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Useful Real Estate Terms

Appraisal - An appraisal is a report prepared by a person licensed by the State of Vermont to determine the approximate value of a property. The appraisal is typically the key element to obtaining financing from a bank. Most banks will not provide a buyer a loan unless an appraiser confirms that the contract price is equal to or less than the appraised value of the property.

Commissions - The fees to real estate agents are known as commissions. Fees vary among agents so it is important to shop around for the best price.

Comparable Sale - This term refers to a property that has sold recently (usually within the past 6 months or sooner) that is similar to your home. You can find these properties on the MLS' list of Sold Properties.

Contract Contingency - Most contracts include clauses that allow a buyer to terminate the contract unless they confirm that certain things meet with their approval. The most common contingency in a contract is an "Inspection Contingency." An inspection contingency normally states that a buyer may terminate the contract if they have the property inspected and they are not satisfied by the results of the inspection.

Counteroffer - Once a buyer presents an offer to a seller, the seller can either accept it as is, reject or counteroffer. A counteroffer is a legal rejection of the buyer's initial offer. The counteroffer is essentially a new offer from the seller to the buyer.

Deposit (aka earnest money) - This is the amount the buyer gives to the seller at the time of the signing of the contract. Typically the deposit is only refundable if the buyer terminates because of a "contract contingency" (see above). If the buyer breaches the contract then the seller normally has the right to retain the buyer's deposit. If the buyer does purchase the property, the deposit is credited towards the buyer's purchase price at closing.

Escrow Agent - An escrow agent acts as an intermediary between the buyer and seller in a real estate transaction. Unlike an agent for one party or the other, the escrow agent has a duty to both parties to act only upon the instructions of both parties. Escrow agents are often charged with holding deposit money.

Exclusive Agency Agreement - This is the agreement or contract between a home seller and a real estate agent. This agreement is an exclusive one meaning that the seller can only use that agent during the term of their agreement to help find a buyer for their home. The agreement does not prohibit the seller from continuing to market the property on their own.

Exclusive Right to Market Agreement - This agreement is similar to the Exclusive Agency Agreement but the seller is prohibited from marketing the property on their own while the agent has it listed. The seller must refer all inquiries to the listing agent.

FSBO - (pronounced "Fizz Bo") stands for "For Sale By Owner." This is a property that is marketed for sale but the owner is not represented by a Listing Broker.

Land Gains Tax - In Vermont, there is tax on the gains (appreciation) in land. The tax is due if the property is sold within 6 years of buying the property. There are exceptions where the buyer will use the property as their primary residence. There are other exceptions as well available on the State's website.

Lead Based Paint Disclosures - Because lead based paint was not banned in the United States until 1978, sellers of residential structures built before 1978 must disclose to prospective buyers whether they have knowledge of the presence of lead based paint or reports pertaining to lead based paint. The seller is not required to test the house but a prospective buyer upon signing a contract could have such a test performed. It is not customary in Vermont for a buyer to have the house tested for lead based paint. Additional requirements pertain to sellers of residential rental buildings.

Listing Broker - This is the firm or individual that represents the seller for the purpose of marketing the seller's home. This party is an agent of the seller and their sole duty is to represent the interests of the seller of the property.

Lockbox - In Vermont most agents utilize lockboxes on properties that they list. In Chittenden County and some other counties most agents use electronic lockboxes that create a digital record of the identity of the person that opened the lockbox and the date and time the box was opened. In other counties agents use traditional punch-code lockboxes.

MLS - This stands for "Multiple Listing System." The MLS is a database of property listings. In Vermont the MLS is owned by the Northern New England Real Estate Network (aka NNEREN). Real estate agents in Vermont input data into the MLS. This data is used by local brokerage websites, including this one, for content. Most if not all real estate content on websites is fed directly from the MLS. Thus, very few public listings are exclusive to a particular website.

Offer - When a buyer is interested in a home, they convey their interest to the seller in writing. In order to be legally enforceable the written document must include the property address, the price, and the date of the closing. Although these are the minimum requirements the written document usually includes additional terms including but not limited to clauses related to the buyer's mortgage and inspecting the property.

Open House - While open houses have lost almost all of their effectiveness, some agents still insist upon holding them. Open houses are opportunities for buyers to visit a listing without a specific appointment. Most agents use open houses these days to try to gain more buyer clients for themselves rather than selling the home.

