Real Estate has its own terminology and jargon that can often confuse buyers and/or sellers. Here, we’ve put together and describe a few commonly used terms that you might hear throughout the home sale process. Hopefully, our Real Estate Glossary gives you the understanding you need to make the process of buying or selling your next house a little easier.
Active - A property listing status that indicates that the house is on the market and available to purchase.
Adjustable Rate Mortgage (ARM) - A mortgage rate that is set for a period of time and will then adjust periodically. For example, a 7/1 ARM is a fixed rate for the first 7 years and will adjust every year after that.
Amortization - The repayment schedule for a mortgage.
Appraisal - A value inspection done by a seller, buyer, or bank to determine the value of a home. In order to secure a bank loan for a home, the home you are buying must often appraise for amount that is higher than your contract price, sometimes called Appraise Out.
Broom Clean - The state in which you must leave your home for the new buyers, emptied cabinets and swept floors.
Buyer’s Agent - A Real Estate Agent that represents the buyer in a home sale transaction.
Closing - The date and time at which a property is transferred from one owner to the other.
Closing Costs - The fees and other costs associated with processing and transferring property ownership. Both buyers and sellers will incur closing costs in a home sale.
Commission - The amount paid to the Real Estate Agents that represent the buyer and seller in a Real Estate transaction.
Contingency - A condition that must be met prior to closing on a property.
Contingent - A property status that means that the home is under contract with contingencies that are yet to be met.
Contract - A purchase and sale agreement between two or more parties.
Disclosures - Federal or local forms that sellers are required to fill out that indicate potential problems with a house.
Down Payment - The amount of money that a buyer plans to deposit toward the purchase of a home.
Dual Agent - A Real Estate Agent that represents both the seller and the buyer in a home sale transaction.
Equity - The value that an owner holds in their house.
Escrow - A third party account where funds are held between the time an offer is accepted and a property closes.
Final Walk Through - The last opportunity for a potential buyer to see the home they are purchasing and ensure the seller has completed any necessary repairs or improvements agreed upon before the closing date.
Home Owners Association (HOA) - An organization that governs and creates the rules for its own community. HOAs are common in master planned communities.
Inspection - A quality inspection done by a third party professional to determine whether there are any property defects that must or should be corrected prior to a closing.
Interest Rate - The percentage that a buyer will pay a bank or mortgage company to secure a loan on their property.
Listing - A home for sale that is represented on the MLS or other listing platform.
Mortgage - A loan that allows buyers to finance a home purchase over the course of several or many years.
Offer - A verbal or written bid to buy a property at a specified price, potentially with contingencies or other concessions.
Pending - A property status that indicates the house has an accepted offer from a buyer that is going through the purchase process.
Pre-Approval - A letter that indicates a bank or mortgage company is willing to lend a potential buyer a certain amount of money to buy a property.
Principal - The amount of each monthly mortgage payment that goes toward equity.
Private Mortgage Insurance (PMI) - Mortgage insurance secured when a buyer puts less than 20% down on a property purchase. PMI protects the bank from default.
Real Estate Agent - A trained and certified person who represents a buyer or seller in a real estate transaction.
Realtor - A Real Estate Agent who is a member of the National Association of Realtors, which has best practices and guidelines for its members.
Seller’s Agent - A Real Estate Agent who represents the seller in a Real Estate transaction and lists the home on the MLS or other listing platform.
Showing - A home viewing appointment made by a potential buyer or their Buyer’s Agent.
Title Insurance - Insurance to protect a buyer from past liens and other claims on a property.
Under Contract - A property status that indicates an offer has been accepted on a property and is not currently eligible for purchase by another party.