The Complete Real Estate Terminology Guide

Buying or selling a home means navigating a maze of unfamiliar terms — escrow, contingencies, title insurance, and dozens more. Without a clear grasp of what these words mean, you can miss important details or feel uncertain about decisions that affect your financial future.

This guide walks you through the most common real estate terminology, from property types and financing basics to closing paperwork and regional variations, so you can move forward with confidence.

Key real estate terms to know

Real estate covers property types like houses, apartments, and commercial buildings, along with the land underneath. When you buy or sell property, you're transferring ownership rights — and that process comes with its own vocabulary.

At its core, real estate means land plus anything permanently attached to it. The term also includes the legal rights to use, modify, and transfer that property. You'll hear words like mortgage, escrow, and title throughout your home journey, and knowing what they mean helps you move forward with confidence.

Title

Title proves you legally own a property. It's not a physical document — it's the right itself, though the deed serves as written evidence. Before closing, a title company searches public records to confirm the seller actually owns the home and can transfer it to you. Clear title means no one else has claims on the property — no unpaid liens, no boundary disputes, no hidden ownership issues.

Escrow

Escrow is a neutral third party holding your money and paperwork until the sale closes. Your earnest money deposit goes into an escrow account, not directly to the seller. Documents like the deed and loan papers stay with the escrow company until both sides meet every condition. Once inspections pass, financing comes through, and all signatures are collected, escrow releases the funds and records the deed. The whole process usually takes 30 to 45 days — with conventional purchases averaging 41 days — though some states close faster.

Earnest money

Earnest money shows the seller you're serious. When your offer gets accepted, you put down 1% to 3% of the purchase price — often $1,000 to $5,000 — into escrow. This isn't extra money you lose. It applies toward your down payment or closing costs when the sale goes through. If you back out without a valid reason spelled out in your contract, though, the seller typically keeps your deposit.

Equity

Equity is what you actually own in your home. Take your home's current value and subtract what you still owe on the mortgage — the difference is your equity. If your house is worth $350,000 and your loan balance sits at $200,000, you have $150,000 in equity. You build equity two ways: paying down your loan over time and watching your home's value rise — with the average homeowner holding approximately $302,000 in equity in 2025. Equity isn't just a number. You can borrow against it, use it for your next down payment, or pocket it when you sell.

Property types and listing vocabulary

Residential properties

Residential properties are built for people to live in. Single-family homes stand alone on their own piece of land. Townhouses share one or two walls with neighbors but usually come with their own entrance and small yard. Condos are individual units inside a larger building, and when you buy one, you own your specific unit plus a percentage of shared spaces like lobbies, pools, and parking areas.

Commercial properties

Commercial properties house businesses instead of families. Office buildings, retail stores, restaurants, warehouses, and shopping centers all count as commercial real estate. The big difference? Commercial properties make money through business operations or by leasing space to tenants, and banks evaluate them based on income potential rather than comparable home sales.

Industrial properties

Industrial properties support manufacturing, storage, and distribution. Factories, distribution centers, and large warehouses fall into this category. You'll often find them near highways, rail lines, or shipping ports — anywhere that makes moving products easier.

Multiple listing service

The Multiple Listing Service, or MLS, is where real estate agents post homes for sale. When an agent lists a property, all the details — price, photos, square footage, number of bedrooms — get entered into the local MLS database. Other agents can search the MLS and show those homes to their buyers. You won't have direct access to the MLS, but public sites like Zillow and Realtor.com pull much of their data from it.

Days on market

Days on market — often shortened to DOM — counts how long a home has been listed. The timer starts when the listing goes live and stops when a seller accepts an offer. Low DOM, like under 20 days, usually means strong demand or smart pricing — compared to the median 58 days homes spent on market in September 2025. High DOM can signal the home is overpriced, has issues, or sits in a slower market. Either way, DOM gives you a quick read on how a property is performing.

As-is sales

As-is means the seller won't fix anything before you close. You're buying the home exactly as it sits today, cracks in the foundation and all. Sellers choose as-is when they can't afford repairs, want a faster sale, or simply don't want the hassle of contractor bids and project management. As a buyer, get a thorough inspection — you'll own every problem the moment you sign.

