Buyer Book 2018

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Serving The DC/MD/VA Area Since 1983 Helping A Family Move Every 2 1/2 Days Selling Over 140 Homes Every Year Helping Over 3,700 Families Move Ready To Assist 1,000 Families More Donating A Portion Of Every Commission To Local Charities

Serving The DC Metro Area From Baltimore To Fredericksburg To Winchester!

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Map Courtesy Of Google Maps

Dear Friends, I grew up in a military family where service was modeled from childhood. As a result of being relocated with the Navy, our family learned what it was like to transition to a new area, find the right schools, and discover the perfect community in a short period of time.

My family channeled our commitment to service and experience into creating a real estate agency that takes care of each and every one of our clients. Our team’s priority is to “always put the client before the sale”. We call that the Nellis Group Experience.

Since 1983, the Nellis Group has been providing this experience to thousands of families and individuals in the D.C. Metro Area. In that time we have helped over 3,700 families buy or sell their home. We plan to grow and continue to impact the local community for generations to come.

Thank you for giving us the opportunity to work with you. Our team looks forward to helping you buy, sell or invest in real estate. We hope you enjoy your Nellis Group Experience.

Sincerely,

James Nellis, CEO

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Section I: The Nellis Group Advantage

Table Of Contents

Introduction To The Nellis Group Advantage...........................................................................................................06 Mission Statement & History.......................................................................................................................................08 Core Values................................................................................................................................................................... 09 Future Vision & Experience....................................................................................................................................... 10 Success & Client Satisfaction..................................................................................................................................... 11 Success Team & Services............................................................................................................................................. 12 Divisions & Special Programs..................................................................................................................................... 13 Section II: Starting The Process Introduction To The Process............................................................................................................................................................. 14 Benefits Of A Buyer Specialist.......................................................................................................................................................... 16 Becoming A Nellis Group Preferred Buyer................................................................................................................................. 17 Section III: Finding Your Ideal Home Introduction To The 5 Pillars Of Real Estate...............................................................................................................................18 Finding Homes Online & Researching The 5 Pillars............................................................................................................... 20 In Home & Community Research...................................................................................................................................................21 The 5 Types Of Home Sales................................................................................................................................................................22 New Construction..................................................................................................................................................................................23 Section IV: Reserving Your New Home For Investors.............................................................................................................................................................................................24 Introduction To Reserving Your Home.........................................................................................................................................25 Understanding Price............................................................................................................................................................................. 26 Developing An Offer.............................................................................................................................................................................27 Section V: The Art Of Negotiation Get Your Offer Accepted..................................................................................................................................................................... 28 Harvard Trained Negotiators.............................................................................................................................................................29 Inspections................................................................................................................................................................................................30 Appraisal................................................................................................................................................................................................... 31 Section VI: Closing On Your Home Introduction To Closing......................................................................................................................................................................32 Final Considerations.............................................................................................................................................................................34 Closing Costs........................................................................................................................................................................................... 35 Section VII: The Nellis Group Experience Every Transaction For Charity......................................................................................................................................................... 36 100th Home For Charity..................................................................................................................................................................... 37 Nellis Group VIP Client Program.................................................................................................................................................. 38 Nellis Group Ambassadors.................................................................................................................................................................39

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A Trusted Local Brand In Real Estate Since 1983

Our Mission To Invest In People’s Lives As They Invest In Real Estate.

Our Vision Be the industry leader in Real Estate innovation, investment and resource to all clients.

Create wealth building for clients as they invest in real estate.

Impact the community through charity that influences the next generation.

Our History The Beginning: Vicki Nellis started the Nellis Group in 1983 after her husband Jim’s military transfer brought the Nellis family to Northern Virginia. Vicki’s passion for people and her ability to understand the needs of consumers helped her to quickly establish a referral based business.

Expansion & Growth: As the company grew, Vicki’s husband Jim, her children James and Nicole, and Nicole’s husband Keith joined the family business. A select team of agents and specialists were brought on to help provide clients with the ultimate real estate experience.

Next Generation: Today, with James Nellis carrying on Vicki’s legacy as the CEO of the Nellis Group, the team has expanded to also serve clients in Washington, D.C. and Maryland. With several specialized team members and business divisions, the Nellis Group has grown from an individual Realtor to a dynamic business enterprise.

