A real estate glossary is a plain-English guide to the terms buyers and sellers hear during a home transaction — including offers, mortgages, inspections, appraisals, title, escrow, and closing. This glossary defines the 100 terms that matter most when you are buying, selling, financing, or relocating.
Buying or selling a home means signing documents and making decisions around words most people never use anywhere else. Every term gets a plain-English definition and a real-world example. Use the search box or the A–Z bar to jump straight to the term you're looking for.
An active listing is a home that is currently listed for sale and is generally available for buyers to tour or make an offer on.
Example: If a home appears as active this morning, a buyer may be able to schedule a showing today, but the status can change quickly if the seller accepts an offer.
Affordability means how much home a buyer can realistically purchase while still being comfortable with the monthly payment and upfront costs.
Example: A buyer may qualify for a $450,000 loan but choose to shop closer to $400,000 to leave room for savings, repairs, and lifestyle expenses.
The asking price is the price a seller lists their home for when it goes on the market.
Example: A seller may list a home at $425,000, receive several offers, and ultimately sell above or below that price depending on demand.
An appraisal gap is the difference between the agreed purchase price and a lower appraised value.
Example: A buyer agrees to pay $500,000, but the home appraises for $485,000, creating a $15,000 appraisal gap.
An adjustable-rate mortgage is a home loan with an interest rate that can change after an initial fixed period.
Example: A 7/6 ARM may have a fixed rate for seven years and then adjust every six months based on the loan terms.
Amortization is the process of paying down a loan through scheduled payments over time.
Example: Early mortgage payments usually go more toward interest, while later payments usually pay down more principal.
APR is a broader measure of borrowing cost that includes the interest rate plus certain loan fees and costs.
Example: One lender may offer a lower interest rate but a higher APR because the upfront fees are higher.
An appraisal is a professional opinion of a home's value, usually ordered by the lender during the mortgage process.
Example: A lender orders an appraisal to confirm that the home supports the loan amount requested by the buyer.
Appraised value is the value assigned to a property by a licensed or certified appraiser for a specific purpose, often mortgage lending.
Example: A buyer agrees to pay $420,000, but the appraised value comes in at $410,000.
Assessed value is the value a local tax authority assigns to a property for property tax purposes.
Example: A home may sell for $500,000 but have an assessed value of $430,000 for local property tax calculations.
A buyer's agent is a real estate agent who represents the buyer during a home purchase.
Example: A buyer's agent helps compare homes, write an offer, negotiate repairs, track deadlines, and coordinate closing.
A backup offer is an offer a seller accepts in case the current buyer's contract falls through.
Example: If the first buyer cancels after inspection, the backup buyer may move into first position without the home going back on the open market.
A best and final offer is a buyer's strongest offer submitted when a seller asks interested buyers to make their final terms clear.
Example: In a multiple offer situation, a seller may ask all buyers to submit their best and final offers by 5 p.m. Monday.
A buyer's market is a market condition where buyers have more negotiating power because there are more homes for sale or less buyer competition.
Example: In a buyer's market, buyers may have more room to ask for concessions, repairs, or a lower price.
A comparative market analysis is an agent's estimate of a home's likely market value based on similar homes that recently sold, are pending, or are currently listed.
Example: An agent reviews nearby three-bedroom homes with similar size and condition before recommending a listing price.
Comparable sales, often called comps, are similar recently sold properties used to estimate what a home may be worth.
Example: A 2,000-square-foot home may be compared with nearby homes of similar size, age, condition, and location.
The closing date is the scheduled day when the sale is finalized and ownership is transferred, subject to the rules and process in that state.
Example: A buyer and seller may agree to close 35 days after contract acceptance to allow time for financing, appraisal, inspection, and title work.
A contingency is a contract condition that must be satisfied for the transaction to move forward.
Example: A buyer may include a financing contingency so they are not forced to buy the home if the loan is not approved under the contract terms.
Contingent means a seller has accepted an offer, but one or more contract conditions still need to be satisfied before closing.
