Legal Real Estate Terms to Know as an Investor

By Staff Reporter Apr 25, 2022 01:47 PM EDT

Photo by RODNAE Productions from Pexels — (Photo : RODNAE Productions from Pexels)

Investing in real estate is a major decision that involves vast sums of money. As a real estate investor, you want to follow proper procedures to avoid being on the bad side of the law. Again, you should engage the right team, and this may include an attorney, a realtor, and a home inspector. That's not all, though! An understanding of the law goes a long way. And a real estate lawyer will help you understand most of the legal terms in the industry.

Check out essential legal terms that you should know:

1. Appraisal

An appraisal is a written report issued by a state-licensed appraiser. It includes unbiased information on the analysis of properties. It's necessary for all commercial property sales, and you'll need it when applying for a mortgage.

An appraisal states the estimated value of a real estate investment. When applying for a loan, the mortgage officer will send an appraisal to get a professional view of the property's value. This will help determine whether the amount of loan applied matches the property's value.

2. Broker

A broker is yet another common term in real estate dealings. This refers to a professional who connects buyers and sellers during property sales. A real estate broker should be licensed to offer the services in the state and have proper documents to prove this. Most brokers work on a commission, but others are salaried and will represent either the buyer or the seller.

3. As-is

As-is is a common term used in the real estate industry. It indicates that the seller is willing to undertake some repairs on the property. It may also mean that that's the lowest market price in the area, and the property is the price as stated.

However, this regards the property's condition during the time of writing the offer. If something happens after the listing period and alters the property's condition, the seller will have to restore it back to the original condition or refund the money.

4. Lien

A lien is a legal claim against an asset that has been listed as collateral in the case of a loan. It's filed against the property due to the money owed and will halt the sale of the property until the debt is settled. It serves as a guarantee for the repayment of the debt, and it's vital to determine there are no liens on the property you intend to buy.

5. Escrow holder

An escrow holder is an agent or a third party who holds the money and property and ensures a secure exchange. They also collect written documents, personal property, and other valuables to be held until certain conditions are met. The professional will ensure that no money or property is released until both parties are satisfied.

A Quick Wrap-Up

Buying and selling property involves multiple processes. You require the expertise of an attorney to avoid mistakes. The professional will guide you on the legal terms during transactions. The attorney will also help you acquire the necessary documents to ensure a successful transaction.