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Our Core Values Faith Our faith impacts everything that we do as a company. It is the essence that drives our actions and is the impetus for how we conduct ourselves. Every client is viewed as a blessing and we are thankful to be able to serve you.

Leverage We utilize each team member to deliver an educational, inspiring and successful real estate experience. The combination of knowledge and skills has created a proven track record for Nellis Group Clients.

Excellence Our team researches the market, analyzes the latest real estate trends and adapts to changing conditions in the global real estate world. We seek to exceed the expectations of our clients in the pursuit of excellence.

X-Factor Our team is unlike any other real estate company in the area. We are proactive at seeking out unique team members that will provide the best possible experience for our clients.

Our Core Values Guide Us In Business And Life

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A Vision For The Future The Nellis Group has served over 3,700 families. Over the next several years we plan to serve 1,000 more.

Experience That Matters The Nellis Group has been in Real Estate since 1983. A typical agent only has 10 years of experience.

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A Track Record Of Success The Nellis Group helps over 140 families per year. The typical agent only helps 12.

Client Satisfaction The Nellis Group provides 5 star customer service. We take pride that 84% of our business comes from referrals.

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Buying Success Team The power of a team behind you. Taking your transaction from the first meeting to the ideal home you buy.

Realtor Specialists: Experts on the D.C. Metro Area’s communities, schools, parks, home styles and transportation options. Our team concept means you will never miss a home because we are not available.

Licensed Appraisers/Pricing Specialists: Experts on the diverse hyperlocal markets in the area. Using a qualitative-market analysis they are able to help you determine the best price for the home you buy.

Contract Coordinator: Analyzes and tracks every date, contingency and element of the contract.Our coordinator will ensure a smooth and seamless transaction.

Negotiation Specialists: Harvard trained experts who have 1 goal in mind; to protect your equity. They will neogitate for the best terms and conditions at every phase of the real estate process.

Local Lenders & The Lender Advantage Program (LAP) : Our private network of lenders are local and available for you. They can offer our clients a special program to help them secure preferred rates and lower closing costs.

Additional Services We have an extensive list of Advantage Partners that can help make your new home perfect.

Our network of trusted contractors will help with home issues including roofing, flooring, HVAC, windows, electric, plumbing & more.

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Our network of local service providers will help with ancillary issues; attorneys, accountants, financial advisors, tax specialists & more.

Our Interior Designer can transform your new home into a stylish residence highlighting your own style.

Our clients leverage our Online Transaction Management and E-Signature that streamline the process and add convenience.

Specialty Divisions No matter what your situation or what type of home you are looking to buy, we have you covered.

Luxury Home Division: Specialists with experience dealing with luxury homes and the intricacies that are unique to this type of transaction.

Military Residential Division (MilRES): Certified MilRES specialists that are specifically trained on all aspects of buying a home for active and retired military & veterans.

REO & Short Sale Divisions: Specialists and negotiators that have specific experience dealing with banks, asset managers, bankruptcy, short sales and the complexities of each of these special circumstance transactions.

New Construction Division: The Nellis Group has experienced agents fluid in the terminology, negotiation strategy and process of buying new construction direct from a builder. Representation does not raise the cost of a new home.

Property Management Division: Taking all the stress and hassle out of dealing with tenants and managing a property. This division assists clients in maintaining long term ownership of their properties.

Specialty Programs Additional programs that can help you with other Real Estate needs.

The Early Bird Program helps you plan 6-12 months in advance. Market updates and housing information prepares you for when you are ready.

The Investor Watch Program gives you access to both local and national markets where you can leverage cash flow and appreciation.

Lifestyle Tours are perfect for relocation buyers.

They provide information on community amenities, styles of homes and local attractions.

Once you buy your home you are a part of our NG VIP Rewards giving you access to special contests, client events, and more.

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Choosing A Buyer Specialist The most important decision you make to start the home buying process is to choose an experienced Realtor that will meet all of your needs. A Nellis Group specialist is a community expert focused on the 5 Pillars of Real Estate and negotiating on your behalf throughout the entire transaction.

