Real Estate Lingo Decoded: 20 Terms Every Buyer and Seller Should Know
Understanding the Language of Home Buying and Selling
If you’ve ever felt like real estate professionals are speaking a different language, you’re not alone. Between acronyms, legal jargon, and industry shorthand, it can feel like you need a decoder ring just to understand a listing—or a conversation with your agent.
But here's the truth: learning a few key terms can make the entire process feel way more approachable. Whether you’re buying your first home or selling your third, knowing the right vocabulary will boost your confidence, help you make smarter decisions, and minimize surprises.
Let’s break down 20 real estate terms every buyer and seller should know—minus the fluff, with clear explanations you’ll actually remember.
1. Appraisal
An appraisal is a professional estimate of a property's market value. Lenders require one to ensure they’re not loaning more than the home is worth. If the appraisal comes in low, it can affect the buyer’s financing or trigger renegotiations.
2. Contingency
A contingency is a condition written into a real estate contract that must be met for the sale to move forward. Common examples include a financing contingency (buyer must secure a loan) or an inspection contingency (buyer can back out if the inspection reveals major issues).
3. Escrow
Think of escrow as a neutral holding zone. During a transaction, a third party holds money and documents until all conditions are met. Once everything checks out, the funds and keys are exchanged, and the sale is finalized.
4. Earnest Money
This is a good-faith deposit buyers submit with their offer to show they’re serious. It’s usually 1-3% of the purchase price. If the deal closes, the money goes toward the buyer’s down payment or closing costs.
5. Closing Costs
These are the fees and expenses that come due at the end of a transaction. They include loan origination fees, title insurance, escrow charges, taxes, and more. Buyers and sellers both pay closing costs, which typically total 2–5% of the purchase price.
6. MLS (Multiple Listing Service)
The MLS is a database where agents share property listings. It's what powers most home search websites and is the most accurate and up-to-date source for property information.
7. Pre-Approval vs. Pre-Qualification
Pre-qualification is a quick estimate of what you might be able to borrow.
Pre-approval is more official—based on income, debt, and credit review—and shows sellers you’re a serious buyer.
8. Pending vs. Active Listings
An active listing is still on the market.
A pending listing has an accepted offer and is in escrow, but the sale hasn’t closed yet.
9. Title
The title is the legal record of who owns the property. Before closing, a title company will conduct a title search to ensure there are no ownership disputes or unpaid liens.
10. Title Insurance
This one-time fee protects against any legal issues tied to past ownership. If a claim pops up after closing (like an unpaid contractor or undisclosed heir), title insurance covers your legal costs or losses.
11. Deed
The deed is the physical document that transfers ownership of the property from seller to buyer. It’s signed and recorded during closing.
12. Escalation Clause
In competitive markets, a buyer may include an escalation clause in their offer. This means they’re willing to automatically increase their offer up to a certain limit if competing offers come in.
13. Days on Market (DOM)
This tracks how long a home has been listed. A high DOM might mean the home is overpriced or has issues. A low DOM can indicate high demand or a hot market.
14. FSBO (For Sale By Owner)
This means the homeowner is selling without an agent. Buyers working with an agent can still view and make offers, but negotiations and paperwork may look different.
15. Comps (Comparables)
These are recently sold homes that are similar in size, condition, and location. Agents and appraisers use comps to determine market value.
16. Inspection Report
After a buyer hires a home inspector, they receive a detailed inspection report outlining the condition of the home and any issues found. It’s a key tool for negotiation.
17. Loan-to-Value Ratio (LTV)
This ratio compares the loan amount to the property value. A lower LTV typically means a lower-risk loan for the lender—and potentially better rates for the buyer.
18. Underwriting
Once you apply for a mortgage, your loan goes through underwriting, where the lender verifies all your financial information and decides whether to approve the loan.
19. HOA (Homeowners Association)
If you buy in a planned community or condo building, you might have an HOA, which charges monthly fees and enforces rules about property appearance and usage.
20. As-Is
When a home is listed as-is, the seller is not making any repairs or improvements. Buyers can still inspect the property, but they should be prepared to take it in its current condition.
Buying or selling a home is a major milestone—and being familiar with the lingo helps take the mystery out of the process. When you understand the terms, you ask better questions, make clearer decisions, and feel more in control every step of the way.
Bookmark this list, refer to it often, and remember: your real estate agent is there to explain everything you need to know. But having a working knowledge of these 20 key terms? That’s a power move.