Decoding Real Estate Jargon: A Glossary for Buyers and Sellers

Veronica Peter May 28, 2025

Navigating the real estate market can often feel like stepping into a world filled with its own language. Whether you're buying or selling a home, understanding real estate jargon is crucial to making informed decisions. Here’s a comprehensive glossary to help you decode common terms and empower you in your real estate journey.

1. Appraisal

An assessment of a property's value conducted by a qualified appraiser. Lenders require appraisals to ensure that they are not lending more money than the property is worth.

2. Closing Costs

Expenses over and above the price of the property that buyers and sellers normally incur to complete a real estate transaction. These include fees for the loan, title insurance, and appraisals, inspections, property taxes, escrow fees, etc.

3. Close of Escrow

Refers to the final stage of a property transaction where the sale is completed, and ownership transfers from the seller to the buyer. It signifies the culmination of all terms and conditions of the sale agreement being fulfilled, including the payment of funds and the transfer of legal documents.

4. Contingency

A condition that must be met for a real estate contract to become binding. Common contingencies include home inspections, loan, appraisal, insurance, and the sale of the buyer’s current home.

5. Earnest Money Deposit

An earnest money deposit, also known as a good faith deposit, is a sum of money a buyer puts down when making an offer on a home to demonstrate their seriousness. It's typically a percentage of the home's purchase price,typically 3% in the Bay Area. This deposit is held in an escrow account by a third party until closing, when it's applied toward the buyer's down payment or closing costs.

6. Equity

The value of the homeowner’s interest in the property, calculated as the difference between the property's market value and any outstanding mortgage balance.

7. Escrow

Funds or assets held by a third party on behalf of the buyer and seller until certain conditions of the transaction are fulfilled. This helps ensure that both parties meet their contractual obligations.

8. Fixed-Rate Mortgage

A type of home loan where the interest rate remains the same throughout the term of the loan, providing predictable monthly payments. Most commonly the tern for a fixed-rate mortgage is 30 years.

9. Homeowner’s Association (HOA) Fees

Dues collected by an HOA to maintain common areas and other shared amenities in a community, such as pools or clubhouses.

10. Listing Agent

A real estate agent who represents the seller and is responsible for marketing the property and negotiating with prospective buyers.

11. Multiple Listing Service (MLS)

A database used by real estate agents to list properties for sale, which provides detailed information about a property to potential buyers.

12. Pending

A sales status indicating that a property is under contract and moving towards closing. You'll typically see this status if you are searching for homes on the MLS.

13. Pre-Approval

A lender’s conditional offer to loan you a certain amount of money for a home purchase. Pre-approval is based on a review of your finances, including income, assets, and credit score.

14. Selling Agent

Commonly known as a "buyer agent", they represent the buyers best interests, source properties, negotiate the deal, and guide buyers through the buying process from start to finish.

15. Short Sale

When a homeowner sells their property for less than the amount owed on the mortgage with the lender's approval, often to avoid foreclosure.

16. Title Insurance

A policy that protects against losses due to title defects, such as liens or encumbrances, that were not uncovered during the initial title search.

17. Underwriting

The process lenders use to determine the risk of offering a mortgage loan to a borrower. It involves verifying the borrower’s income, assets, and credit history.

18. Zoning

Laws governing how land can be used in certain areas. Zoning affects what can be built on a lot and how it can be used, whether for residential, commercial, or industrial purposes.

Arming yourself with a solid understanding of real estate terminology can demystify the process, giving you the confidence to make informed decisions. Whether you’re buying your first home or selling your property, this glossary serves as a handy reference to navigate the complexities of real estate transactions with ease. Understanding these terms can turn what might seem like a maze into a clear path toward your real estate goals. Happy buying or selling!