Discount Buyer Agent or Online Company • Procures compensation from the seller from the net proceeds of the transaction.

• A basic understanding of the contract and will legally represent you as the buyer.

Basic Buyer Agent • Experience with the buying process.

• Able to assist you with different types of transactions.

• Negotiates your contract.

A Nellis Group Buyer Agent • Views over 100 homes per month and knows the local communities.

• Internal buyer success team to track your transaction from offer to closing.

• Pricing expertise with a licensed appraiser and pricing specialists.

• Lender Advantage Program (LAP) to help you get the best financing.

• A proven 30+ year history of excellence and a strong set of core values.

• A set of specialized programs to assist you.

• An expert on the 5 Pillars of Real Estate.

• Specialty divisions to assist you with the 5 main transactions.

(Traditional, FSBO, REO, Short Sale, New Home)

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How Do Realtors Get Paid?

1. When a home is listed with a seller or builder, the commission to a Realtor representing a buyer is built into the sales price.

2. Realtors get paid based off the seller’s net proceeds.

3. If you choose to not have representation, the seller or builder keeps the additional profit that would have been the commission. Plus, you will not have a professional to negotiate on your behalf which could end up costing additional money.

Becoming A Nellis Group Preferred Buyer We commit all of our resources to you and you commit to work with the Nellis Group as your exclusive Real Estate team. We ask that you sign this agreement so everyone can be assured both parties are working diligently to achieve a common goal.

How To Get Started

Take Our Online Buyer Survey

Phone Interview

Why Do You Need To Get Pre-Approved?

• Know your estimated monthly payment in advance.

• Figure out the best loan options early in the process.

• Offers you write will be viewed as more credible by sellers.

Get Pre-Approved

• Learn about our potential Lender Advantage Program (LAP) savings.

In Office Consultation

Enroll As A Preferred Buyer

Select Your Charity

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Home Research The Nellis Group will provide you with the tools you need to search for your ideal home. Your agent is also constantly researching the local communities to find both listed and off-market homes that are coming soon.

Search for homes 24 hours a day on our website.

View special off-market homes that you can’t find online.

Receive daily updates on new homes on the market.

5 Pillar Research Online sources help you research how each of the 5 Pillars of Real Estate factor into your purchasing decision.

In the D.C. Metro Area it is rare to get everything, so you need to find a good balance to fit your needs.

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LOCATION

View aerial and traffic maps.

COMMUNITY

Research community amenities and information.

SCHOOLS

Study schools and school districts.

CONVENIENCE

Plan your commute.

CRIME

Examine crime reports in the area.

Sources: Google Maps, Bing Maps

Sources: HOA Websites, Nellis Group Community Pages

Sources: US News & World Reports, GreatSchools.org

Sources: WMATA.com, DriveScore.com, Slug Line Website

Sources: Police Department Websites, Local Newspaper Crime Reports

Community Research Visit your potential neighborhoods to look around and get a feel for the area. See what you like about it and more importantly what you don’t like about the community.

Complete a community drive by.

Immerse yourself in the community

Go community door knocking - Strollers & Leashes.

Ask neighbors about the pros and cons of the neighborhood

10 Questions You Need To Ask The Neighbors 1. What do you like the best about living here?

2. What do you like the least about living here?

3. If you could change one thing about the community, what would it be?

4. Do all of the neighbors get along?

5. Why is the seller selling the house?

6. How are the schools?

7. How is the crime in this area, have you had issues?

8. Is it quiet? Any disturbances?

9. Has the seller ever complained to you about the house?

10. Have you ever heard anything odd about your neighbor’s house or yours?

Make a commute practice run.

Evaluate the traffic, bus timing, metro and slug lines

Visit homes with your Realtor Specialist.

Discover the benefits of each home The average buyer visits 10 homes before they buy.

Don’t be afraid if the first home is the right fit. By studying your needs and wants the Nellis Group can discern your best fit in a home and make the most efficient use of your valuable time.

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The 5 Types Of Home Sales The Nellis Group has the experts and the experience to help you handle each of the 5 types of home sales.

Every sale comes with its own intricacies and challenges so it is important that your Realtors are equipped with the right knowledge and expertise.

