Buying and Selling Homes: Terms and Definitions

Appraisal

An evaluation conducted by a certified appraiser to determine the market value of a property. It is often required by lenders before approving a mortgage loan.

Buyer's Agent

A real estate agent who represents the interests of the buyer in a real estate transaction. They assist the buyer in finding suitable properties, negotiating offers, and guiding them through the purchasing process.

Closing Costs

The fees and expenses associated with the transfer of property ownership. These costs can include appraisal fees, title insurance, legal fees, and more.

Contingency

A condition or requirement that must be met before a real estate contract becomes legally binding. Common contingencies include home inspections, financing, and appraisals.

Earnest Money

A deposit made by the buyer to demonstrate their serious intent to purchase the property. It is held in escrow until the closing of the transaction.

Escrow

An account where funds are held by a neutral third party until all conditions of a real estate transaction are met. This includes the finalizing of paperwork and the transfer of ownership.

Home Inspection

A thorough assessment of a property's condition, conducted by a licensed inspector. It helps buyers identify potential issues or repairs needed before finalizing the purchase.

Listing Agent

The real estate agent who represents the seller in a real estate transaction. They help the seller market the property, negotiate offers, and guide them through the selling process.

Mortgage

A loan provided by a lender to finance the purchase of a home. The property serves as collateral for the loan.

Multiple Listing Service (MLS)

A database used by real estate professionals to share property listings. It allows agents to collaborate and offer properties to a broader audience.

Offer

A formal proposal made by a buyer to purchase a property at a specified price and under certain conditions. The seller can accept, reject, or counter the offer.

Pre-Approval

A preliminary assessment by a lender of a buyer's creditworthiness and the amount they can borrow. It helps buyers understand their budget and strengthen their offers.

Title Insurance

An insurance policy that protects the buyer and lender from financial loss due to defects in the property's title or ownership.

Under Contract

A phase in the real estate transaction process where the buyer and seller have agreed to the terms of the sale but have not yet completed the closing.

Contingent Offer

An offer that is dependent on certain conditions being met, such as the sale of the buyer's existing home.

Down Payment

The initial payment made by the buyer toward the purchase price of the property. It is typically a percentage of the total price and is paid at the time of closing.

Closing

The final step of the transaction where ownership of the property is officially transferred from the seller to the buyer. It involves signing legal documents and paying closing costs.

Seller's Disclosure

A document provided by the seller that discloses known defects or issues with the property. It helps buyers make informed decisions.

Counteroffer

A response from the seller to the buyer's initial offer, suggesting changes to the terms of the sale, such as price or closing date.

Title Search

An examination of public records to verify the property's legal ownership history and identify any liens or claims against it.