Buying or selling property is exciting, but let's be honest: real estate has its own language. Between contracts, inspections, and financing, it can sometimes feel like you need a translator just to keep up! Understanding common real estate terms can help you feel more confident, make better decisions, and avoid surprises along the way.

Here's a breakdown of the most common real estate terms you'll hear during a transaction, explained in plain English.

1. Listing

A listing is a property that is officially for sale and represented by a real estate agent. The listing includes important details like price, square footage, number of bedrooms and bathrooms, and photos.

Why it matters: This is the home’s “resume” and the main way buyers learn about a property.

2. Purchase & Sale Agreement (or Offer)

The purchase & sale agreement is the written contract a buyer submits to the seller stating the price they’re willing to pay and the terms of the sale. This includes timelines, contingencies, and requested concessions.

Why it matters: This document starts the entire transaction process.

3. Contingency

A contingency is a condition that must be met for the deal to move forward. Common contingencies include:

  • Home inspection

  • Financing approval

  • Appraisal

  • Sale of the buyer’s current home

Why it matters: Contingencies protect buyers and give them an “out” if something important doesn’t check out.

4. Earnest Money Deposit (EMD)

Earnest money is a deposit the buyer makes to show they are serious about purchasing the property and to make the contract valid. It’s held in escrow and applied to the purchase at closing.

Why it matters: It shows good faith and commitment to the transaction. It's also what give the contract its teeth as both the buyer and seller are putting an asset on the table - the seller: their property; the buyer: earnest money.

5. Escrow

Escrow is a neutral third-party account that holds funds and documents during the transaction until all conditions are met and the sale is finalized.

Why it matters: It keeps money and paperwork safe and organized.

6. Due Diligence

A due diligence period is what allows the buyer to research the property further while having it under their control (a seller-signed purchase & sale agreement). This most typically includes a home inspection, which is a professional evaluation of the property’s condition, including the structure, roof, electrical, plumbing, and heating systems, but could also include research into zoning, buildability/expansion possibilities, a soils evaluation, water testing, or any other element of the property a buyer could be questioning.

Why it matters: It helps buyers understand exactly what they’re purchasing and negotiate adjustments to the contract, if appropriate.

7. Appraisal

An appraisal is an unbiased estimate of the property’s value, typically ordered by a lender, and always completed by a third party. Without the filters of personal reasons for buying or selling, the appraiser is able to provide a calculated estimate based on comparable sale facts alone.

Why it matters: The lender uses it to ensure the property is worth the amount being financed. A lender will never lend more than the appraised value of the property.

8. Closing Costs

Closing costs are fees and expenses paid at the end of the transaction. They can include:

  • Loan fees

  • Title insurance

  • Attorney fees

  • Recording fees

  • Taxes and insurance prepayments

  • Real estate agent fees

Why it matters: Buyers and sellers should budget for these additional costs beyond the purchase price and become familiar with each fee as some are negotiable or shoppable while others are not.

9. Title and Title Insurance

Title refers to legal ownership of the property. Title insurance protects against issues like unknown liens, ownership disputes, or errors in public records.

Why it matters: It ensures the property can legally and safely be transferred to the new owner. 

Bonus tip: Breakwater Realty Group will always recommend that a buyer purchases title insurance - it provides immense protection for a one-time cost due at closing.

10. Closing (or Settlement)

Closing is the final step where all documents are signed, funds are transferred, and ownership officially changes hands.

Why it matters: This is when the deal becomes official and the keys are handed over... the best part of the transaction!

11. MLS (Multiple Listing Service)

The MLS is a database where real estate agents list properties for sale and share information with other agents.

Why it matters: Most homes you see online originate from the MLS.

12. Pre-Approval

A pre-approval is a lender’s written estimate of how much a buyer can borrow based on their financial information.

Why it matters: It strengthens an offer and shows sellers that a buyer is financially ready to buy.

13. Down Payment

The down payment is the portion of the purchase price the buyer pays upfront (at closing) in cash. A down payment can be as low as 0% ($0) for a Rural Development or a VA loan, 3% for a conventional loan, or 3.5% for an FHA loan.

Why it matters: It affects loan terms, interest rates, and whether mortgage insurance is required.

14. Seller Concessions

Seller concessions are costs the seller agrees to pay on behalf of the buyer, such as closing costs or repair credits.

Why it matters: They can make buying more affordable upfront and keep cash in a buyer's pocket at closing.

15. Days on Market (DOM)

Days on Market shows how long a property has been listed before going under contract.

Why it matters: It can indicate demand and help guide pricing and negotiation strategy.

Why Knowing These Terms Matters

Real estate transactions can move fast, and understanding the language makes the process smoother and less stressful. When buyers and sellers know what terms mean, they:

  • Ask better questions

  • Make stronger decisions

  • Feel more confident in negotiations

Think of this glossary as your real estate cheat sheet. The more familiar you are with these terms, the more empowered you’ll feel every step of the way.

If you ever hear a term that doesn’t make sense, don’t hesitate to ask your agent. Real estate should feel exciting, not confusing—and a little clarity goes a long way.