This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!
Question: Can you explain the difference between settlement and ratification?
Is there another metro area with more “industry languages” than D.C.? Between consultants, lawyers, and politicians, you can sit next to somebody at a quiet bar, who’s speaking perfectly clear English, and not understand a word. Realtors are just as guilty of rattling off terms and acronyms in the course of conversation, so here’s a quick glossary of common terms that I’m frequently asked to define.
- Ratification: Occurs when both parties (buyer and seller) have agreed to the deal and the contract has been signed/initialed by both parties without any additional changes.
- Settlement: This is the date that the home is actually purchased by the buyer. Also known as “closing.”
- Underwriting: The final approval process for a loan. The underwriter reviews the entire loan application package and issues an approval or notifies the buyer of any conditions that must be met in order to secure a loan.
- EMD: Earnest Money Deposit. A negotiable sum of money deposited by the buyer into an escrow account after the contract is finalized, usually within 3-5 days and 2-3% of the sales price. If the buyer walks away from the deal outside of legal means/contingencies, the seller can keep the entire sum of money as damages.
- Contingency: A term within a sales contract that gives the buyer or seller the right to void a contract, without penalty, if certain criteria are/are not met. A common contingency is a Home Inspection. The buyer is given the right to an inspection and if the buyer and seller cannot agree on corrective action requested by the buyer, the buyer has the right to void the contract, within a pre-determined period of time (usually 5-10 days after ratification).
- FSBO: For Sale By Owner. When a homeowner decides to do something crazy and sell his/her home without an agent J
- ARM: Adjustable Rate Mortgage. A loan with a fixed interest rate for a specific period of time (usually 5, 7, or 10 years) that can adjust to a different rate, based on market rates when the fixed period ends. It’s well established that these loans led to the housing crash 10 years ago, which led to the Great Recession, and ARMs got a very bad name in the process. However, they can be a great product for many buyers because they offer lower rates than a 30-year fixed (most common loan product) and most homeowners will sell their home before the time the rate can adjust.
- PITI: Principal, Interest, Taxes, and Insurance. The total monthly fixed payments for a homeowner. PITI is commonly used to determine the daily rent-back rate for a Post-Settlement Occupancy Agreement (seller remains in the home for a specified period of time after settlement).
- 1031: A 1031 Exchange allows a homeowner to defer capital gains tax charges from a home sale by using the proceeds of the sale towards the purchase of another home. You must meet certain requirements like identifying the home to purchase within 45 days and settling within 180 days, from the date of the previous home sale. As with all tax-related transactions, it’s advisable to consultant an accountant beforehand.
Let me know if there are any other terms you’ve heard thrown around by agents that you aren’t clear on. I’m happy to write a second column with more terms.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.
In loving memory of Joseph Robert Kapacziewski, who passed away in 2023 at the age of 41.
In loving memory of James Stuart Edmonds, who passed away in 2023 at the age of 84.
A man was shot in front of a lounge on Columbia Pike early this morning, continuing a string of violent incidents.
Good Friday evening, Arlington. Today we published articles that were read a total of 17124 times… so far. 📈 Top stories The following are the most-read articles for today —…
YULA’s ultimate frisbee spring season is now open for registration. We offer programs for middle and high schoolers – open to all players, whether they are new or have previous experience.Middle SchoolIn the Middle School league, mixed-gender teams practice once during the week and have games on Sunday afternoons. Spring league is a fun, safe, and positive environment. The season begins mid-March and wraps up with a tournament in early June. There are several options for practice days, so we can often work around schedule conflicts with other sports & activities.High SchoolThe High School program is organized by school of attendance and teams are classified by gender. New players will learn the basics in a supportive, welcoming environment. Experienced players will continue to develop their skills, and enjoy competition with other high school programs. The season concludes with a state level championship tournament in late May.All players are guided by experienced coaches who emphasize sportsmanship and good spirit. Ultimate is a fun sport with great camaraderie!YULA does not want finances to limit anyone from participating. Our middle school program offers a “Pay What You Can” cost structure and our our high school program is offering a $50 discount to new players.Visit our website to register and learn more. Sign up with a friend, but don’t delay, the season starts in March!http://www.yula-ulti.org
The Arlington-Aachen High School exchange is returning this summer and currently accepting applicants.
The sister-city partnership started in 1993 by the Arlington Sister Cities Association, which seeks to promote Arlington’s international profile through a variety of exchanges in education, commerce, culture and the arts. The exchange, scheduled June 17th to July 4th, includes a two-week homestay in Aachen plus three days in Berlin. Knowledge of the German language is not required for the trip.
Former participants have this to say:
_”The Aachen exchange was an eye-opening experience where I was fully immersed in the life of a German student. I loved biking through the countryside to Belgium, having gelato and picnics in the town square, and hanging out with my German host student’s friends. My first time out of the country, the Aachen exchange taught me to keep an open mind, because you never know what could be a life changing experience.” – Kelly M._
Valentine gifts for someone special or for yourself are here at George Mason University from noon -4pm on February 14, 2023. Satisfy your sweet tooth with Kingsbury Chocolates, find a handmade bag from Karina Gaull, pick up treats from Village