Probate sales

Probate sales happen when a homeowner dies without a clear estate plan. The court steps in, appoints someone to handle the estate, and authorizes the home sale. Proceeds get distributed according to state law or the deceased's will. Probate sales take longer than typical transactions — sometimes four to six months — because the court has to approve major decisions along the way.

Real-estate owned properties

Real-estate owned properties, or REO homes, belong to the bank. When a foreclosed home doesn't sell at auction, ownership reverts to the lender. Banks want these properties off their books, so REO homes often come with lower prices. However, they're almost always sold as-is, and you may face financing challenges if the property doesn't meet minimum lending standards.

Financing and mortgage terminology

Mortgage basics

A mortgage is a loan you take out to buy a home, and the home itself backs the loan. If you stop paying, the lender can foreclose and take the property. Your monthly payment usually includes four parts: principal (the actual loan amount you're paying down), interest (what the lender charges to loan you money), property taxes, and homeowners insurance. Lenders often call this PITI.

Down payment requirements

Your down payment is the cash you bring to the table upfront. Conventional loans typically ask for 5% to 20% down. FHA loans accept as little as 3.5%. VA and USDA loans let eligible buyers put zero down. The more you pay upfront, the smaller your loan and the lower your monthly payment — but coming up with a large down payment can delay your purchase timeline.

Adjustable-rate mortgage

An adjustable-rate mortgage — an ARM — gives you a fixed rate for an introductory period, often three, five, or seven years. After that, your rate adjusts annually based on market indexes. ARMs usually start with lower rates than fixed mortgages, which can save you money early on. However, your payment can increase significantly once adjustments begin.

Fixed-rate mortgage

A fixed-rate mortgage locks your interest rate for the life of the loan. Whether you choose a 15-year or 30-year term, your principal and interest payment never changes. Market rates could double, and your payment stays the same — offering predictability and protection against rising rates.

Debt-to-income ratio

Debt-to-income ratio, or DTI, measures how much of your monthly income goes toward debt. Lenders add up your future mortgage payment, car loans, student loans, credit cards, and any other monthly obligations, then divide by your gross monthly income. A DTI of 36% means 36% of your income covers debt. Most lenders want to see DTI below 43%, though some allow higher with strong credit or large cash reserves.

FHA loans

FHA loans are backed by the Federal Housing Administration and designed for buyers with smaller down payments or less-than-perfect credit. You can qualify with a down payment as low as 3.5% and a credit score around 580. The catch is mortgage insurance — you'll pay an upfront premium plus monthly insurance for the life of the loan, unless you refinance later.

VA loans

VA loans are a benefit for military service members, veterans, and some surviving spouses. The Department of Veterans Affairs guarantees the loan, so lenders offer zero down payment, no monthly mortgage insurance, and competitive rates. You'll pay a one-time funding fee, but it can be rolled into your loan amount.

Offers, contingencies, and closing language

Purchase agreements

The purchase agreement is the contract between buyer and seller. It spells out the price, closing date, what stays with the house, and any conditions that have to be met. Both sides sign, and you're legally bound — unless a contingency gives you an exit.

Appraisal contingency

An appraisal contingency protects you if the home's value comes in low. Lenders hire an independent appraiser to confirm the property is worth the loan amount. If the appraisal falls below your offer price, you can renegotiate, ask the seller to drop the price, or walk away and get your earnest money back.

Inspection contingency

The inspection contingency gives you time to hire a professional inspector. Most contracts include seven to 10 days for this. If the inspector finds major problems — foundation cracks, roof damage, outdated electrical — you can ask the seller to fix them, request a price reduction, or cancel the deal.

Loan contingency

A loan contingency, sometimes called a financing contingency, lets you cancel if your mortgage falls through. Even with pre-approval, final underwriting can reveal issues. You typically have 30 to 45 days to secure financing. If the loan doesn't close, you get your deposit back.

Closing costs breakdown

Closing costs are the fees you pay to finalize the sale, separate from your down payment. Buyers usually pay 2% to 5% of the purchase price covering loan fees, appraisal, title insurance, and escrow services. Sellers typically cover agent commissions and transfer taxes.

