Real Estate Glossary

Buying or selling a home comes with plenty of unfamiliar terms. Here’s a quick-reference glossary of common real estate vocabulary, with a few extra entries for topics that matter most to older adults and their families. Have a term you don’t see here? Just ask.

Appraisal — A licensed professional’s estimate of a home’s market value, typically required by a lender before approving a mortgage.

Capital Gains Exclusion — A tax provision that lets many homeowners exclude a portion of the profit from selling their primary residence from taxable income, subject to IRS ownership and use rules.

Closing Costs — Fees and expenses, beyond the purchase price, that buyers and sellers pay to complete a real estate transaction, such as title fees, recording fees, and lender charges.

Comparative Market Analysis (CMA) — A report comparing a home to similar recently sold properties nearby, used to help set a competitive and realistic listing price.

Contingency — A condition written into a purchase agreement that must be satisfied before the sale can close, such as a home inspection, financing, or the sale of the buyer’s current home.

Earnest Money — A deposit a buyer puts down to show they’re serious about purchasing a home; it’s usually credited toward the purchase price at closing.

Equity — The portion of a home’s value that an owner actually owns outright, calculated as the current market value minus any remaining mortgage balance.

Escrow — A neutral third-party account that holds funds or documents during a transaction until all conditions of the sale are met.

Fair Market Value — The price a home would likely sell for in an open market between a willing buyer and seller, with neither under pressure to act.

Home Equity Conversion Mortgage (HECM) / Reverse Mortgage — A loan available to homeowners 62 and older that lets them convert part of their home equity into cash while continuing to live in the home; it’s repaid when the home is sold or the owner no longer lives there.

Home Inspection — A professional evaluation of a home’s condition, covering systems like the roof, plumbing, and electrical, typically done before closing so buyers understand what they’re purchasing.

Listing Agreement — A contract between a homeowner and a real estate agent authorizing the agent to market and sell the property.

Multiple Listing Service (MLS) — A database real estate agents use to share information about homes for sale, giving listings wide visibility to potential buyers and their agents.

Pre-Approval — A lender’s written estimate of how much a buyer may qualify to borrow, based on a review of income, credit, and finances; it strengthens an offer by showing sellers the buyer is financially prepared.

Staging — Preparing and arranging a home’s furniture, decor, and layout to help it show well to potential buyers, often used to highlight space and appeal.

Title Insurance — A policy that protects buyers and lenders against financial loss from defects in a property’s title, such as unknown liens or ownership disputes.

Underwriting — The process a lender uses to evaluate the risk of a loan by verifying a borrower’s income, assets, debt, and credit before final loan approval.

Don’t see the term you’re looking for, or ready to talk through your options? Reach out anytime