75+ terms explained in plain English — everything buyers and sellers need to know.
Real estate is full of jargon. This glossary breaks down every term you'll encounter when buying or selling a home — from your first showing to the closing table. Bookmark it. You'll need it.
A professional assessment of a property's market value, ordered by the lender before approving a mortgage. The appraiser considers comparable sales, condition, and location. If it comes in low, you may need to renegotiate or cover the gap. Read our full appraisal guide →
Selling a home in its current condition without making repairs. The buyer accepts the property with all known and unknown defects. Can speed up the sale but may reduce offers. Learn about selling as-is →
A licensed professional who represents buyers or sellers in real estate transactions. Agents work under a broker. Not all agents have the same license level — some are salespersons, others are brokers. See the difference →
A real estate professional with a higher license level than an agent. Brokers can operate independently and supervise agents. A managing broker oversees all transactions at a brokerage. Why managing brokers matter →
A contract between a buyer and their agent outlining representation terms, duties, and compensation. After the 2024 NAR settlement, these are now required before touring homes in many markets. NAR settlement explained →
Money returned to the buyer at closing from their agent's commission. If the seller offers 2.5% and the buyer's agent charges a flat fee, the difference goes back to the buyer. At ShopProp, buyers can receive thousands back.
When multiple buyers submit competing offers on the same property. Common in hot markets. Strategy matters — escalation clauses, pre-inspections, and strong pre-approval letters help. How to win a bidding war →
Tax on the profit from selling a property. Most homeowners qualify for a Section 121 exclusion ($250K single / $500K married). Commission paid reduces your taxable gain. Capital gains tax guide →
The final step in a real estate transaction where ownership transfers from seller to buyer. Documents are signed, funds are disbursed, and keys change hands. What to expect at closing →
Fees and expenses beyond the purchase price that buyers and sellers pay at closing. Typically 2-5% of the purchase price. Includes title insurance, escrow fees, transfer taxes, and lender charges. Full closing costs breakdown →
A report comparing recently sold similar homes to estimate a property's market value. Used by agents to recommend a listing price. Pricing guide →
The fee paid to real estate agents for their services. Traditionally 5-6% of the sale price, split between buyer's and seller's agents. The flat-fee model changes this equation entirely.
A condition in a purchase agreement that must be met for the sale to proceed. Common contingencies include financing, inspection, and appraisal. Contingencies guide →
The upfront cash a buyer pays toward the purchase price. Typically 3-20% of the home price. A larger down payment reduces your monthly payment and may eliminate PMI.
When one agent or brokerage represents both buyer and seller in the same transaction. Creates inherent conflicts of interest. Illegal in some states, restricted in others. Dual agency risks →
Legal requirement for sellers to reveal known defects and material facts about a property. Requirements vary by state. State-by-state requirements →
A deposit (typically 1-3% of the purchase price) that shows the seller you're serious about buying. Held in escrow and applied to closing costs. Refundable if you back out under a valid contingency. Earnest money guide →
A neutral third party that holds funds and documents during a real estate transaction. Also refers to the period between accepted offer and closing. Escrow explained →
The difference between your home's market value and what you owe on your mortgage. Equity grows as you pay down the loan and as the home appreciates.
A fixed dollar amount charged for real estate services regardless of the home's sale price. The opposite of percentage-based commission.
Selling your home without an agent. NAR data shows FSBO homes sell for a median 23% less than agent-assisted sales. FSBO vs flat fee →
A mortgage with an interest rate that stays the same for the entire loan term. Most common terms are 15 and 30 years. Provides predictable monthly payments.
Now replaced by the Loan Estimate. A document from lenders outlining estimated closing costs. Must be provided within 3 business days of your mortgage application.
