Real Estate Glossary
Real estate has a language of its own. Here's what it all actually means.
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A
Appraisals
Appraisal
An independent, professional assessment of a property's market value, typically required by a lender before approving a mortgage.
Appraisals
Appraisal Gap
The difference between the appraised value of a home and the agreed-upon purchase price when the appraisal comes in below the contract price.
Appraisals
Appraised Value
The value a licensed appraiser determines for a property as the conclusion of a formal appraisal, distinct from market value, list price, and tax assessed value.
Financing
APR (Annual Percentage Rate)
The true annual cost of a mortgage loan, expressed as a percentage, that includes both the interest rate and certain lender fees.
Home Value
Assessed Value
The value a county or municipal tax assessor assigns to a property for the purpose of calculating property taxes, often different from market value.
C
Closing
Cash to Close
The total amount a buyer is expected to bring to the closing table, accounting for the down payment, closing costs, credits, deposits, and other adjustments shown on the final closing documents.
Closing
Closing
The final step in a real estate transaction where ownership officially transfers from seller to buyer, funds are exchanged, and the deed is recorded.
Closing
Closing Costs
The fees and expenses beyond the purchase price required to complete a real estate transaction, typically paid at the closing table.
Closing
Closing Disclosure
A standardized document provided to buyers before closing that details the final loan terms, projected monthly payments, closing costs, and cash-to-close amount for the transaction.
Home Value
CMA (Comparative Market Analysis)
A report prepared by a real estate agent that estimates a property's market value by analyzing recent sales of similar homes in the same area.
Home Value
Comparable Sales
Recently sold properties used as reference points to estimate a home's potential market value, and the evidence behind any serious home value analysis.
Contracts
Contingency
A condition in a real estate purchase contract that must be satisfied for the transaction to proceed. If the condition isn't met, the buyer may exit the deal.
Financing
Conventional Loan
A mortgage loan not backed or insured by a federal government agency, conforming to guidelines set by Fannie Mae or Freddie Mac.
Contracts
Counteroffer
A response to an offer in which the receiving party proposes modified terms rather than accepting or rejecting the original offer outright.
D
Home Value
Days on Market
The number of days a property has been actively listed for sale, a metric that buyers notice and that can affect how they perceive and engage with a listing.
Closing
Discount Points
Upfront fees paid to a mortgage lender at closing in exchange for a lower interest rate on the loan. One point equals 1% of the loan amount.
Financing
Down Payment
The portion of a home's purchase price the buyer pays upfront in cash, separate from the mortgage loan.
Contracts
Due Diligence
The investigation period after a purchase contract is signed, during which the buyer thoroughly evaluates the property before committing to close.
E
Buying
Earnest Money
A good-faith deposit made by a buyer when submitting an offer to purchase a home.
Home Value
Equity
The portion of a home's value that the owner actually owns, equal to the difference between the home's market value and the remaining mortgage balance.
Closing
Escrow
A neutral arrangement in which a third party holds money, documents, or other assets until all conditions of a real estate transaction are satisfied.
F
Financing
FHA Loan
A mortgage insured by the Federal Housing Administration that allows for lower down payments and more flexible credit requirements than conventional loans.
Closing
Final Walkthrough
A buyer's pre-closing visit to the property, typically within 24 hours of closing, to verify the home is in the expected condition and any agreed repairs have been made.
H
Real Estate Basics
HOA (Homeowners Association)
An organization that governs a residential community by managing shared spaces, enforcing rules, and collecting dues from homeowners.
Inspections
Home Inspection
A professional, visual examination of a property's major systems and components, conducted by a licensed home inspector, to identify existing or potential problems before purchase.
I
Inspections
Inspection Report
The written document a home inspector provides after completing a property evaluation, describing what they observed, any limitations encountered, and items that may warrant attention or further evaluation.
Financing
Interest Rate
The annual percentage charged by a lender for borrowing money: the base cost of your mortgage, before accounting for additional fees.
L
Closing
Lender Credits
An arrangement in which a lender provides a credit that reduces certain upfront closing costs in exchange for a higher interest rate on the loan.
Home Value
List Price
The asking price at which a seller initially offers a property for sale, a strategic decision that should be informed by, but is not identical to, market value.
Financing
LTV (Loan-to-Value Ratio)
The ratio of your mortgage loan amount to the appraised value of the home, expressed as a percentage, used by lenders to assess risk.
M
Inspections
Major Defect
A significant problem with a property that may affect safety, structural integrity, major systems, functionality, or value, though the term has no single universal definition across all transactions, inspection standards, or jurisdictions.
Home Value
Market Value
An informed estimate of what a property may reasonably command if offered for sale in the current market under normal conditions.
Real Estate Basics
MLS (Multiple Listing Service)
A cooperative database used by real estate agents to share property listings with other agents and buyers, and the primary marketplace for homes for sale.
Financing
Mortgage Pre-Approval
A lender's conditional commitment to lend you a specific dollar amount, based on verification of your income, assets, credit, and employment.
Financing
Mortgage Pre-Qualification
An informal, early estimate of how much you might be able to borrow, based on self-reported information without full verification by the lender.
P
Financing
PMI (Private Mortgage Insurance)
Insurance that a borrower pays to protect the lender when the down payment is less than 20% of the home's purchase price on a conventional loan.
Closing
Prepaid Expenses
Costs collected at closing that cover future property-related expenses such as homeowners insurance, prepaid mortgage interest, and initial escrow account deposits for taxes and ongoing insurance.
Closing
Prepaid Insurance
Homeowners insurance premiums paid upfront at or before closing, typically covering the first full year of the policy before any monthly escrow contributions begin.
Closing
Prepaid Taxes
Property taxes collected at closing to seed the buyer's escrow account so the lender can pay upcoming tax bills on the homeowner's behalf.
Home Value
Price Reduction
A deliberate change to a listing's asking price after the property has been listed for sale, representing a strategic response to market feedback and not automatically a sign of failure.
Contracts
Property Disclosure
A seller's written statement that discloses known material defects and conditions of a property, provided to the buyer before or around the time of contract.
Closing
Prorations
The division of ongoing property expenses, such as property taxes or HOA dues, between buyer and seller based on each party's period of ownership at the time of closing.
S
Closing
Seller Concessions
An amount the seller agrees to contribute toward the buyer's closing costs, reducing the cash the buyer needs to bring to the closing table.
Closing
Settlement Statement
A document that provides a detailed accounting of all charges, credits, and adjustments applied to both the buyer and seller in a real estate transaction, showing how the transaction proceeds are distributed.
T
Closing
Title Fees
Charges associated with title and settlement services in a real estate transaction, including the title search, title insurance policies, and fees of the closing or settlement agent.
Closing
Title Insurance
Insurance that protects a buyer and/or lender from financial loss arising from defects, liens, or disputes in a property's title that existed before the purchase.
Closing
Transfer Taxes
Government-imposed charges on the legal transfer of real property from one owner to another, which vary by state, county, and municipality and may be allocated between buyer and seller depending on jurisdiction and contract terms.
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