Real Estate Glossary

Appraisal – A lender-ordered opinion of a home’s value to confirm the purchase price supports the loan.

Closing Costs – Fees paid at closing such as lender charges, title work, attorney fees, and taxes; buyers typically pay a portion.

Contingency – A condition that must be satisfied for the sale to move forward, such as inspection, financing, or appraisal.

Down Payment – The amount of money a buyer pays upfront toward the purchase price, separate from closing costs.

Earnest Money Deposit – An upfront deposit showing serious intent to purchase, held safely and usually credited at closing.

Escrow – A neutral third party that holds money and documents until all terms of the transaction are met.

Home Inspection – A professional evaluation of the home’s structure, systems, and safety items before finalizing the purchase.

Mortgage Pre-Approval – A lender’s written estimate of how much a buyer can borrow based on verified financial information.

Private Mortgage Insurance (PMI) – Insurance required when a buyer puts down less than 20%, protecting the lender, not the buyer.

Seller Concessions – When a seller agrees to help pay some of the buyer’s closing costs as part of the negotiation.

Title Search – A review of public records to confirm the seller has the legal right to transfer ownership.

Walk-Through – A final visit before closing to confirm the home’s condition and that agreed-upon repairs were completed.

As-Is Sale – Selling a home in its current condition without making repairs, except as negotiated.

Days on Market (DOM) – The number of days a property is actively listed before going under contract.

Listing Agreement – The contract between a seller and real estate agent outlining price, commission, and marketing plan.

Multiple Offers – When more than one buyer submits an offer, often resulting in stronger terms for the seller.

Net Proceeds – The amount a seller receives after paying off the mortgage, closing costs, and commissions.

Price Reduction – A decrease in the listing price when market response or competition requires adjustment.

Seller Disclosure – A document where the seller shares known information about the property’s condition and history.

Staging – Preparing a home to look its best for buyers through decluttering, furniture placement, and presentation.

Title Insurance – Protection against ownership or public record issues; seller responsibility varies by location.

Probate – The legal process of settling an estate, which may be required before an inherited home can be sold.

Executor or Administrator – The person legally authorized to manage an estate and approve the sale of estate property.

After Repair Value (ARV) – The estimated market value of a property after renovations are completed.

Capitalization Rate (Cap Rate) – A metric used to estimate return based on property income compared to purchase price.

Cash Flow – The remaining income after rent is collected and all property expenses are paid.

Depreciation Recapture – Taxes owed on depreciation claimed during ownership when selling an investment property.

Disposition Strategy – The plan for selling an investment property to maximize return and timing.

Off-Market Sale – A transaction completed without public listing exposure, often for privacy or speed.

Rent Roll – A summary of rental income, lease terms, and tenant details for an investment property.

Tenant-Occupied Sale – Selling a property while tenants remain in place under existing leases.

Value-Add – Improvements that increase rental income, reduce expenses, or raise resale value.

1031 Exchange – A tax strategy that may allow investors to defer capital gains by reinvesting proceeds into another property.