Tom Crimmins Realty Blog - houses for sale in Staten Island

Real Estate Word of the Day: Earnest Money

Real Estate Word of the Day: Earnest Money

Earnest money is a deposit made by a potential homebuyer to show that they are serious about purchasing a property. It's a gesture of good faith, indicating that the buyer is committed to following through with the purchase. This deposit is typically held in an escrow account and is applied towards the down payment or closing costs upon finalizing the sale.

Earnest money shows the seller that the buyer is serious about the purchase, which can make the buyer's offer more attractive, especially in competitive markets. Once the earnest money is deposited, the property is taken off the market, and the seller is less likely to entertain other offers. This gives the buyer time to conduct inspections, secure…

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Real Estate Word of the Day: Encumbrance

Real Estate Word of the Day: Encumbrance

An encumbrance is a claim, lien, charge, or liability attached to and binding real property. It is any right or interest in land that may exist in someone other than the owner, but which will not prevent the transfer of title. Encumbrances can affect the property's value and limit its use.

Types of Encumbrances

Liens

Liens are legal claims against a property, typically used as security for a debt. Common types of liens include:

• Mortgage Liens: These are claims by a lender against a property until the mortgage is paid in full.
• Mechanic’s Liens: Filed by contractors or subcontractors who have performed work on the property but have not been paid.
• Tax Liens: Imposed by the government for unpaid…

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Real Estate Word of the Day: Contingent Offer

Real Estate Word of the Day: Contingent Offer

A contingent offer is an offer on a property that is dependent on certain conditions being met before the sale can be finalized. These conditions, known as contingencies, are outlined in the purchase agreement and must be satisfied for the transaction to proceed. If the contingencies are not met, the buyer can withdraw the offer without penalty, and the seller can continue to market the property to other potential buyers.

Looking to buy or sell your home on Staten Island? For all your real estate needs, look no further than Tom Crimmins Realty! Give us a call at (718) 370-3200, and we can provide you with professionally-trained agents who are flexible to all…

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Real Estate Word of the Day: 1031 Exchange

Real Estate Word of the Day: 1031 Exchange

Named after Section 1031 of the Internal Revenue Code, a 1031 Exchange allows investors to defer paying capital gains taxes when they sell an investment property and reinvest the proceeds into a new qualifying property. By doing so, investors can leverage their profits to acquire more valuable properties, thus enhancing their investment portfolio without the immediate tax burden.

The primary advantage is the ability to defer capital gains taxes, potentially until the sale of the replacement property. This can lead to significant tax savings, allowing more capital to be reinvested. By reinvesting the entire sale proceeds into new properties, investors can enhance and diversify their portfolios, thus…

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Real Estate Word of the Day: Assumption

Real Estate Word of the Day: Assumption

An assumption refers to the transfer of an existing mortgage from the current homeowner to the buyer. Essentially, the buyer "assumes" the mortgage, taking over the responsibility for the remaining loan balance, interest rate, and terms of the original loan. This can be an attractive option for both buyers and sellers under the right circumstances.

One of the main reasons buyers consider assuming a mortgage is to take advantage of a lower interest rate. If the original loan was secured during a period of low interest rates, the buyer can benefit from these favorable terms, potentially saving thousands of dollars over the life of the loan compared to securing a new mortgage at current higher rates. Assuming a…

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Real Estate Word of the Day: Walkthrough

Real Estate Word of the Day: Walkthrough

A walkthrough is a final inspection of a property by the buyer before closing the deal. It typically occurs shortly before the closing date, often within 24 to 48 hours. The primary purpose of a walkthrough is to ensure that the property is in the agreed-upon condition, all requested repairs have been made, and no new issues have arisen since the last time the buyer viewed the property.

During the negotiation phase, the buyer and seller may agree on certain repairs or improvements that the seller needs to complete before closing. The walkthrough allows the buyer to confirm that these repairs have been satisfactorily completed. Additionally, it ensures that the property is in the same condition as when the…

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Real Estate Word of the Day: Variance

Real Estate Word of the Day: Variance

In statistical terms, variance measures how much a set of numbers (data points) differ from the mean (average) of those numbers. It provides insights into the spread or dispersion of data points in a dataset. A higher variance indicates that the numbers are more spread out from the mean, while a lower variance indicates that they are closer to the mean.

While it might seem like a term plucked straight out of a statistics textbook, its implications in real estate are profound and worth understanding. Understanding the variance in property values within a specific neighborhood or region can help investors assess the potential risk and return. A high variance in property prices might indicate a diverse market with…

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Real Estate Word of the Day: Usury

Real Estate Word of the Day: Usury

Usury refers to the act of charging interest on a loan at a rate that exceeds the legal limit set by law. Historically, usury laws were established to protect borrowers from exorbitant interest rates and to ensure fair lending practices. These laws vary by jurisdiction, but their core purpose remains the same: to prevent lenders from exploiting borrowers through excessive interest charges.

Mortgage lenders must adhere to state and federal usury laws when setting interest rates. If a lender charges an interest rate above the legal limit, it can be considered usurious, leading to legal consequences and financial penalties. For borrowers, usurious rates can make mortgage payments unaffordable, potentially leading to…

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Real Estate Word of the Day: Underwriting

Real Estate Word of the Day: Underwriting

Underwriting is the process used by lenders, insurance companies, and investors to assess the risk of providing financial services, such as loans or insurance, to a client. In the context of real estate, underwriting involves a thorough evaluation of the property, the borrower, and the market conditions to determine whether to approve a loan application and under what terms.

The Process for Underwriting

When you apply for a mortgage or a real estate investment loan, the first step is the initial application review. This involves collecting your financial information, including income, credit score, employment history, and existing debts. A crucial part of underwriting is the property appraisal. This is…

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Real Estate Word of the Day: Title Insurance

Real Estate Word of the Day: Title Insurance

Title insurance is a specialized form of indemnity insurance designed to protect property owners and lenders from potential losses arising from defects in the title to a property. Unlike other insurance types, which protect against future events, title insurance protects against claims for past occurrences. This includes any discrepancies or issues with the property's title that may not have been discovered during the initial title search.

When you purchase a property, a title company conducts a thorough search of public records to uncover any potential issues with the title. This search aims to ensure that the seller has a valid title to transfer and that there are no hidden liens, encumbrances, or other…

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