Appraisal — What It Means in Real Estate

An appraisal is a professional estimate of a property’s market value completed by a licensed appraiser. Lenders require appraisals to ensure the home is worth the amount being borrowed, and appraisal results can impact loan approval and negotiations.

Assessed Value — How Property Taxes Are Calculated

The assessed value is the dollar value assigned to a property by a local tax authority for the purpose of calculating property taxes. This value may differ from market value and is updated periodically.

Closing Costs — Fees Paid at the End of a Transaction

Closing costs are expenses paid by buyers and sellers to finalize a real estate transaction. These can include loan fees, title insurance, escrow charges, taxes, and prepaid expenses. Closing costs typically range from 2%–5% of the purchase price.

Listing Agreement — Contract With a Real Estate Agent

A listing agreement is a written contract between a property owner and a real estate agent that authorizes the agent to market and sell the property under agreed-upon terms.

Contingency — Conditions That Must Be Met

A contingency is a condition written into a purchase agreement that must be satisfied before the sale can move forward. Common contingencies include financing approval, inspections, and appraisals.

Market Value — What a Home Is Worth

Market value is the price a property is likely to sell for in a competitive and open market. It is influenced by location, condition, recent comparable sales, and current market conditions.

Multiple Listing Service (MLS) — Property Database

The MLS is a private database used by real estate professionals to share property listings. It helps ensure accurate pricing, broad exposure, and cooperation between agents.

Escrow — A Neutral Holding Period

Escrow is a process in which a neutral third party holds funds and documents during a real estate transaction until all contract terms are met. Escrow protects both buyers and sellers by ensuring obligations are fulfilled before ownership transfers.

Title Insurance — Protecting Ownership Rights

Title insurance protects buyers and lenders against claims or disputes related to property ownership. It ensures the title is clear of undisclosed liens or legal issues.

Zoning — How Property Can Be Used

Zoning laws regulate how properties may be used, including residential, commercial, or mixed-use purposes. Zoning rules can affect renovations, building additions, and future development.

Earnest Money — Showing Good Faith

Earnest money is a deposit made by a buyer to show serious intent to purchase a property. It is typically held in escrow and applied toward the purchase price at closing if the transaction is completed.

Equity — Your Ownership Stake

Equity is the difference between a property’s market value and the amount owed on any mortgages or liens. As property values rise or loans are paid down, equity increases and can be leveraged for future financial opportunities.

FHA Loan — Government-Backed Financing

An FHA loan is a mortgage insured by the Federal Housing Administration. These loans often allow lower down payments and more flexible credit requirements, making them popular with first-time homebuyers.

Fixed-Rate Mortgage — Predictable Payments

A fixed-rate mortgage has an interest rate that remains the same for the life of the loan. This provides stable, predictable monthly payments and long-term budgeting certainty.

Home Inspection — Evaluating Property Condition

A home inspection is a professional evaluation of a property’s physical condition, including structure, systems, and safety issues. Inspection results help buyers understand potential repairs or concerns before finalizing a purchase.

Home Warranty — Added Protection After Closing

A home warranty is a service contract that covers repair or replacement of major home systems and appliances for a set period. Warranties can provide peace of mind, especially for buyers purchasing older homes.

Pre-Approval — Strengthening a Buyer’s Offer

A mortgage pre-approval is a lender’s written estimate of how much a buyer may be able to borrow based on financial review. Pre-approval strengthens offers and signals serious buying intent.

Principal — The Loan Balance

Principal is the original amount borrowed in a mortgage, not including interest. Each payment reduces the principal balance over time, increasing equity.

Purchase Agreement — The Legal Offer

A purchase agreement is a legally binding contract outlining the terms and conditions of a real estate sale. It includes price, contingencies, timelines, and responsibilities of both parties.

Underwriting — Final Loan Review

Underwriting is the process lenders use to evaluate a buyer’s financial risk before approving a mortgage. This includes reviewing income, credit, assets, and the property itself.

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