As a potential home buyer, chances are you are working with a realtor. A realtor is the best resource that you can have to guide you in your homeownership journey, however, there are times when they get so caught up in the process, they forget that we don’t speak the same language that they do when it comes to real estate. They might be showing you a house and telling you that this is probate or a flip sale and you don’t know what any of it means.
Not to worry. We’ve broken down the most common types of home sales below to guide you as you go through the process.
Standard
The most common real estate transaction wherein a homeowner lists and sells their home. No extraordinary reason why the house is available on the market, the owners just decided to sell it. They can be selling their house for various reasons such as relocating, moving to a bigger home either because their family is getting bigger or they can afford it or even empty nesters needing to downgrade to a smaller house.
Foreclosure
With the increase in real estate prices, what people usually do is set up a mortgage – a way to get funding to purchase a house from a bank or other entity. By purchasing a house and applying for a mortgage, the owner is required to pay a specific amount monthly, bi-annually, or annually for a period of time depending on payment terms, and the property then becomes collateral for the amount owed. Now, when the owner cannot afford or stop making payments, the lender forecloses on the property, and eventually re-sells it to recoup some of their losses.
Probate
Now, probate is not a term exclusive to real estate unlike the others mentioned here but is one of the most complicated concepts when it is applied to real estate. When a person becomes deceased, probate is applied as the deceased person’s properties need to be distributed to their beneficiaries.
For real estate, a deceased person’s properties are viewed and decided over by a probate court which is given authority by the state on how to distribute it to the beneficiaries that the deceased person decided on before their death.
In rare cases, probate courts decide on property allocation and distribution according to the accounts of the remaining living relatives and other investigation findings in the event that the deceased individual did not have a will for the probate committee to base their ruling on.
Flips Or Remodels
Flipping in real estate is done by those who consider real estate as a business of making money. When one “flips” a house in real estate, it means they are specifically buying dilapidated, worn out, and subpar properties and doing renovations and altering for the reason of being able to sell it for a higher value.
Flipping in real estate is a pretty common practice on foreclosed properties or properties where accidents and crimes have occurred – as these events significantly decrease the market value of a property – and is one of the reasons why entering real estate is one of the most profitable occupations in the country.
On the note, If you are a homeowner considering selling your property that has already seen its fair share of wear and tear, we suggest flipping it up to make sure you get a huge profit.
New Construction
New Construction in real estate terms refers to homes and properties that are newly constructed with the homeowners being the first ever to own the specific property.
This means everything from infrastructure to all home finishings are brand new and supposedly in the best condition that they can ever be – with this, real estate agents usually use the fact that New Construction Homes are all brand new to raise the prices of these properties higher in the market. If you have the financial capacity to do so, purchasing New Construction Homes is never a wrong investment!
The Bottom Line
While it is advised to have professionals help you deal with your real estate matters, having first-hand knowledge about it allows you to make informed decisions, steer away from bad advice, scams, and people who wish to take advantage of you and your assets.
Each type of home sale has its advantage and disadvantages and there are a lot of factors that can affect your decision on which route to take, knowing what you want in your home, your priorities, and your budget can help you make the right choice.
