Understanding Common Real Estate Terms: A Simple Guide for Buyers & Sellers
By The McGrath Team Realtors
If you're buying or selling a home, you're going to hear a lot of real estate lingo—and it can be overwhelming. At The McGrath Team, we believe in keeping the process clear and stress-free, so we’ve put together this quick guide to help you make sense of some of the most common terms in the world of real estate.
1. MLS (Multiple Listing Service)
This is a database where real estate agents list properties for sale. When you hear a home is “on the MLS,” it means it’s officially available to buyers and their agents.
2. Contingency
A condition that must be met for a real estate deal to go through. Common contingencies include inspections, financing, or the sale of another property.
3. Escrow
This is a neutral third-party account that holds funds during a transaction. Escrow ensures that money and documents are only released when all conditions of the sale are met.
4. Appraisal
A professional valuation of a home’s worth, ordered by a lender to make sure the home is worth the loan amount. If the appraisal comes in low, the buyer or seller may need to renegotiate.
5. Earnest Money
Think of this as a “good faith” deposit made by a buyer to show they’re serious. It’s typically applied to the purchase price at closing.
6. Pre-Approval vs. Pre-Qualification
Pre-qualification is a quick estimate of what you might qualify for. Pre-approval is more official—it means a lender has reviewed your credit and finances and is willing to loan you a certain amount.
7. Title & Title Insurance
The title is your legal ownership of the property. Title insurance protects you from any past issues with ownership, like liens or disputes.
8. Closing Costs
These are the fees and expenses (beyond the purchase price) that are paid at closing. They typically include loan fees, taxes, insurance, and title-related charges.
9. Under Contract
This means the seller has accepted an offer, but the deal hasn’t closed yet. Inspections, financing, and other steps are still in motion.
10. FHA, VA, & Conventional Loans
These are different types of mortgage loans. FHA loans are backed by the government and often ideal for first-time buyers. VA loans are for eligible veterans and service members. Conventional loans are not government-backed and often require higher credit scores.
You don’t need to become a real estate dictionary—but understanding these common terms can make your journey smoother and more confident. And remember, we're here to guide you every step of the way, explaining the process in plain language and advocating for your best interests.
Have questions about buying or selling in the St. Louis or St. Charles area? Let’s talk!