Example: A listing may show as contingent while the buyer completes inspections and final loan approval.
A counteroffer is a response that changes one or more terms of the original offer.
Example: A buyer offers $390,000, and the seller counters at $400,000 with a faster closing date.
A Closing Disclosure is the final mortgage document that shows the buyer's loan terms, projected payments, and final closing costs.
Example: A buyer reviews the Closing Disclosure before closing to confirm the interest rate, monthly payment, cash to close, and fees.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as FHA, VA, or USDA.
Example: A buyer with strong credit may use a conventional loan with 5 percent, 10 percent, or 20 percent down depending on the program.
Clear to close means the lender has approved the buyer's loan file and the transaction can move into final closing steps.
Example: After underwriting conditions are satisfied, the lender issues clear to close and the closing appointment can be scheduled.
Closing is the final stage of a real estate transaction when documents are signed, money is transferred, and ownership changes hands.
Example: At closing, the buyer signs loan documents, the seller signs transfer documents, and the deed is recorded according to local process.
Closing costs are the fees and expenses paid to complete a real estate transaction.
Example: A buyer's closing costs may include lender fees, title fees, appraisal fees, prepaid taxes, insurance, and recording fees.
CC&Rs are covenants, conditions, and restrictions that set rules for how properties in a community can be used or changed.
Example: CC&Rs may limit fence types, short-term rentals, exterior paint colors, parking, pets, or additions.
A down payment is the portion of the purchase price the buyer pays upfront instead of financing through the mortgage.
Example: On a $350,000 home, a 5 percent down payment equals $17,500 before adding closing costs and prepaid expenses.
Days on market measures how long a property has been listed for sale.
Example: A home with 80 days on market may attract lower offers if buyers assume the seller is becoming more negotiable.
Due diligence is the buyer's opportunity to investigate the property, documents, costs, and risks before moving forward.
Example: During due diligence, a buyer may inspect the home, review HOA documents, check insurance costs, and confirm financing.
Debt-to-income ratio compares a borrower's monthly debt payments with their gross monthly income.
Example: If a buyer earns $8,000 per month and has $3,200 in monthly debt payments, their DTI is 40 percent.
Discount points are optional upfront fees a buyer may pay to reduce the mortgage interest rate.
Example: A buyer may pay points at closing to lower the monthly payment if they plan to own the home long enough to benefit.
A deed is the legal document used to transfer ownership of real estate from the seller to the buyer.
Example: After closing, the deed is recorded with the county or local recording office to show the new owner.
Earnest money is a good-faith deposit a buyer makes after an offer is accepted to show they are serious about buying the home.
Example: A buyer offers $400,000 and deposits $5,000 in earnest money with the title company after the contract is signed.
An escalation clause is an offer term that automatically increases a buyer's price up to a stated limit if competing offers are received.
Example: A buyer offers $450,000 with an escalation clause that beats competing offers by $2,000 up to $465,000.
Escrow is a neutral holding process for money, documents, or instructions until contract requirements are met.
Example: A buyer's earnest money may be held in escrow until the sale closes or the contract is canceled according to its terms.
A first-time home buyer is someone buying their first home, or in some programs, someone who has not owned a primary residence for a certain period of time.
Example: A renter purchasing a condo as a primary residence may be considered a first-time home buyer and may want to ask about down payment assistance.
A financing contingency protects a buyer if they cannot obtain the mortgage described in the contract.
Example: If the buyer's loan is denied despite making a good-faith effort, the financing contingency may allow them to cancel under the contract terms.
An FHA loan is a mortgage insured by the Federal Housing Administration and often used by buyers who want flexible credit or lower down payment options.
Example: A first-time buyer may compare an FHA loan with a conventional loan to see which option has the better total cost.
A fixed-rate mortgage is a home loan where the interest rate stays the same for the life of the loan.
Example: A buyer with a 30-year fixed-rate mortgage has a predictable principal and interest payment every month.
The final walkthrough is the buyer's last chance before closing to confirm the property is in the agreed condition.
