Forms for making an offer on a condo can contain unfamiliar words and phrases, making the homebuying process intimidating.
Here are some definitions to help you:
Comparative market analysis: A report comparing recently sold properties to the condo unit you want to buy.
Counteroffer: The bid a seller makes to respond to your offer. Buyers and sellers can exchange offers and counteroffers until they reach agreement on a sale.
Contingencies: Clauses making the sale of the condo dependent on certain things happening, such as the unit passing a home inspection.
Earnest money deposit: The cash you include with your offer to show you are serious about buying the condo unit. It shows commitment because it can be non-refundable. The deposit is typically 1% to 3% of your bid and is added to your down payment when you close. The cash is held in an account a third party manages.
Escalation clause: A clause triggered when another person’s offer is higher than yours. The clause raises your offer by a set amount until reaching the highest sum you will pay for the unit.
Escrow: The account where the earnest money deposit is kept. A third party like a title company administers it.
Homeowners association: The organization that governs a condo community. The HOA sets the rules that condo residents must follow, enforces them, maintains the community’s common areas and collects monthly fees to fund its work.
Homeowners association documents: The written rules and regulations of the condo community. They can also be known as codes, covenants and restrictions. You should review them before or shortly after making an offer to determine whether they are acceptable.
Purchase agreement: A written offer to purchase a condo unit. It identifies the buyer and seller; sets the terms for the purchase, such as price and contingencies, and determines the amount of earnest money deposit to be paid.
Special assessments: A fee charged to residents of condo communities in addition to monthly HOA fees to pay for unanticipated large expenses, such as repairs after a natural disaster.
Waiving home inspection: A buyer’s agreement to close regardless of any flaws and repairs discovered by an inspection. Some lenders may require homebuyers to get a home inspection.
- Getting a mortgage pre-qualification or pre-approval for a condo purchase
- How to hunt for a condo to buy
- How to assess your financial readiness to buy a condo
- 10 terms to know before buying a condo
- Buying a home in 10 steps