interest rate: Your lender may offer you the opportunity to buy down your interest rate. This means coming up with money out of pocket in exchange for a lower interest rate.
Closing: Closing takes place once all the escrow requirements have been met. This is when the buyer signs all the necessary documents and takes ownership of the home.
Comparables: These are homes that compare to the one you are buying or selling. Comparables or “comps” are used to identify a home’s sales price by comparing the home to others that are similar in terms of size, age, location, condition, and other factors.
Contingency: A contingency is sometimes attached to an offer, making said offer dependent on other factors, like the sale of a potential buyer’s existing home.
Earnest money: This is typically paid when making an offer on a property. If your offer is accepted, you enter into escrow and the earnest money becomes part of your down payment.
FSBO: A home that’s being sold “For Sale By Owner” instead of with a Realtor. You may hear this pronounced “Fizbo.”
HOA: Newer communities and masterplans usually have a Homeowner’s Association, which charges a fee to homeowners for things like landscaping and amenities. In acreage communities, there is instead a Property Owner’s Association (POA).
P&I: Refers to principal and interest only. You always want to make sure you keep in mind all the other monthly charges you’ll be responsible for, like taxes, insurance, and an HOA fee if there is one.
PITI: Principal, interest, taxes and insurance, otherwise known as the four main elements of a monthly mortgage.
PMI: This stands for private mortgage insurance, and is typically required on homes where the buyer has put less than 20 percent down.
Points: You may be charged points by your lender when processing your loan. One point equals one percent of the loan amount, and so on.
Zero lot line: Zero lot line homes, also known as Z lots, are built differently than traditional single-family or attached homes. “Zero-lot-line house are built very close to the property line in order to create more usable space,” said Investopedia. “Rowhouses, garden homes, patio homes and townhomes are all types of properties that may be zero-lot-line homes. They may be attached (as in a townhome) or detached, single story or multistory.”