Example: A buyer checks that repairs were completed, appliances remain, and no new damage occurred after the seller moved out.
A flood zone is an area mapped for flood risk, which may affect insurance requirements, financing, and buyer due diligence.
Example: A buyer may discover that a waterfront or low-lying property requires separate flood insurance before the lender will approve the loan.
Home search criteria are the must-haves and preferences a buyer uses to narrow the home search.
Example: A buyer may search for three bedrooms, two bathrooms, a two-car garage, a fenced yard, and a commute under 30 minutes.
House hunting is the process of searching for homes, comparing options, and deciding which properties are worth touring or making an offer on.
Example: A buyer may start house hunting online, then tour a short list of homes with an agent over the weekend.
A home sale contingency makes the purchase dependent on the buyer selling their current home.
Example: A buyer agrees to purchase a new home only if their existing home sells by a certain date.
Homeowners insurance is a policy that helps protect a homeowner against certain property damage and liability risks.
Example: A lender usually requires a buyer to secure homeowners insurance before closing on a financed purchase.
A home inspection is a professional review of the visible condition of a property's major systems and components.
Example: An inspector may evaluate the roof, foundation, plumbing, electrical system, HVAC, attic, exterior, and appliances.
A home warranty is a service contract that may cover certain repairs or replacements for home systems and appliances.
Example: A seller may offer a one-year home warranty to reassure buyers about older appliances or mechanical systems.
A homeowners association is an organization that manages rules, fees, and shared responsibilities in certain communities.
Example: An HOA may manage landscaping, community amenities, architectural rules, parking rules, and shared maintenance.
HOA fees are regular payments homeowners make to a homeowners association to fund community expenses and services.
Example: A condo buyer may pay monthly HOA fees that cover exterior maintenance, building insurance, trash, amenities, and reserves.
An inspection contingency gives the buyer time to inspect the home and respond to the findings according to the contract.
Example: After discovering a major plumbing issue, a buyer may ask for a repair credit, renegotiate, or cancel if allowed by the contract.
The interest rate is the percentage charged by the lender for borrowing money.
Example: A higher interest rate can increase a buyer's monthly payment and reduce buying power.
An inspection report is the written summary of a home inspector's findings, often with photos, notes, and recommendations.
Example: A report may flag a leaking water heater, missing GFCI outlets, damaged siding, or signs of moisture in the crawl space.
A listing agent is the real estate agent who represents the seller in a home sale.
Example: A listing agent helps price the home, prepare the listing, market the property, review offers, and manage the closing process.
A listing agreement is the contract between a seller and a real estate brokerage that gives the brokerage authority to market the property for sale.
Example: A homeowner signs a listing agreement before the agent places the property in the MLS and begins marketing it.
A Loan Estimate is a lender document that shows estimated loan terms, monthly payment, closing costs, and cash needed to close.
Example: A buyer can compare Loan Estimates from two lenders to review interest rate, APR, lender fees, and estimated closing costs.
Loan-to-value ratio compares the loan amount with the property value or purchase price used by the lender.
Example: If a buyer borrows $320,000 on a $400,000 home, the LTV is 80 percent.
A lien is a legal claim against a property, often tied to unpaid debt, taxes, judgments, or contractor claims.
Example: A title search may reveal an old contractor lien that must be resolved before the buyer can receive clear title.
A lead-based paint disclosure is a required disclosure for many homes built before 1978 that informs buyers about known lead-based paint or hazards.
Example: A buyer purchasing a 1965 home receives a lead-based paint disclosure before moving forward with the sale.
A mortgage pre-approval is a lender's conditional confirmation that a buyer may qualify for a home loan up to a certain amount.
Example: A seller may take a $390,000 offer more seriously when it includes a pre-approval letter from a reputable lender.
Market value is the price a property is likely to sell for based on current buyer demand, property condition, location, and comparable sales.
Example: A homeowner may believe their house is worth $500,000, but the market value may be closer to $470,000 if similar homes are selling there.
A multiple offer situation happens when a seller receives more than one offer on the same property.
