Navigating the real estate world can feel like learning a new language. Whether you’re buying your first home, selling your current one, or just exploring the market, it’s easy to feel overwhelmed by unfamiliar jargon. That’s why we’ve put together this simple guide to common real estate terms—so you can feel confident and informed every step of the way.
1. Appraisal
An appraisal is a professional estimate of a home’s value. Lenders require it to make sure the home isn’t overpriced compared to what it’s actually worth. Think of it as a reality check before the deal moves forward.
🔍 Why it matters: If the appraisal comes in lower than the purchase price, you may need to renegotiate or cover the difference.
2. Closing Costs
These are the fees and expenses you pay (in addition to the purchase price) at the end of a real estate transaction. They include things like loan fees, title insurance, and taxes.
💰 Typical cost: 2%–5% of the home’s purchase price.
3. Contingency
A contingency is a condition that must be met for the deal to go through. Common examples include a home inspection contingency or a financing contingency.
🚦 Example: A buyer might include a contingency that allows them to back out if the home inspection reveals serious issues.
4. Escrow
Escrow is when a neutral third party holds money or documents until the conditions of a sale are met. It helps protect both the buyer and the seller.
🗂️ Example: Your deposit goes into escrow until the deal closes.
5. Equity
Equity is the difference between what your home is worth and how much you still owe on your mortgage.
📈 Why it matters: As you pay down your loan or your home’s value increases, your equity grows—this is a key source of long-term wealth.
6. MLS (Multiple Listing Service)
The MLS is a database that real estate agents use to share information about homes for sale. It’s what powers most property search sites.
🧭 Benefit: It helps buyers discover available homes and sellers reach more potential buyers.
7. Pre-Approval
A pre-approval is a letter from a lender saying you’re qualified to borrow up to a certain amount. It’s based on your credit, income, and financial history.
✅ Pro tip: Get pre-approved before you start house hunting—it shows sellers you’re serious.
8. Title
The title is the legal right to own a property. When you buy a home, a title company checks that the title is clear—meaning no one else has a legal claim to it.
🧾 Why it matters: Clean title = peace of mind.
9. Earnest Money
This is a deposit made by a buyer to show they’re serious about purchasing a home. It’s usually applied to the down payment or closing costs later.
💵 Fun fact: If the buyer backs out for a reason not allowed in the contract, they may lose this deposit.
10. Under Contract
When a home is under contract, it means the buyer and seller have agreed on terms—but the sale hasn’t closed yet.
🕒 What’s next: Inspections, appraisals, and financing all happen during this phase.
Final Thoughts
Understanding real estate terms doesn’t have to be overwhelming. With a little knowledge, you can make smart, confident decisions whether you’re buying, selling, or just browsing the market.
Have a question about any of these terms or want us to break down a real estate concept? Drop it in the comments below or reach out—we’re here to help!