Common buyer costs: Loan origination fee Appraisal Credit report Title insurance (lender's policy) Escrow or attorney fees Prepaid property taxes and insurance Home inspection

Common seller costs: Agent commissions Title insurance (owner's policy) Transfer taxes Mortgage payoff Prorated property taxes Home warranty (if offered)

Rent-back agreements

A rent-back lets the seller stay in the home after closing. You own it, but they rent it from you for a set period — anywhere from a few days to 60 days. Both sides agree on a daily rate and move-out date, and everything gets written into a separate agreement. Rent-backs help sellers who haven't found their next home yet or who need extra time to relocate.

Cash offers and iBuyer terminology explained

iBuyer definition

An iBuyer is a company that buys homes directly using technology and data. Instead of listing your home and waiting for buyers, you request an offer online. The iBuyer evaluates your property, sends you a cash offer within 24 to 48 hours, and lets you pick your closing date. Companies like Opendoor pioneered this model in 2014, giving sellers a faster, more predictable alternative to the traditional market.

Instant cash offers

Instant cash offers skip the listing process entirely. You answer questions about your home's condition, location, and features online. The company's pricing algorithm analyzes comparable sales and market trends, then generates an offer. If you accept, you close on your timeline — often in as little as 10 days or as long as 60 days out.

Backup offers

A backup offer is your second-position bid on a home already under contract. If the first buyer's financing fails or their inspection uncovers deal-breaking issues, your offer automatically moves to first place. Sellers sometimes accept backup offers for security, knowing another buyer is ready if the primary deal collapses.

Seller concessions

Seller concessions are closing costs the seller agrees to cover for you. Common concessions include paying part of your loan fees, buying a home warranty, or giving you credit for repairs. Buyers often request concessions when cash is tight or when inspection reveals problems. Lenders cap concessions at 3% to 6% of the purchase price, depending on your loan type.

Legal and documentation real estate terms

Deed types

A deed transfers property ownership from one person to another. Warranty deeds guarantee the seller has legal ownership and will defend your title against future claims — the safest option. Quitclaim deeds transfer whatever interest the seller has, if any, with zero guarantees. Family members often use quitclaim deeds, but they carry more risk in arm's-length sales.

Title insurance

Title insurance protects you from ownership disputes and hidden claims. The lender's policy protects the bank. The owner's policy protects you. If an old lien surfaces or someone challenges your ownership, title insurance covers legal costs and potential losses. You pay once at closing, and coverage lasts as long as you own the home.

Homeowner association rules

A homeowner association, or HOA, manages shared spaces and enforces community rules. When you buy into an HOA, you agree to follow regulations on everything from lawn care to exterior paint colors. You'll pay monthly or annual fees covering amenities like pools, landscaping, and snow removal. HOAs can also fine you for violations or, in extreme cases, place a lien on your property.

Zoning regulations

Zoning laws dictate how you can use your property. Residential zones allow homes but typically ban commercial businesses. Commercial zones permit retail, office, or industrial use. Mixed-use zones allow both. Your local planning department enforces zoning, and violating it can result in fines or orders to cease the non-conforming use.

Regional and state-specific terminology

Option periods

In Texas, the option period gives buyers an unrestricted out. For a small fee — usually $100 to $500 — buyers get seven to 10 days to inspect, reconsider, or simply change their mind. During this window, they can terminate for any reason and get their earnest money back. Once the option period expires, walking away becomes much harder.

Natural hazards disclosures

Some states, including California, require sellers to disclose natural hazard risks. The natural hazards disclosure report flags whether your property sits in an earthquake zone, flood plain, fire hazard area, or landslide region. Buyers receive this report early, giving them time to research risks, adjust their insurance, or reconsider the purchase.

Tenancy in common

Tenancy in common lets two or more people own a property together with separate, distinct shares. One person might own 70% while another owns 30%. Each owner can sell or transfer their share independently. When an owner dies, their portion passes to their heirs — not automatically to the other co-owners.

Move forward with your real estate knowledge

Knowing the language of real estate removes confusion and puts you in control. When you understand terms like contingencies, equity, and title insurance, you can ask the right questions and make decisions that align with your goals.

The traditional home sale can feel overwhelming — showings, repairs, uncertain timelines. Opendoor offers a different path: request a cash offer, review it on your schedule, and pick a closing date that works for you.

Ready to sell with certainty? Get a free, no-obligation cash offer and see what your home is worth today.