Example: A well-priced home in a popular neighborhood may receive six offers during the first weekend on the market.
Mortgage insurance is coverage that protects the lender when a buyer makes a lower down payment or uses certain loan programs.
Example: A conventional buyer putting less than 20 percent down may have monthly mortgage insurance added to the payment.
A mortgage rate lock is a lender agreement that holds a buyer's interest rate for a set period while the loan moves toward closing.
Example: A buyer may lock a rate for 30 or 45 days so a sudden rate increase does not change the expected payment before closing.
A major defect is a serious property issue that may affect safety, structure, habitability, financing, or repair cost.
Example: Foundation movement, unsafe electrical work, active roof leaks, or a failed sewer line may be treated as major defects.
Move-in ready means a home is generally ready for a buyer to occupy without major immediate repairs or renovations.
Example: A move-in ready home may have updated systems, clean finishes, working appliances, and no obvious major repair needs.
Net proceeds are the estimated amount a seller keeps after paying off the mortgage, commissions, taxes, fees, concessions, and other selling costs.
Example: A seller may accept a $600,000 offer but net less after paying the loan balance, closing costs, and agreed seller credits.
An open house is a scheduled time when potential buyers can visit a property without a private showing appointment.
Example: A listing agent may host a Sunday open house to create buyer traffic during the first weekend on the market.
An offer is a buyer's formal proposal to purchase a property under specific price, timing, financing, and contingency terms.
Example: A buyer offers $375,000 with 3 percent down, a 30-day closing, and an inspection contingency.
A pre-qualification is an early estimate of what a buyer may be able to borrow, often based on limited financial information.
Example: A buyer may complete a quick online pre-qualification before gathering pay stubs, bank statements, and tax information for pre-approval.
Pricing strategy is the plan for setting a list price that attracts qualified buyers and supports the seller's goals.
Example: A seller may price slightly below competing homes to generate multiple offers or price at market value to attract serious buyers quickly.
Pending means a home is under contract and the transaction is moving toward closing, often after major contingencies have been addressed.
Example: A listing may move from contingent to pending after inspection issues are resolved and the buyer's loan is progressing.
A purchase agreement is the written contract that sets the terms of the home sale between buyer and seller.
Example: The purchase agreement lists the price, earnest money, contingencies, closing date, included items, and key deadlines.
Principal and interest are the parts of a mortgage payment that repay the loan balance and pay the lender for borrowing the money.
Example: A buyer's full monthly payment may include principal, interest, taxes, insurance, HOA fees, and mortgage insurance.
Possession is the point when the buyer has the right to occupy or control the property.
Example: A contract may give the buyer possession at closing, or the seller may negotiate to stay for a few days after closing.
Prepaid expenses are costs paid at closing for items that apply after closing, such as homeowners insurance, property taxes, and prepaid interest.
Example: A buyer may prepay the first year of homeowners insurance and several months of property tax reserves at closing.
Property condition describes the physical state of the home, including repairs, maintenance, age of systems, and overall livability.
Example: Two homes with the same size and location can sell for different prices if one is updated and the other needs major repairs.
Property taxes are local taxes homeowners pay based on the property and the rules of the taxing authority.
Example: A buyer comparing two homes at the same price may find that one has much higher annual property taxes because of its location.
Recording is the process of filing real estate documents with the local government so the ownership change becomes part of the public record.
Example: After closing, the deed is recorded to show that the buyer is now the legal owner of the home.
A radon test checks for radon, a naturally occurring gas that can enter homes through soil and foundation openings.
Example: A buyer may request a radon test during the inspection period, especially in areas where elevated radon is common.
A repair credit is money the seller agrees to credit the buyer at closing instead of completing a repair before closing.
Example: Rather than fixing an old HVAC issue before closing, the seller agrees to a $4,000 credit if the buyer's loan permits it.
Relocation is the process of moving from one area to another, often involving job changes, school research, housing timelines, and local market decisions.
