Frequently Asked Questions

Frequently Asked Question button

photo of pen with signature lineA real estate Closing Agent is usually an attorney or someone who works for a real estate Title Company.

This is a third party (not the Realtor© or Real Estate Broker) who oversees processing the final paperwork related to the sale, such as, the deed transfer, mortgage payoff, etc.

Sometimes this person or company is referred to as the Settlement Agent. Buyers and Sellers can also be represented by their own attorneys in the closing process.

© AskConny.com

orange house cutouts with question markThat depends on the terms of your contract, but this could jeopardize the mortgage financing and the sale or purchase itself.

If the appraisal comes in for less than the agreed sale price, the parties to the sale or purchase might have to take further action depending on the specific terms of the real estate contract.

There are many possibilities depending on the terms of the sale contract: the sale could be cancelled; the parties could renegotiate the price; the lender could require a higher down payment; or the lender could refuse to lend at all. It all depends on how the deal is structured.

Sometimes appraisals can be successfully challenged, but it is difficult to do.

© AskConny.com

Leverage is used in real estate and (other types of investment) to improve the overall return on the capital invested (ROI) by the investor.

Leverage involves using primarily borrowed funds to purchase an investment, thus requiring less money from the asset purchaser.

Most real estate projects use leverage in the form of mortgages or other debt instruments.

© AskConny.com

Category: Real Estate

Listing Broker Listing AgentState laws vary to some extent, but generally real estate Agents work “under” a Real Estate Broker’s license.

Broker’s can own and operate a real estate brokerage office; agents cannot. An agent works under the supervision of a Broker and the Broker is generally responsible for the Agent’s work and for compliance.

Agents are Independent Contractors, not employees of the Broker.

Obtaining a Brokers’ license requires additional experience and education beyond that needed to obtain an Agent’s license.

© AskConny.com

Category: Real Estate

unimproved real estate propertyBasically, it is raw land.

Unimproved property has not had anything done to it in preparation for building (e.g. grading or site preparation or the addition of utilities).

© AskConny.com

Category: Real Estate

real etate commissionUsually, the Seller pays the commission.

A Seller hires a Listing Agent and pays her a commission to sell the property.

Generally, that commission paid to the Listing Agent is then split between the Buyer’s Agent & the Listing Agent at the point of sale.

Circumstances vary however, so ask your Realtor® to be certain you know the facts before making an offer.

© AskConny.com

Category: Real Estate

Property tax exemptionsA property tax exemption reduces your property tax assessment value by a specific dollar amount.

So it your property is assessed at $100,000 and you qualify for a $25,000 tax exemption, you will be taxed on $75,000 of value instead of $100,000.

Exemptions are not automatic, you usually need to apply for them.

States and localities have many different type of exemption categories, depending on your location.

Some of the typical exemptions are based on homestead, age, veteran status or disability reasons.

Check with your tax assessor’s office to see what exemptions are available and how to apply for them.

© AskConny.com

Categories: Real Estate, Taxes

photo of checkNot paying HOA fees isn’t really a smart option.

HOAs have legal rights and in some states liens for overdue HOA fees can even lead to foreclosure.

Always get legal advice before taking any kind of action about HOA fee payments.

© AskConny.com

Category: Real Estate

Home equityHome Equity is how much monetary value you have in your home.

It is the difference between what you owe on your mortgage loan(s) and what your house’s market value is. (Other owed amounts, such as debts secured by property liens, can also reduce equity.)

For example, if your house is worth $200,000 & you owe $125,000, your “equity” is $75,000.

This is a different amount than what you would realize at closing if you sold your home because the costs related to the sale of your home (e.g., real estate commissions, real estate transfer taxes, etc.) will be deducted from your net proceeds at closing.

© AskConny.com

Categories: Assets, Real Estate

illustration hand picking a house out of a bunch of housesNot all HOA fees are created equal. The fees vary widely by Homeowner Association (HOA) & depend on the size of the community & the type of amenities provided.