Traditional Home Sale Offer Response Time: Within 24 Hours Settlement Date: 30-60 Days

Foreclosure (REO / Bank Owned) Offer Response Time: 48 Hours-1 Week Settlement Date: 30 Days

Short Sale Offer Response Time: 4-6 Months Settlement Date: 6-8 Months

For Sale By Owner (FSBO) Offer Response Time: 24-48 Hours Settlement Date: 30-60 Days

New Home Construction Offer Response Time: Within 24 Hours Settlement Date: Approx 6 Months From Start *Spec Homes Can Settle In 30 Days

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New Construction Buying a brand new home is one of the more time intensive processes and the transaction can take much longer than a traditional sale. Your agent will assist you during each of these 12 steps to make sure you are creating your ideal home.

The 12 Steps To A New Construction Purchase* 1. Review models with the builder and your agent.

2. Select the lot/unit from the site map.

3. Select elevation/floor based on the community.

4. “Spec� Out an entire home & determine market price.

5. Nellis Group agent writes the offer.

6. Design/selection process.

7. Private home inspection.

8. Pre-drywall inspection w/ builder.

9. Private final inspection.

10. Final inspection with builder.

11. Negotiate punch list. *Steps subject to change based on home type

The Pricing Myth The builder has already priced the home/models and has built-in the Realtor commission to the price. So, if you are not represented by an agent, the builder will KEEP that money, not pass it on to you.

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Investing In Real Estate

This guide focuses on buying your primary home. Investing is a bit more complicated of a subject and requires a more in-depth explanation. If you are interested in learning about the best ways to invest locally or across the country, contact your Nellis Group agent and get started today.

The IDEAL Formula

I ncome D epreciation E quity A ppreciation L everage One of the unique programs we offer to potential investors is our Investor Watch. We research top areas around the country and find those with the greatest return on investment. We study the local market for investing close to home, and we have experts come in to speak to our VIP clients and help them get the knowledge and strategies needed to be a successful real estate investor.

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Understanding Price & Developing A Reserve Strategy When you are ready to make an offer for a home, it is important to look at all the different aspects of pricing, and not base everything on the listed price. During negotiations the sales price, target price, reserve price and closing price can all be different numbers.

Sales Price - What Is The Home Listed At? This is the official listed price of the home as determined by the seller. This price may be above, equal to, or below market value depending on the sales strategy of the seller.

Target Price - What Is The Home Worth?

The Nellis Group Pricing Specialist/Licensed Appraiser will run a Qualitative Market Analysis (QMA) to develop the most accurate target price. This will be the starting point for creating your offer strategy.

Nellis Group QMA

(Most Accurate)

A Qualitative Market Analysis performed by a Licensed Appraiser.

Typical Realtor CMA

(Less Accurate)

A basic computer generated comparative analysis performed by a Realtor, not an Appraiser.

Generic Online Estimates

(Least Accurate)

Inaccurate computer generated price estimates that do not take into account all factors of the actual market.

Buyer Tip Take a look at the last 5 homes that were sold in the neighborhood. Compare their list price versus their sold price. You will find they generally sell at 95%-98% of the list price. This can help you get an approximate figure of what the home you are looking at will sell for in today’s market. (May not be true in every market).

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Reserve Price - What Will You Offer For The Home?

This is the price that you will submit to the seller during your initial offer. The price is based on your offer strategy taking into account a combination of both the sales price and the Qualitative Marketing Analysis.

12 Question Qualification Survey The first thing we do before making the official offer is to assess the needs of the seller, evaluate flexibility on the price, and determine the experience of the other agent through our proven 12 question qualification survey. This gives every buyer the insight into which type of offer to make on the home.

Crafting Your Offer Aggressive For Price

Aggressive To Reserve

Getting the best terms, conditions and price for the home.

Making sure no one else reserves the home before you do.

When there are few or no offers

When this is your dream home

At the Nellis Group we apply a Pauper vs. Prince strategy.

Pauper vs. Prince Pauper Lower Offer

Prince Higher Offer

Fewer Offers

Many Offers

Tips To Reserving A Home Multiple Offers - When there are multiple offers, your agent will help make yours stand out from the rest.

Good Deals - Your agent will help you understand the market and determine potential “deals�.

