Plan Your Purchase

Agency disclosure form

If a real-estate agent working with the buyer represents the seller, the agent will ask the buyer to sign an agency disclosure notice informing the buyer of this relationship. Also, if the same firm represents both buyer and seller, the agent needs to ask the buyer to sign a notice consenting to this.

Appraisal

A professional assessment of the market value of a property.

Association Fees

Fees that cover common costs of all homes in a condominium, townhouse or single family home association, such as trash removal, lawn maintenance, sewer and water fees, etc

Brokerage fee

A written contract for payment of fees to the real-estate agent. Typically, the seller pays the brokerage fees, which are paid from the proceeds of the sale at closing.

Closing

Completion of the sale, where the buyer signs the mortgage. Also called a settlement.

Closing costs

Expenses over and above the price of the property. These may include points, appraisal fees, cost of a credit report, title search, processing fees, underwriting fees, homeowner's insurance, property taxes for escrow, attorneys' fees, home inspection fees and transfer of ownership charges.

Commitment letter

A formal letter from the lender stating the terms under which it agrees to loan money to the buyer.

Contingency

A condition that must be met before any agreement on a property is complete.

Credit report

A record of whether or not a person has paid bills on time, banks often use this to determine whether a buyer is worthy of a loan. The Fair Credit Reporting Act gives any consumer access to a summary of information in the consumer's file showing the nature, substance and sources of the information it contains, and provides a method to correct inaccurate information

Deed

The official document that transfers ownership to the buyer. A deed contains a legal description of the property.

Downpayment

The part of the purchase price that the buyer pays in cash and does not finance with a mortgage.

Disclosed dual agent

A real-estate agent who legally represents the interests of both the seller and the buyer in the same transaction.

Earnest money

A deposit showing that the buyer is seriously interested in buying the property. This money is applied toward the down payment and held in escrow if a purchase agreement is reached.

Escrow

The holding of documents and money by a neutral third party before closing. Escrow also is an account held by the lender for future payments of taxes and insurance.

Foreclosure

When a homeowner is unable to make the mortgage payments or other financial obligations, the lender has the right to take possession of the property and sell it.

Listing agent

The agent who lists the house for sale, and who will receive at least a percentage of the brokerage fees when the house is sold.

Offer

The amount of money a buyer bids on a house, subject to the acceptance or rejection of the seller. Once the seller accepts an offer, the agreement on the property is binding.

Pre-approval of a loan

A home buyer wins approval of a mortgage before proceeding with a purchase offer. This is in contrast to the majority of buyers, who find homes they want to buy first, then apply for mortgages.

Pre-qualification

A non-binding, preliminary check by a lender on an applicant's qualification for a mortgage. Because it is done without a thorough credit check, a pre-qualification does not necessarily mean the buyer will receive final approval for a loan.

Principal

The amount of money a buyer borrows to buy a house.

Property tax

Annual taxes paid on property to cover local, state and other services.

Purchase agreement

The agreement between a buyer and a seller for the purchase of a property.

Real-estate broker

An individual licensed by the state to broker real-estate transactions. Before selecting one, a buyer should ask for recent references, and choose one with whom the buyer is most comfortable.

Realtor

A licensed real-estate agent who has taken additional steps to become a member of the local board of Realtors and a member of the National Association of Realtors. The group offers professional courses and award designations signifying that a Realtor has completed a course.

Seller's agent

A real-estate agent who represents and acts in the best interests of a seller in a real-estate transaction.

Seller's disclosure form

Illinois law requires that a buyer receive a seller's disclosure form describing the characteristics of the dwelling, including whether the seller knows of the existence of any lead paint, asbestos or hazardous substances on the property.

Survey

A measure to determine the exact location of the house, lot lines, easements and rights-of-way.

Title insurance

Insurance that protects the insured against the loss of interest in the property due to defects in the title.

Title search

An examination of the public records to reveal all interests in a property other than the owner's, such as mortgages, tax liens, municipal assessments, easements and rights-of-way, etc. This is typically done when the buyer has received a mortgage commitment from the lender.

Walk-through inspection

Typically done within 48 hours of closing, the buyer and their real-estate agent do a final inspection of the property the buyer is purchasing to ensure it is in essentially the same condition it was when the buyer made the purchase offer.