Some possible items include:

  • Maintenance costs for common areas (community pools, community center, etc.)
  • Insurance related to the common areas & association
  • Security costs for the association (not the individual homes)
  • Payroll for any HOA employees
  • Fees paid to an outside property management company
  • Entry gate & security guards
  • Basic cable fees
  • Costs of running the association, professional fees, bookkeeping, etc.

Read the association documents to be clear about what is covered. It is also important to review a copy of the HOA budget so you can see how your HOA fee money is being spent.

When you apply for a mortgage, the HOA fee is included in the calculation of your monthly housing costs, along with your mortgage payment and real estate taxes. This affects your qualification for your mortgage.

© AskConny.com

Category: Real Estate

Plat map lot and block numbersA plat map shows lot lines, blocks, streets and other boundary locations in a specific land area.

Most real estate parcels have a designated lot and block number that is shown on a Plat Map.

This lot and block number often shows in the deed description and is referenced in any contracts related to the sale or purchase of real estate.

© AskConny.com

Category: Real Estate

lease escalator clauseIt’s a type of lease clause.

Commercial leases almost always have an escalator clause.

The clause builds in an agreed upon future increase in the lease payment amount.

It’s usually tied to a time period (e.g., an annual increase or an increase after 5 years.)

But it can also be tied to other triggering events, so read your lease carefully & make sure you understand when & under what circumstances your lease payment can increase.

© AskConny.com

Categories: Legal, Real Estate

Planned Unit DevelopmentA Planned Unit Development (PUD) is commonly confused with a subdivision.

However a PUD is actually a zoning designation that governs the density & other zoning requirements for an area.

A subdivision can be in a PUD, but it isn’t required.

PUD requirements can include limitations (or exceptions) on density, community open areas, lot sizes, etc.

Many housing developments created by private developers are in PUDs.

© AskConny.com

Category: Real Estate

paper house with typ welcome homeTitle refers to ownership. If you have title to a real estate property (residential or commercial), you have ownership rights in the property.

Title can be acquired through sale, inheritance, gift, foreclosure or other legal transfer of rights in the real estate.

Title can be held in a variety of ways, including individually or in a legal entity such as a corporation, Trust, LLC, Partnership, etc.

Much of the paperwork related to final closing on a property is to insure that the Title is clear and can be legally transferred.

Title Insurance can be purchased to protect the property owner from any defects in the title that are discovered after purchase.

© AskConny.com

Categories: Legal, Real Estate

photo roll of money, calculator & penMany lenders require home buyers to “escrow” funds in addition to making their mortgage loan payment each month.

This protects the lender because it insures that the real estate taxes and homeowners insurance are paid up to date. In effect, the lender forces the Borrower to save the money for these payments each month.

The lender creates an escrow account for the borrower & each month the borrower pays a portion of the escrow items along with their loan payment.

Typically, the monthly mortgage payment includes three items:

  1. Interest
  2. Principal
  3. Escrow payment

The bank or lender puts the escrow amount into the Borrower’s escrow account. When the insurance or real estate tax bills come due, the lender has the funds to pay bill.

Usually, the lender pays these bills directly from the escrow account on behalf of the Borrower.

Typically lenders require 3 months of escrow payments in advance at closing.

© AskConny.com

Categories: Mortgages, Real Estate

real estate agent signA Realtor© is a member of the National Association of Realtors (NAR), which is the world’s largest professional organization.

NAR membership requires adherence to a strict written Code of Ethics and Standards of Practice.

NAR offers members a wide range of professional development opportunities and specialty designations which allow members to stay on top of the latest real estate laws and effectively deal with special situations like short sales.

Members include many types of real estate professional, both residential and commercial, including real estate sales people, appraisers, property managers, and brokers.

© AskConny.com

Category: Real Estate

house and hardhatIt can be, and many home buyers have created wonderful homes or investment properties from less than perfect “fixer upper” starting points. If you like working on rehab projects and have the time and money needed, it is worth considering.

But it can also be a money pit, so it’s very important to fully understand what you are getting into & add some contingency funds to any estimates you put together for the costs of rehab. It’s almost guaranteed that there will be some surprises in any rehab project.