2 Homes At Once? - The Nellis Group developed a special addendum to legally write on 2 homes at once.

Remember that every home and offer strategy is different.

We will develop your offer strategy together.

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7 Steps To A Successful Offer 1. Earnest Money Deposit We recommend a minimum 1% of the sales price be paid to the Title Company as an Earnest Money Deposit. This is refunded upon ratification of your contract.

2. Type Of Loan Your agent and lender will guide you on the best way to present your offer. They will cover the timelines for financing and appraisal. In some cases your down payment may even change to strengthen your offer.

3. Full Approval Your offer is the strongest when you have full pre-approval from your lender. If you are using an NG approved local lender, they will take an active role in getting your offer accepted.

4. Cash Offers Sellers love cash offers. In this case you must show a “Proof Of Funds” by providing a letter from your private banker or a copy of your account showing the required funds.

5. Personal Cover Letter A great cover letter personalized to you and the commonalities you share with the seller can make a HUGE difference in getting an offer accepted. We’ve even seen sellers take less money due to a personal connection.

6. Inspections We recommend for our buyers to pay the money to conduct their own private inspections on the home to ensure the home is not a “money pit” and validate their large investment.

7. Flexible Settlement Date An offer may be more likely to be accepted if it coincides with the seller’s individual timeline. Depending on the situation, things like a “rent-back” or a fast settlement on a vacant home can save you money.

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Once Your Offer Is Written, The Negotiation Stages Begin Initial Negotiation Stage When you make an offer on a home, your Realtor specialist will work with you to negotiate any counteroffers from the seller. The primary objective is to secure you the best terms.

8 Keys To Negotiating The Best Offer Leverage Days On Market

Offer Competition

Realtor Reputation

Settlement Time Frame

12 Question Survey

Lender Advantage Program (LAP)

Emotional Appeal (Personal Letter)

Proof Of Funds

Inspection Phase After your offer is accepted and your home is reserved you will want to order a series of inspections to ensure everything in the home is in the proper order. The Nellis Group recommends every buyer orders a home inspection and possibly other inspections on the home.

Home Inspection

Average Price: $400 - $600

Dwelling Exterior

Roof & Attic

Dwelling Interior Heating/Cooling

Structural System Electrical

Radon Testing

Average Price: $150-$200

Plumbing

Termite Testing

Average Price: $50-$100

Lead Testing

Average Price: $250-$500

Environmental

Average Price: $400+

If after the home inspection you realize this isn’t the right home, you can utilize the home inspection phase to exit the contract.

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CLUE Reports A CLUE (Comprehensive Loss Underwriting Exchange) Report is basically a CarFax for a home. It lets you know about the claims that were placed on that home so you can determine if there are any “hidden� problems with the property.

Homeowner Document Review Phase If your home is part of an HOA or condo association you will have 72 hours to review the HOA documents and policies once they are delivered to you. You can opt to exit the contract during this phase.

Lender Appraisal Stage A bank appraisal is required by the lender to ensure they are lending you the correct amount of money for the home. If this value comes back below the reserved price there are 4 possible outcomes shown on the right which includes the final exit strategy of the contract.

What If The Home Appraises Below Sales Price

BUYER ADV

If the appraisal comes back at or above the reserved price, you will be able to remove your appraisal contingency and move to the next step.

SELLER ADV

COMPROMISE

Seller reduces the sales price to the appraisal price

Buyer brings additional funds to cover the difference

Seller reduces the price, buyer brings some additional funds

Buyer can walk away from the contract without penalty

Seller Buyer

Seller Buyer

Seller Buyer Seller Buyer 31

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Final Considerations

Remove Financial Contingencies

Ask your Nellis Group Specialist about the best time to remove your financial contingencies.

Take Advantage Of Our Free Title Search

Our Advantage Partners will make sure the seller legally owns the property, find any encumbrances and ensure it is free of any defects or liens for title insurance.

Conduct A Property Survey

A property survey should be conducted to see the legal property boundary lines and easements that could impact the property.

Optional Considerations

Homeowner / Hazard Insurance Home Warranty

Many buyers choose to purchase homeowner’s insurance in order to protect their home from any unforeseen circumstances. It is typically a lender requirement.