Example: A family relocating for work may need help selling their current home, buying in a new city, and understanding neighborhoods before arrival.
A showing is a scheduled opportunity for a buyer to tour a property in person or virtually.
Example: A buyer may tour three homes on Saturday and decide to write an offer on the one that best matches their search criteria.
A starter home is a first or early home purchase that fits a buyer's current budget and needs, even if it is not their long-term dream home.
Example: A couple may buy a smaller townhouse now, build equity for several years, and later move into a larger single-family home.
A seller disclosure is a document where the seller shares known information about the property, including issues, repairs, or conditions that may affect the buyer's decision.
Example: A seller may disclose a past roof leak, previous water damage, or a repaired foundation issue.
Staging is the process of preparing a home to look appealing to buyers through furniture placement, decor, cleaning, lighting, and presentation.
Example: A vacant living room may be staged with furniture so buyers can better understand the size and layout of the space.
A seller concession is when the seller agrees to contribute money toward certain buyer costs or negotiated expenses.
Example: Instead of reducing the price, a seller may offer $7,500 toward the buyer's closing costs if the loan program allows it.
A settlement statement is a closing document that summarizes money coming in, money going out, credits, debits, and final amounts for the transaction.
Example: The seller reviews the settlement statement to see the payoff, commissions, taxes, fees, and net proceeds.
A sewer scope is a camera inspection of the sewer line between the home and the public sewer or septic connection point.
Example: A sewer scope may reveal root intrusion, collapsed pipe, or blockage that could cost thousands of dollars to repair.
A survey identifies property boundaries, improvements, easements, and certain encroachments.
Example: A survey may show that a neighbor's fence crosses the property line or that an easement runs along the rear of the lot.
A seller's market is a market condition where sellers have more leverage because buyer demand is strong and available inventory is limited.
Example: In a seller's market, a well-priced home may receive multiple offers within the first few days.
A school district is the local public school system assigned to an address and often affects buyer demand and resale appeal.
Example: Two similar homes may attract different levels of buyer interest if they are assigned to different school districts.
Title insurance helps protect against certain ownership problems or title defects that may be discovered after closing.
Example: If a past ownership issue appears after closing, an owner's title policy may help defend the buyer's ownership rights according to the policy.
A title search is a review of public records to confirm ownership and identify claims, liens, easements, or other issues affecting the property.
Example: A title search may find an unpaid tax lien that must be cleared before the home can close.
Transfer tax is a government tax or fee that may be charged when real estate changes ownership.
Example: Depending on the location, transfer taxes may be paid by the buyer, seller, or split between both sides.
A termite inspection checks for termites, wood-destroying insects, or related damage depending on the local requirements and inspection scope.
Example: A buyer may order a termite inspection for an older home with crawl space access and visible wood framing.
Under contract means the buyer and seller have signed a purchase agreement, but the sale has not closed yet.
Example: A home becomes under contract after the seller accepts the buyer's signed offer, but it is not officially sold until closing is completed.
A USDA loan is a mortgage program for eligible buyers and eligible properties, often used in rural or some suburban areas.
Example: A buyer shopping outside a major city may ask a lender whether the property and borrower qualify for USDA financing.
Underwriting is the lender's review of the buyer's finances, credit, income, assets, property, and loan file before final approval.
Example: An underwriter may ask for updated bank statements or an explanation of a large deposit before issuing final approval.
A VA loan is a mortgage benefit for eligible veterans, active-duty service members, and certain surviving spouses.
Example: A military buyer relocating to a new duty station may use a VA loan to buy a primary residence with favorable terms.
Wire fraud in real estate is a scam where criminals trick buyers or sellers into sending closing funds to the wrong account.
Example: A buyer receives fake wiring instructions by email and sends their down payment to a scammer instead of the title company.
We connect LGBTQ+ buyers and sellers with vetted, affirming local agents who can walk you through what these terms mean for your transaction.
Editorial note: Real estate laws, forms, taxes, and closing customs vary by state and local market. This guide is educational and should be reviewed with a licensed local professional before you act on it.