As real estate agents we can easily forget that real estate is not a taught subject in school. Many homebuyers and even sellers understand very little about the home buying and selling process. If you’re new to real estate, here are just a few key terms you will need to understand:

Comps – A “comp” is a comparable property to the one you’re looking to buy or sell. A comparable property needs to be a SOLD property in the same neighborhood or area as the subject property. It will generally be the same size, or at least similar in size or bedrooms and baths and will be built in the same time frame or have similar features. Usually an agent will find at least three “comp” properties before pricing a home to list for sale or before submitting an offer on a listed property.

Price/SqFt – Price per square foot is a fairly simple concept, but it can be a major life saver for situations where “comp” properties are not available, or in neighborhoods with mixed size and style homes. You will always stick with the same neighborhood on pricing before you’d ever find a similar home in a different neighborhood for comps, since an updated ranch near the downtown area can be tens of thousands more than the same property six miles away. Price per square foot is a great solution to this problem, and many agents will find an average $/SqFt to price properties. The Price per square foot will be available in the MLS, but you can easily figure it out by dividing the home’s price (list or sold price) by the square footage. If you were looking at putting an offer in on a home that is $100,000 for 1,000 sq feet, you’d be looking at paying $100,000/1,000 Sq Ft, or $100 per square foot.

Financing Contingency – Buying a property is not as simple as throwing a contract together and negotiating on price. There have to be terms and conditions on the contract to protect both the buyers and sellers’ interests. This is why it’s so important to hire a licensed Berkeley real estate agent to handle your contract, since contingencies can make or break a deal. A financing contingency means that the buyer plans on purchasing the home if and only if they are approved for financing. This means the buyer will not lose their deposit in the event that they are denied for a loan.

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