Many foreclosures or auction properties qualify as “fixer uppers” and it can be difficult or impossible to determine the home’s maintenance or repair history. Owners and Realtors© often do not have any available information, so do appropriate due diligence.

At a minimum, due diligence on a fixer upper should include doing thorough inspections, hiring an engineer or architect if needed, estimating your materials costs, getting estimates from contractors for repairs you will not do yourself, and reviewing available building department property history records. And don’t forget to look into the permits that will be required while you are there.

© AskConny.com

Category: Real Estate

home appraisal illustrationA real estate appraisal is a formal & documented estimate of the market value of residential or commercial real estate performed by an expert in the field.

Professional appraisers use recent sales data, market trends, current property condition and other types of data to appraise a home or commercial property. Appraisers are licensed professionals.

Mortgage lenders require an appraisal by a professional appraiser of their choice prior to making a commitment to lend money on a property.

© AskConny.com

Categories: Mortgages, Real Estate

model house and real estate deedA deed is a legally binding written and signed document that conveys title to real property. There are different types of deeds, including Quitclaim Deed, General Warranty Deed and Special Warranty Deed.

The deed is delivered at closing to the Buyer by the Seller. Different types of deeds have different legal implications, so it is important to understand what type of deed is being conveyed.

© AskConny.com

Category: Real Estate

real estate subdivisionA real estate subdivision is an area of land that is subdivided into smaller lots.

Many neighborhoods & planned communities are part of a subdivision.

As an example, a developer may buy a large tract of land & then break it up into house sized lots.

These lots are usually detailed on a Plat Map.

© AskConny.com

Category: Real Estate

photo smart phne with home graphicHomesSteps is a program run by Freddie Mac. The website HomeSteps.com showcases foreclosed real estate properties owned by Freddie Mac that are currently available for purchase.

Potential buyers can search the HomeSteps site geographically and also by type of property.

Special financing for purchase and property rehab is available from Freddie Mac for some HomeSteps properties.

All purchase offers are made via the HomeSteps online submission process. Buyers can do this directly or if you are currently working with a Real Estate professional, your agent can handle the submission and purchase offer for you.

© AskConny.com

Category: Real Estate

triple net leaseNNN is short hand for a Triple Net Lease. NNN refers to “Net, Net, Net.”

In a triple net lease the tenant pays for all the operating expenses. The majority of commercial leases are Triple Net.

There is a base lease payment for the space & the tenant also pays a proportionate share of the real estate taxes, insurance, maintenance, utilities, etc.

These costs are usually calculated annually & then billed monthly with the lease payment.

© AskConny.com

Category: Real Estate

newspaper with Changes Ahead headlineA grandfather clause creates a legal “exception” to a law or regulation. It often exempts you from following a newly issued regulation if you are already engaged in doing whatever is being regulated.

“Grandfathering” often occurs when zoning laws are changed & existing properties or business uses do not meet the new codes but are allowed to continue doing business anyway.

Sometimes this is used to give an existing business a chance to phase in changes caused by a new law or regulation or to mitigate the cost of following the new regulations.

Not all new laws or regulations contain grandfather clauses and, even if they do, the impact can be limited in scope or in time.

So if you think the new law or regulation applies to your business be sure to get proper legal or financial advice.

© AskConny.com

Categories: Legal, Real Estate

multi family property

For mortgage financing purposes, it depends on the number of units & the type of units on the property.

Multi-unit residential buildings will require commercial or a residential financing, depending on the number of units.

Properties with 4 or fewer residential units can usually be financed with residential mortgages. Building with more than 4 units (e.g., apartment buildings) will need commercial mortgage financing.

© AskConny.com

Category: Real Estate

rental propertyRental deposit terms depend on the landlord’s requirements and are always negotiable.

Typically for a single family home, apartment or condo rental, you’ll need enough money to cover the first month’s rent, the last month’s rent and a security deposit.

Security deposits usually equal one month’s rent, but if you have pets there may be an additional security deposit amount required.

© AskConny.com

Category: Real Estate