Selling a home in North America needs real estate knowledge, especially if you decide to sell your home yourself. Here are a few terms that you should be more familiar with.
A 1031 Exchange is a tax aspect of the Internal Revenue Code to allow a real estate investor who meets all the requirements to sell their property and defer paying taxes on the gain. By completing an exchange, the owner can dispose of their investment property, use all of the equity to acquire replacement investment property, defer the capital gain tax that would ordinarily be paid, and leverage all of their equity into the replacement property.
A Breach Of Contract will occur when a party will violate a direct obligation or fail to perform provisions in the contract agreement. It usually occurs in two ways: 1 A failure to perform in the property listing agreement between the broker and the seller. 2 A violation of terms in the sales contract between the buyer and the seller.
Contingencies in real estate contracts are the specific clauses in the contract that must be fulfilled by both the buyer and the seller, or provide a way to void the contract. For instance, a current home sales contingency is used when a buyer makes an offer on a home before selling the current home. The buyer may have to sell the present home before he can qualify and can afford the new one. So the offer is contingent on the sale of the existing home. Some key standard contingencies are home inspections, financing, and appraisal.
The Alienation Clause Due on Sale Clause asserts the lender’s option to force that balance of the secured debt becomes due immediately and payable if the property is sold by the borrower, therefore preventing the homeowner from assigning the debt without the lender’s approval. Comes from the term alienate, which means to transfer or convey the title to a property from one party to another.
Exclusive Right to Sell is a common type of real estate listing agreement. There will be a specific broker who will be given the exclusive right and authorization to market the property. And if the property is sold while the listing is in effect, the seller must pay the broker his commission, regardless of who sold the property. Therefore, this type of listing agreement offers the best opportunity for brokers to earn a commission. This is also known as an exclusive agency listing.
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