🏡 Real Estate Glossary
Understanding the Language of Home Buying and Selling
Whether you’re a first-time homebuyer or a seasoned seller, real estate comes with a lot of industry-specific language. Here’s a helpful glossary of common terms you’ll encounter during the process:
Appraisal
An estimate of a property’s market value conducted by a licensed appraiser, typically required by lenders.
As-Is
A term used when a property is being sold in its current condition with no repairs or improvements made by the seller.
Back-Up Offer
An offer made on a property that is already under contract with another buyer. It becomes active if the first deal falls through.
Buyer’s Agent
A real estate agent who represents the buyer’s interests in a transaction.
Closing
The final step of a real estate transaction when the title is transferred and the deal is completed.
Closing Costs
Out-of-pocket expenses incurred by buyers and sellers at the closing of a transaction.
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Buyers: charges may include agent commissions, appraisal, inspection, loan fees, title insurance, taxes, escrow set up.
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Sellers: charges may include agent commissions, title transfer fees, updating of abstract, prorated taxes/HOA dues.
Commission
The fee paid to real estate agents for their services, usually a percentage of the home’s sale price and typically paid by the seller.
Comparable (Comp)
A recently sold property that is similar in size, location, and features to help determine market value.
Conventional Financing
A mortgage loan not insured by the government. It typically requires higher credit scores and a lower debt to income ratio.
Counter Offer
A response to an initial offer with modified terms, which voids the original offer and begins a new negotiation.
CMA (Comparative Market Analysis)
A report prepared by a real estate agent to help determine a home’s market value based on recently sold, similar properties.
Days on Market (DOM)
The number of days a property has been listed for sale. Longer DOM can signal an overpriced or less desirable listing.
Deed
A legal document that officially transfers ownership of real property from the seller to the buyer. It includes a detailed description of the property and is recorded with the local government to establish public ownership records.
Down Payment
The initial cash payment made by the buyer when purchasing a home, typically 3%–20% of the purchase price.
Due Diligence
The buyer’s opportunity to investigate the property before finalizing the purchase—includes inspections, reviewing disclosures, and verifying permits.
Earnest Money
A deposit submitted with an offer to show good faith. It’s applied to closing costs or the down payment if the deal closes.
Easement
A legal right to use part of someone else’s land for a specific purpose, such as utility access or a shared driveway.
Escalation Clause
A clause in an offer that automatically increases the buyer’s bid up to a set maximum if competing offers are received.
Escrow
A neutral third party that manages the exchange of money and documents during a transaction to ensure a secure and fair closing.
FHA Financing
A government-backed loan by the Federal Housing Administration with lower down payment and credit requirements.
HELOC (Home Equity Line of Credit)
A loan that allows homeowners to borrow against the equity in their home, typically as a line of credit.
Home Inspection
A professional evaluation of the home’s condition, identifying needed repairs or safety issues before purchase.
Home Protection Plan (Home Warranty)
A service contract that covers repair or replacement of major systems and appliances due to normal wear and tear.
Homeowners Association (HOA)
A group that manages and enforces rules for properties in a planned community, often collecting dues and maintaining shared spaces.
Interest Rate
The cost of borrowing money, expressed as a percentage of the loan amount.
Listing
A property that is publicly advertised for sale, usually represented by a listing agent.
Loan Pre-Approval
A written estimate from a lender of how much a buyer is qualified to borrow, based on verified financial information.
Mortgage
A loan used to purchase real estate, typically paid in monthly installments with interest.
Mortgage Insurance (PMI)
Insurance required for buyers with a down payment under 20% to protect the lender in case of default.
Offer
A formal bid by a buyer to purchase a property under specific terms and price.
Pending
Status indicating the seller has accepted an offer and the transaction is progressing toward closing.
Pre-Approval Letter
A formal document from a lender stating that a buyer has been evaluated and qualifies for a mortgage up to a specified amount, based on verified financial information. It strengthens a buyer’s offer by showing sellers they are serious and financially capable of purchasing the home.
Pre-Qualification Letter
An informal estimate from a lender of how much a buyer might be able to borrow based on self-reported financial info.
Principal
The original amount borrowed in a mortgage loan, excluding interest.
Proof of Funds
Documentation (usually a bank statement or a letter from a bank) showing that a buyer has sufficient liquid funds to cover a down payment or cash purchase.
Seller Concession
When a seller agrees to pay some of the buyer’s closing costs or provide credits toward repairs or updates.
Seller’s Agent (Listing Agent)
The real estate professional who represents the seller and their best interests in a transaction.
Seller’s Property Condition Disclosure
A legally required document where the seller details known issues or defects with the property.
Special Assessments
Additional charges levied by a city or HOA to cover infrastructure projects or major repairs, billed separately from property taxes or dues.
STOP Clause (Subject To Owner’s Purchase)
A contingency used in real estate contracts indicating that the sale is subject to the seller successfully finding and securing a new home to purchase. This clause allows the seller to accept an offer while retaining the right to cancel the contract if they are unable to find a suitable replacement property within a specified timeframe.
Tax Assessed Value
The value assigned to a property by the local government for the purpose of calculating property taxes. This value may differ from market value.
Title
The legal right to ownership of a property.
Title Insurance
Insurance that protects against potential legal claims or disputes over property ownership.
Under Contract
A term indicating the buyer and seller have agreed on terms, but the sale has not yet closed.
VA Financing
A mortgage backed by the U.S. Department of Veterans Affairs, offering benefits to qualified veterans, active-duty members, and some military spouses.