This optional warranty covers the home for 1 year after purchase, alleviating stress of a big expense for electric, plumbing, appliances and mechanical items.

Last Steps

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Order Your Utilities

The Nellis Group provides contact information for all utilities so you can turn them on the day of settlement.

Final Walkthrough

You will investigate the property and make sure all repairs were completed per the contract.

Closing Costs

On the day of settlement you will have to pay your closing costs of the transaction.

The lender will give you a financial worksheet ahead of time that will let you know more details about specifics. If you are using the Nellis Group LAP (Lender Advantage Program) we require them to send you the final numbers 7 days in advance.

Lender Fees Tax & County Recordation Fees

Fees charged direct by the lender.

The equivalent of sales tax for your home.

Lender’s Title Insurance

Your lender will require you to purchase title insurance or they will not provide you with the loan. This protects their interests if you stop making payments and gives them first position to acquire the property.

Optional Owner’s Title Insurance

This recommended but optional coverage protects you as the homeowner for clean title and for items that could arise in the future.

Prepaids/Escrows/ Impounds

This is money collected by the lender so you are covered with insurance and tax payments for the next time they are collected on the home. The lender is required to pay these bills if you escrow as part of your monthly payment.

Settlement Day

This is the day you have been waiting for since your first meeting with the Nellis Group. On the day of settlement, you will pay applicable closing costs & receive the keys to your new home.

Congratulations On Your New Home!

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Charity Outreach The Nellis Group is committed to making a positive impact in the community. Whether it be through monthly tithing, special charity events, working closely with our charity partners or our special client donation program.

We have been blessed with a great business and we find it is important to give back to the community.

Every Transaction For Charity Whenever you buy or sell a home with the Nellis Group, we will donate a portion of our commission to one of the Nellis Group charity partners in your honor. One of our favorite days of the month is when we meet as a team to sign the charity donation forms for our clients.

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100th Home For Charity Each year, the Nellis Group donates 100% of our commission from the sale of our 100th home to charities in the DC metro area. This program allows us to spotlight dozens of local charities and support some great causes with donations of $10,000 or more. Our clients help us select the candidates and then help us vote for the winners in this fun program that gets people talking about giving back to those in need.

Military Care Packages

Immanuel Thank You Lunch

Charity Races

Golf Tournament Sponsorships

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Nellis Group VIP Client Activities We love our clients and spending time with them throughout the year. We host VIP client events, giveaways, seminars and monthly drawings. Once you become a preferred buyer all of these great perks become available to your and your family. We look forward to seeing you at our events and rocking some Nellis Group swag!

Redskins & Nationals Ticket Consideration Monthly Giveaways & Contests Home Anniversary Gifts Birthday Wishes & Prizes Charity Donation In Your Honor Invitation To Special Festivals & Events Sweet Success Free Holiday Pie Much More!

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Nellis Group Ambassadors Nellis Group Ambassadors are those clients who share their positive Nellis Group Experiences with their family, friends, co-workers and all those with upcoming Real Estate plans. Our Ambassadors share our passion for charity, and believe in our mission, vision and core values. The Nellis Group hosts unique Ambassador events throughout the year to thank everyone who has been a champion of the Nellis Group brand.

VIP Caps Tickets

Other Ambassador Events

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Important Terms 5 Pillars Of Real Estate The 5 factors that a buyer needs to review before choosing a home. The Pillars are: Community, Convenience, Crime, Location and Schools.

Nellis Group Advantage The Nellis Group Advantage highlights the essential elements that make the Nellis Group one of the top Real Estate teams in the D.C. Metro area.

Preferred Buyer Agreement A two-way agreement where we commit to our clients and they do the same so we can both work together to find the best home with the best terms.

Advantage Partner Program (APP) This optional program offers you access to a select

group of experienced companies that can give you exceptional service during different phases of the home buying process.

Lender Advantage Program (LAP) Access to one of our preferred lenders that will leverage

the lending process to aid in negotiations and to save you the most money.

Qualitative Market Analysis (QMA) A comprehensive market analysis performed by a

licensed appraiser or pricing specialists giving you a more accurate pricing of the home.

Reserving A Home A way to remove a home from the open market and save it for yourself.