An organization that manages a community — condos, townhomes, or planned developments. Charges monthly/annual fees and enforces CC&Rs. HOA guide →
A professional examination of a property's condition — structure, systems, roof, foundation, plumbing, electrical. Typically costs $300-$600. Inspection guide →
A service contract covering repair or replacement of home systems and appliances for one year. Typically costs $400-$700. Warranty guide →
The cost of borrowing money, expressed as a percentage. Fixed rates stay the same; adjustable rates change after an initial period. Even a 0.5% difference significantly impacts monthly payments and total cost.
A form of co-ownership where two or more people hold equal shares in a property with right of survivorship. If one owner dies, their share automatically passes to the surviving owner(s).
The agent who represents the seller. Also called the seller's agent. Responsible for pricing, marketing, negotiating offers, and guiding the seller through closing.
A standardized document from lenders that outlines your loan terms, estimated monthly payment, and closing costs. Must be provided within 3 business days of application.
The ratio of your mortgage to the property's appraised value. An 80% LTV means you're borrowing 80% and putting 20% down. Below 80% LTV typically eliminates PMI requirements.
The highest license level in real estate. A managing broker oversees all agents and transactions at a brokerage. They are legally responsible for the conduct and compliance of every deal.
A database where agents list properties for sale. Syndicated to Zillow, Redfin, Realtor.com, and other consumer sites. Being on the MLS is essential for maximum exposure.
A lender's conditional commitment to lend you a specific amount based on your financial profile. Stronger than pre-qualification. Sellers take pre-approved buyers more seriously. Pre-approval guide →
A landmark legal settlement that changed how real estate commissions work. Sellers no longer set buyer agent compensation through the MLS. Buyers must now sign representation agreements before touring homes. Full settlement breakdown →
The amount a seller takes home after all costs — agent commission, closing costs, mortgage payoff, repairs, and concessions. A flat fee maximizes your net proceeds.
A scheduled period where a property is open for potential buyers to view without an appointment. Can generate foot traffic and multiple offers. Open house tips →
A formal proposal from a buyer to purchase a property at a specific price and terms. Once the seller accepts, it becomes a binding contract (in most states). How to make an offer →
Insurance required by lenders when your down payment is less than 20%. Adds $50-$200/month to your payment. Can be removed once you reach 20% equity.
The original loan amount, not including interest. Each mortgage payment includes principal and interest — early payments are mostly interest, later payments are mostly principal.
Annual tax assessed by local government based on a property's assessed value. Rates vary dramatically by location. Property tax guide →
A real estate agent who is a member of the National Association of Realtors (NAR). Not all agents are Realtors — it's a trade association membership, not a license level. Agent vs broker vs Realtor →
Replacing your existing mortgage with a new one, typically to get a lower interest rate or change loan terms. Refinancing guide →
A contractual right giving someone the opportunity to match any offer before a property is sold to someone else. Common in HOA and condo situations.
Money the seller agrees to pay toward the buyer's closing costs. Can make an offer more attractive without lowering the purchase price.
Selling a home for less than what's owed on the mortgage, with the lender's approval. Occurs when a homeowner is in financial distress and the property value has dropped below the loan balance.
Preparing and furnishing a home to make it more appealing to potential buyers. Can be DIY or professional. Staging guide →
Legal ownership of a property. A title search ensures there are no liens, claims, or encumbrances before a sale closes.
Insurance that protects against losses from title defects discovered after closing. Owner's policies protect the buyer; lender's policies protect the bank. Title insurance guide →
A tax strategy that lets you defer capital gains taxes by reinvesting proceeds from one investment property into another. Strict timelines apply. 1031 exchange guide →
The lender's process of evaluating your financial profile and the property to determine whether to approve your mortgage. Happens after you apply and before final approval.
A mortgage guaranteed by the Department of Veterans Affairs. Available to eligible veterans, active-duty service members, and surviving spouses. Typically requires no down payment.
Local government regulations that dictate how property in specific areas can be used — residential, commercial, industrial, etc. Affects what you can build, renovate, or operate on a property.
ShopProp's flat fee means you pay $4,495 — not a percentage. A managing broker on every transaction since 2007.
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