Real Estate Terminology 101: 25 Must-Know Terms for Buyers and Sellers
🏡 Real Estate Terminology 101: 25 Must-Know Terms for Buyers and Sellers
Updated: April 28, 2025
🤔 Why Real Estate Jargon Can Be So Confusing
Let’s face it — buying or selling a home can feel like learning a new language.
From “escrow” to “contingencies,” there’s a mountain of real estate terminology that gets tossed around by agents, lenders, and lawyers. And if you’re not sure what it all means, you risk making costly mistakes or feeling lost in the process.
But don’t worry — we’ve got your back.
Whether you’re a first-time homebuyer, a seasoned seller, or just exploring the market, this guide will demystify the 25 most important real estate terms you need to know in 2025.
🧠 Real Estate Terms Every Buyer and Seller Should Know
1. Appraisal
An independent estimate of a property’s value, usually required by lenders before issuing a mortgage.
🔎 Why it matters: If the appraisal comes in low, it could delay or derail the sale.
2. Pre-Approval
A written letter from a lender stating how much they’re willing to lend you based on your financial profile.
🔑 Why it matters: Shows sellers you’re a serious, qualified buyer.
3. Listing
The official posting of a home for sale, usually on platforms like Zillow, Realtor.com, or the MLS.
💡 Tip: Listings include photos, price, square footage, and features.
4. Contingency
A condition that must be met before a real estate contract becomes legally binding.
Examples: home inspection, financing, or sale of your current home.
5. Earnest Money
A deposit made by a buyer to show they’re serious about purchasing.
💰 If the deal goes through: it counts toward your down payment.
❌ If it doesn’t: you might lose it if you back out for reasons not covered by contingencies.
6. Closing Costs
The fees paid at the end of a real estate transaction, usually 2–5% of the home price.
Includes lender fees, title insurance, taxes, and more.
7. Equity
The difference between what your home is worth and what you owe on it.
📈 As you pay down your loan or property value increases, your equity grows.
8. Title
Legal ownership of a property.
🏷️ You need a clear title — no disputes or liens — to sell or buy a home.
9. Escrow
A neutral third party that holds funds or documents until certain conditions are met (like closing).
It’s like a secure middleman.
10. Home Inspection
A professional review of the home’s structure and systems (roof, plumbing, electrical, etc.).
🛠️ Used to uncover issues before finalizing a deal.
11. Appreciation
An increase in property value over time due to market conditions, improvements, or location desirability.
12. Deed
The legal document that transfers ownership of the property from seller to buyer.
13. Down Payment
The cash you pay upfront when buying a home, typically 3% to 20% of the purchase price.
14. Principal
The amount you borrow from a lender, not including interest.
15. Interest Rate
The percentage charged by the lender for borrowing money, expressed annually.
📉 A lower interest rate = a cheaper loan over time.
16. Amortization
A loan repayment schedule where each monthly payment covers both principal and interest.
Over time, more of your payment goes toward principal.
17. Loan-to-Value Ratio (LTV)
The percentage of the home's value you're borrowing.
For example: A $90,000 loan on a $100,000 house = 90% LTV.
🏦 Lower LTV can help you qualify for better rates.
18. Private Mortgage Insurance (PMI)
Insurance lenders require if your down payment is less than 20%.
Protects the lender if you default.
19. Multiple Listing Service (MLS)
A database used by real estate professionals to list and access property information.
Not usually accessible to the public directly, but syndicated on platforms like Zillow.
20. Offer
A formal proposal to buy a home, including price, contingencies, and terms.
🏡 Sellers can accept, reject, or counter it.
21. Counteroffer
When a seller responds to your offer with modifications — like a higher price or fewer contingencies.
It starts a negotiation process.
22. Closing (a.k.a. Settlement)
The final step in a real estate deal when all paperwork is signed and the property officially changes hands.
📅 Often involves both parties meeting with attorneys or escrow agents.
23. Real Estate Agent vs. Realtor
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A Real Estate Agent is licensed to help buy/sell homes.
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A Realtor is an agent who’s also a member of the National Association of Realtors and follows a strict code of ethics.
24. FSBO (For Sale By Owner)
When a homeowner sells without a real estate agent.
Can save on commission, but requires more work and legal knowledge.
25. Under Contract
Means the seller has accepted an offer, but the deal isn’t final yet (pending contingencies and closing).
📢 Pro Tip: Don’t Be Afraid to Ask Questions
It’s your money, your future, and your home — you deserve to understand every step.
If an agent, lender, or title officer uses a term you don’t know, ask them to explain it in plain English. A good professional won’t mind — and it could save you serious stress.
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