If you’ve bought or sold a home before, you’ve probably heard your real estate agent use phrases that sound straightforward but can mean a lot more than you might think. From “best and final” to “clear to close,” there’s a lot happening behind the scenes of a real estate transaction.
Here are a few common phrases you may hear during a deal, translated for those who don’t use them everyday.
“We’re calling for best and final offers.”
Translation: The seller has multiple interested buyers and is giving everyone a deadline to submit their strongest offer.
This doesn’t always mean the highest price will win. Price matters, but so do things like financing, contingencies, closing date and the overall strength of the offer. When a seller calls for “best and final,” buyers should assume this is their opportunity to put their strongest terms forward.
“The appraisal came in low.”
Translation: The appraiser determined the home is worth less than the agreed-upon purchase price, so now the buyer and seller have to figure out who covers the difference.
For example, if a buyer agrees to pay $500,000 but the home appraises for $480,000, the lender may only finance based on the lower appraised value. Depending on the terms of the contract and the buyer’s financing, the parties may renegotiate the price, the buyer may bring additional cash to closing, or they may find another solution.
A low appraisal doesn’t automatically mean the deal is dead, but it does mean the parties have something new to work through.
“We added an escalation clause.”
Translation: The buyer is saying, “I’m willing to pay more than the other offers, up to a certain limit.”
An escalation clause can allow a buyer to automatically increase their offer if the seller receives a competing offer that is higher. For example, a buyer might offer $600,000 with an escalation clause up to $625,000.
There are important details and protections to consider when using one, so it’s something your agent should help you structure carefully.
“The inspection came back with 40 items.”
Translation: There are 40 things noted in the inspection report, but that does not necessarily mean there are 40 problems.
No house is perfect. The goal of an inspection isn’t to get a perfect bill of health, but to gain a deeper understanding of the prospective home and the significance and severity of any issues that are found.
Home inspection reports can be detailed and may include everything from minor maintenance items to major mechanical, structural or safety concerns. If major problems are discovered, the inspection period gives the buyer an opportunity to negotiate the cost of repairs with the seller before that period is complete. That could mean asking the seller to make a repair, requesting a credit or negotiating another solution.
“The seller accepted another offer, but we’re able to put in a backup offer.”
Translation: Another buyer is currently under contract on the home, but you’re next in line if that deal falls apart.
A backup offer can give a buyer another opportunity to purchase the home without starting the search all over again. If the first contract terminates for a reason allowed under the contract, the backup buyer may have the opportunity to move forward.
It’s not the same as having the house under contract, but it can be a valuable position to be in, especially in a competitive market.
“We’re clear to close.”
Translation: The buyer’s lender has completed its review and is ready for the loan to move forward to closing.
This is one of the big milestones in a transaction. It generally means the lender has reviewed the buyer’s financial information and loan documents and is satisfied that the requirements for the mortgage have been met.
But “clear to close” doesn’t necessarily mean you’re at the closing table just yet. There are still final steps, paperwork and coordination between the lender, attorneys, title company, agents and everyone else involved.
The Bottom Line
Real estate has a language of its own, but you shouldn’t need a dictionary to understand what’s happening with your home.
That’s where your Ville Team agent comes in. From negotiating the terms of your offer to navigating inspections, appraisals and everything in between, your agent is your best resource for understanding what’s happening, what your options are and what comes next.
A great real estate experience isn’t just about getting to the closing table. It’s about having someone in your corner who can help you navigate every step along the way. Contact The Ville Team today to achieve your real estate goals.