What do you know about real estate? Most adults have to know a little bit about real estate – it matters to grown-ups, in particular, because you’ll always need a place to live. But whether you rent or buy, knowing little things about real estate might help you to have a better idea of what you would like for your future. When it comes to buying a home, renting a home, or anything that’s new, it’s helpful to know your options, and always helpful to try to educate yourself first. When it comes to renting, you have many, many options to consider in terms of your living space.
For a home, you have a completely different list of possibilities. In either case, it’s most important that you have enough ready to go for a 20% down payment, good credit, and a reliable real estate agent. Even though you’re educating yourself, having a real estate agent can help you in ways that you might not consider – particularly when it comes to networking your home, and finish the closing paperwork.
Condos, Duplexes, Apartments, Bachelors, Studios, and Singles
Here’s something you already know: whether you’re renting or buying, you’ve got some decisions to make! For your reference, here are some general descriptions that can help you to understand the difference between the different types of multi-family housing options:
- Condos: usually reserved for vacation rentals, condominiums can come in many different shapes, sizes, and locations. In many cases, condos don’t differ much from standard apartments – all of them come with at least one bedroom, a living area, a full kitchen, and a full bathroom. What separates condos from apartments is the fact that condos are always together, and owned by several people, as opposed to a single building manager who is responsible for multiple units.
- Apartments: several one- to three-bedroom housing units for rent that are all part of one building, under a single owner. Apartments are usually only rented; apartments that can be purchased are usually condos. Unlike condos, apartments will have greater limitations on the types of modifications that you can make to the property – after all, the property doesn’t legally belong to the renter.
- Duplexes: a home converted into multiple apartments is what usually makes a duplex. Duplexes usually consist of two apartment homes side-by-side, but can include four, five, or six units in larger homes. Duplexes are often great rental opportunities, but are rarely available for sale.
- Studios: with studios, bachelors and singles, definitions start to get blurry, and may actually vary from state to state. Studios are usually a single room, with a full bathroom, an open kitchen, and a space for sleeping and living. In major cities, you are almost guaranteed to find similar pricing for studios and one-bedroom apartments, but studios will also be cheaper to rent. Studios will often have the type of amenities that you’ll look for in one-bedroom apartment communities, like clubs and pools.
- Bachelors and Singles: these two names usually refer to the same setup – a room, however large, a full bathroom, and a kitchenette. The kitchenette will often contain a small refrigerator and microwave, though larger cities with smaller markets will occasionally upgrade a bachelor with a full kitchen. This technically bumps it up to a studio, but property owners won’t always distinguish between upgraded bachelors and studio apartments.
A realtor usually refers to a person certified by the National Association of Realtors, an organization that monitors and provides resources to their certified persons. Realtors may be better connected than your average real estate agent, and have an established chain of command to ensure consistency whenever possible. This doesn’t mean that all real estate agents are realtors, but it does mean that a realtor has a network that may differ from non-realtor real estate agents. With that, also understand that today, the terms, ‘realtor’ and ‘real estate agent’ are used interchangeably.
Real Estate Agent
A licensed professional who is educated and trained in real estate practices, including acting as a third party for those who are buying and selling homes, as well as some of the laws concerning the sale of real estate. There are real estate attorneys, and it’s advisable to consult a real estate attorney if you’re considering a home with a unique mortgage.
An appraiser is a licensed professional who is educated and trained in assessing the Fair Market Value for a home. Appraisers can be helpful to those looking at buying a home, especially as they evaluate the cost of the home, versus its monetary value.
Fair Market Value
The Fair Market Value refers to the amount that any piece of real estate, including homes, is really worth. The Fair Market Price considers both local and national markets, necessary repairs for the home, and the purchase price of homes in the same neighborhood.
Simply put, cash reserves refers to the leftover cash capital from purchasing your home. Most lending institutions have minimum cash reserves required for the purchase of a home, and the amount fluctuates from situation to situation. After you’ve made your down payment, you’ll still need to pay for closing costs for your home, as well as have a stash of a few thousand dollars in case of emergencies. This extra cash, though, should only be used for things that your home needs – don’t treat it like extra income for things that you don’t need, even if it’s new furniture for your new home.
Closing and Closing Costs
Closing a sale on a home is the victory stage of home buying. The seller has formally accepted your offer, and the paperwork is signed over to you. This is an especially important time: payments must be made, and signatures must be taken. Having an experienced real estate agent at your side will save you the hassle of trying to figure out the mountain of paperwork by yourself.
Closing costs can include, but aren’t limited to, the real estate agent’s commission, fees for transfer of paperwork, insurance, and homeowner’s association fees.