Real Estate Terms Every Buyer and Seller Should Know

Whether you’re buying your first home or selling your third, the world of real estate comes with its own language. From acronyms like “EMD” to phrases like “under contract,” it can all feel overwhelming if you're not familiar.

To help you feel more confident, here’s a breakdown of the most common real estate terms you should know—whether you're buying, selling, or just exploring the market.

For Both Buyers and Sellers

1. MLS (Multiple Listing Service)

A shared database that real estate agents use to list and search homes for sale. It’s the most accurate and up-to-date home listing resource.

2. Appraisal

A professional evaluation of a property's market value, usually ordered by the buyer's lender to confirm the home is worth the agreed price.

3. Closing Costs

Fees paid at the end of a real estate transaction. These can include taxes, lender fees, title insurance, and more. Usually 2%–5% of the home’s purchase price.

4. Escrow

A neutral third-party account where funds are held during the transaction. It ensures that money (like the buyer’s earnest money deposit) and documents are safely handled.

5. Contingency

A condition that must be met for the deal to proceed (e.g., home inspection, loan approval). If contingencies aren’t met, the buyer or seller can walk away from the deal.

For Buyers

6. Pre-Approval

A letter from a lender indicating how much you're qualified to borrow based on your financial information. It shows sellers you're a serious and ready buyer.

7. Earnest Money Deposit (EMD)

A deposit made by the buyer after the offer is accepted, showing good faith. It’s typically 1%–3% of the home’s price and counts toward closing costs.

8. Home Inspection

An evaluation of the home’s condition performed by a licensed inspector. It can reveal issues with the roof, plumbing, electrical, or structure.

9. Title Insurance

Protects buyers and lenders from future claims against the property’s title, such as unpaid taxes or liens from previous owners.

10. Debt-to-Income Ratio (DTI)

The percentage of your monthly income that goes toward debt payments. Lenders use it to determine how much home you can afford.

For Sellers

11. Listing Agreement

A contract between a seller and their real estate agent that gives the agent permission to market and sell the property.

12. Comparative Market Analysis (CMA)

A report created by agents that compares your home to similar homes that have recently sold. It helps determine a competitive listing price.

13. Seller Concessions

Costs the seller agrees to cover on behalf of the buyer (such as closing costs) to help finalize the sale.

14. Days on Market (DOM)

The number of days a property has been listed before going under contract. A lower DOM often signals higher demand.

15. Under Contract

The stage after an offer is accepted but before the sale is finalized. The home is no longer actively available for other offers.

Final Thoughts

Understanding real estate terms makes you a more informed and confident buyer or seller. The more you know, the better prepared you'll be to navigate negotiations, paperwork, and decisions with ease.

Have questions about anything you read here? I’m happy to explain and guide you through every step of your real estate journey.