"Open" Permits - Vermont is somewhat unique in that because of Vermont Supreme Court decisions, zoning and building permits are considered part of a property's title (see below). As a result of these decisions, most buyers will need to ensure that any and all permits affecting the property have been properly disposed of in the town offices. In some cases a final inspection may be required by a town official even if the permit is very old to finally "close out" the open permit.

Option (to purchase) - An option to purchase is an agreement between a buyer and seller that gives the buyer the future right to purchase. The buyer usually pays the seller a non-refundable amount of money for this right. Unlike a right of first refusal (see below), the buyer has the exclusive right to purchase during the option period.

Preview - Some agents like to preview new listings without clients. Sellers have no obligation to allow a preview but most do.

Property Inspection - Although not legally required, most buyers in Vermont will have a home inspected by a professional home inspector prior to purchasing a home. It is important to note that at this time there is no licensing in Vermont for home inspectors so the only standards used are those of their national trade association (NAHI).

Property Transfer Tax - In Vermont the State charges a 1.25% tax on the transfer of real estate. It is customary for the buyer to pay this tax, which differs from states in the U.S. where the sellers customarily pay. The tax is due at the time of the transfer. There is an exception for a property that will be used as the primary residence of the purchaser. If the purchaser will use the property as their primary residence then the first $100,000 of the sales price is taxed at .5% or $500. Thus, if a buyer purchases a $200,000 home as their primary residence the tax will be $1,750, whereas if the house is not the buyer's primary residence the tax would be $2,500.

P&S - Purchase and Sale Contract. This is the written agreement creating the legal obligation of the seller to sell and the purchaser to buy the property.

PTTR - This stands for Property Transfer Tax Return. This is the form filed with the State at closing reporting the transfer tax paid by the buyer.

Radon - Is a gas that has been linked to an increased risk of cancer. The U.S. Environmental Protection Agency's website has a detailed description of the gas and the risks associated with it. It has become customary in Vermont to have a home tested for radon before purchasing. While there are no laws regarding radon, the EPA has recommended levels for installing mitigation devices and systems. Most home inspectors in Vermont also are trained in conducting radon tests.

Right of First Refusal - A right of first refusal is usually provided by a seller to a buyer for the opportunity to match the terms of another offer should the seller receive one. In Vermont the most common scenario is where the buyer has a home of their own to sell before they can purchase the seller's home. The buyer and seller agree to the terms of the purchase of the seller's home. The seller then has the right to continue to show their home and take other offers. The buyer then has the right to match the terms of any offer the seller receives that is better than the agreement between the buyer and the seller.

Seller's Property Information Report (SPIR) - This is a document customarily provided by a seller to prospective buyer. Sometimes referred to as the "Seller's Disclosures," this document is not legally required under Vermont law at the current time. However, it is common practice for the seller to provide this document to a buyer prior to their signing a contract to purchase the seller's home.

Short Sale - Some lenders will allow the seller to sell the home for less than the amount of the current mortgage. The seller must get the lender's approval to sell the property for a price that is "short" of the existing loan amount.

Showing - This is the term used when a buyer views a property for sale. Typically the buyer should ask their agent to schedule an appointment with the listing agent to see the home to avoid any later disputes as to procuring cause.

Staging - It is important to put the "best face" on your home before buyers see it. Staging is the act of making a home look more attractive. Some examples of staging include lighting candles, baking cookies, keeping fresh flowers throughout the home or keeping all of the lights on during showings.

State of Vermont Consumer Disclosure - The State of Vermont requires that every real estate agent upon "substantial contact" with a prospective client provide a consumer disclosure. This website contains a link to the disclosure on the homepage to meet this requirement.

Title Search - In Vermont a property is sold by a seller giving a "deed" to a buyer. The deed is evidence of the seller's ownership. Similar to an automobile, the deed is often referred to as the title to the property. It is important for a buyer to make sure that the seller owns the title and that there are no mortgages or other liens on the property. A buyer or a buyer's lender will typically hire an attorney in Vermont to search the history of the title (often referred to as the "chain of title") to ensure that the seller has a good title to sell to the buyer. In Vermont the records of title are kept at the local level in the town and City land records.