Real Estate Terms Every Buyer and Seller Should Know
Whether you’re buying your first home or selling your third, navigating the real estate process means hearing a lot of industry jargon. Understanding key real estate terms can save you stress, help you make smarter decisions, and keep your deal on track.
Here are the most important real estate terms every buyer and seller should know—broken down in plain English.
1) MLS (Multiple Listing Service)
A database where real estate agents list homes for sale. It’s what powers sites like Zillow and Realtor.com.
✅ Why it matters: If your home is on the MLS, it gets maximum exposure. If you’re a buyer, this is where you’ll find the most up-to-date listings.
2) Contingency
A condition that must be met for a real estate deal to move forward—like securing financing or a home passing inspection.
✅ Why it matters: Contingencies protect buyers and sellers. Know what they are and how they affect timelines.
3) Earnest Money Deposit (EMD)
A deposit a buyer makes to show they’re serious about the purchase. It’s held in escrow and applied toward the down payment at closing.
✅ Why it matters: If the buyer backs out without a valid reason, the seller may keep the EMD.
4) Appraisal
A professional estimate of a home’s market value, required by lenders before approving a mortgage.
✅ Why it matters: If a home appraises for less than the purchase price, it can derail the sale—or require renegotiation.
5) Escrow
A neutral third party that holds funds and documents during the transaction until all conditions are met.
✅ Why it matters: Escrow ensures neither the buyer nor the seller is at risk until the deal is finalized.
6) Closing Costs
Fees paid at the end of the transaction (usually 2–5% of the purchase price), covering lender fees, title insurance, taxes, and more.
✅ Why it matters: Buyers and sellers should budget for these costs and understand who pays what.
7) Title
Legal ownership of the home. A title company ensures the title is clear of liens or disputes before transfer.
✅ Why it matters: Title issues can delay or cancel a closing. Title insurance protects both parties.
8) Listing Agreement
A contract between a home seller and a real estate agent, giving the agent the right to market and sell the home.
✅ Why it matters: It outlines commission, marketing strategy, and how long the agent will represent you.
9) Buyer’s Agent vs. Seller’s Agent
- Buyer’s agent: Represents the buyer’s interests
- Seller’s agent (Listing agent): Represents the seller’s interests
✅ Why it matters: Dual agency (when one agent represents both sides) is legal in some states but can lead to conflicts of interest.
10) Pre-Approval
A lender’s written offer stating how much a buyer can borrow based on income, credit, and debt.
✅ Why it matters: Pre-approval shows sellers you’re a serious buyer and gives you a competitive edge.
11) Under Contract / Pending
These terms mean a home has an accepted offer but hasn’t closed yet.
✅ Why it matters: These properties may still accept backup offers, but the sale is in progress.
12) Inspection Period
A window of time when a buyer can hire professionals to evaluate the home.
✅ Why it matters: Issues uncovered during inspections can lead to price negotiations or contract cancellation.
13) Down Payment
The upfront portion of the purchase price paid by the buyer (usually 3%–20% depending on the loan type).
✅ Why it matters: A larger down payment can reduce mortgage rates and eliminate the need for private mortgage insurance (PMI).
14) Homeowners Association (HOA)
A governing body in some neighborhoods that enforces rules and collects monthly or annual fees.
✅ Why it matters: HOA fees affect affordability and may limit property changes.
15) Closing (Settlement)
The final step in a real estate transaction when documents are signed, funds are transferred, and the property officially changes hands.
✅ Why it matters: Be prepared with IDs, certified funds, and time to review the closing disclosure beforehand.
Bonus: Acronyms You’ll Hear a Lot
- FSBO: For Sale By Owner
- PMI: Private Mortgage Insurance
- CMA: Comparative Market Analysis
- FHA/VA/Conventional Loan: Different mortgage types with unique requirements
Final Thoughts
Understanding real estate terminology is crucial whether you’re buying or selling a home. These terms empower you to ask better questions, avoid costly mistakes, and feel more confident at every stage of the transaction.
If you’re unsure about anything during your real estate journey, don’t hesitate to ask your agent—a great agent is also a great translator.
Thinking of buying or selling a home?
I’m here to guide you from start to finish—and break down all the lingo along the way.
📩 Reach out for a no-obligation consultation today!
860-864-0209
chrismaynard@billheenan.net
chrismaynardrealestate.com
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