Contract Exit Strategy A way to legally exit a contract for a home you have reserved without penalty.

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Glossary Adjustable Rate Mortgage (ARM): A mortgage whose rates change during set periods of the mortgage based on the market’s interest rate.

Appraisal: The process by which the lender determines how much the home is worth to determine mortgage details.

Financial Contingencies: Time frame for purchaser to secure full loan approval.

Fixed Rate Mortgage: A mortgage that has the interest rate locked-in for the full term of the loan.

Balloon Mortgage: A mortgage that offers low rates for a period of time before it increases, is refinanced or paid off.

For Sale By Owner (FSBO): A person who is selling their home without professional representation.

Buyer Agent: A licensed Realtor who offers you professional representation during a home buying transaction.

Foreclosure: When a homeowner defaults on their mortgage, their ownership is terminated and the bank takes ownership of the property.

Closing Costs: Payments due on settlement day.

Home Warranty: Optional coverage protecting the buyer from unforeseen mechanical problems.

C.L.U.E. (Comprehensive Loss Underwriting Exchange) Report: A report that acts like a Carfax report, and let’s you know if the house has had any serious issues in the past.

Homeowner’s / Hazard Insurance: Insurance that protects the home and contents within the home.

Commission: An amount collected by an agent for services rendered.

ALTA (American Land Title Association): A settlement statement that discloses all the closing costs and fees to purchase a home.

Conventional Loan: A private loan that is not guaranteed by the US Government and generally has 15, 20, or 30 year terms.

Inspection Phase: The time when a buyer orders the necessary inspections to ensure the home is in acceptable condition.

Deed: A legal document transferring ownership of a property.

CD (Closing Disclosures): An estimate of the closing costs given to you by your lender ahead of time.

Default: A failure to make mortgage payments.

Home Inspection: A procedure ordered by the buyer to make sure the home is safe, structurally sound, and in working order.

Discount Point: Money paid to reduce the interest rate of the mortgage.

Down Payment: Money paid up front in cash that reduces the loan amount.

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FHA (Federal Housing Administration) Loan: A loan protected by the government.

Lien: A legal claim for a property that must be satisfied on the date of settlement.

Glossary Lock-In: Protection from changes in interest rates.

Market Price: The amount of money the home is worth based on current local conditions.

Real Estate Owned (REO): A sale where the bank is the direct seller of the property. (foreclosure)

Mortgage: A property lien that promises you will pay.

Refinancing: Paying off one loan while obtaining another. Generally done to secure a lower interest rate or monthly payment.

Offer: A document given to the seller to purchase the home including sales price, terms, and contingencies.

RESPA: Laws requiring lenders, Realtors, and all parties to disclose all information.

Pre-Approval: Qualifying for a mortgage before the home search so you can be viewed as a serious buyer.

Sale-Leaseback: An arrangement where the buyer allows the seller to live in the home for a certain period of time after settlement.

Prepaids/Escrow: A closing cost paid to protect the lender for the first month of mortgage and taxes.

Prime Rate: The interest rate charged by lenders and banks.

Principal: The amount borrowed from a lender that is subject to repayment with interest.

Premium: Amount paid to maintain insurance coverage.

PITI: Principal, Interest, Taxes, Insurance; the main elements of a monthly mortgage.

List Price: The offer price from the seller to their market.

Local Lender: An experienced area lender who will qualify you for a mortgage and is aware of state & county costs.

Radon: A cancerous gas that can be found in homes.

A Radon inspection can be done to protect the buyer.

Realtor: A licensed professional who can represent buyers.

Settlement: The actual legal consummation of purchasing a home.

Short Sale: A sale where the seller owes more than the home is worth so the bank agrees to allow the sale while taking a loss on money owed.

Survey: A property diagram that indicates the location of improvements, legal boundaries, easements, encroachments, rights of way, etc.

Title: A document indicating ownership of a property.

Title Insurance: Indemnity against loss resulting from disputes over ownership of the property and defects in the title.

Title Search: The process where the owner of the title is verified and the title is examined for liens or issues.

Underwriting: Analyzing the risk in a loan application.

VA Loan: A loan for veterans or current military insured by a federal agency.

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