Real Estate Terms You Should Know Before You Buy or Sell a Home
Buying or selling a home is a big decision—and if you're not familiar with real estate lingo, the process can feel confusing or even overwhelming. Whether you’re a first-time buyer or preparing to list your property, knowing the basic terms can help you feel more confident, make informed decisions, and avoid costly misunderstandings.
Here’s a breakdown of the most important real estate terms to know before you dive into the market:
🏠 For Buyers and Sellers
1. Listing Agent vs. Buyer’s Agent
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Listing Agent: Represents the seller and markets the home for sale.
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Buyer’s Agent: Represents the buyer and helps them find and negotiate the purchase.
Some agents, like myself, work with both buyers and sellers—but their duties are always tied to their client’s best interests.
2. CMA (Comparative Market Analysis)
A report that compares your home to similar recently sold homes in your area to help determine a fair market value. It’s a key tool for pricing your home correctly or making a competitive offer.
3. Contingency
A condition that must be met for a deal to move forward. Common contingencies include:
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Home inspection
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Appraisal
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Financing
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Sale of buyer’s current home
If a contingency isn’t met, the buyer can typically back out without losing their deposit.
💸 For Buyers
4. Pre-Approval vs. Pre-Qualification
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Pre-Qualification: An estimate of what you might be able to borrow.
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Pre-Approval: A verified loan amount from a lender based on your actual finances. This is much stronger and necessary when making serious offers.
5. Earnest Money Deposit (EMD)
A good-faith deposit (usually 1–3% of the purchase price) made when you submit an offer. It shows you’re serious and is applied toward your down payment or closing costs.
6. Escrow
A neutral third party that holds money and documents during the transaction to ensure all terms are met before the sale is finalized.
🏡 For Sellers
7. Days on Market (DOM)
The number of days a property has been listed for sale. A high DOM can signal overpricing or lack of buyer interest, while a low DOM often indicates strong demand.
8. Seller’s Disclosure
A legal document where the seller lists any known issues with the property, like roof leaks, plumbing problems, or prior repairs. Honesty here protects you from legal trouble later.
9. Appraisal
An unbiased estimate of a property’s market value, required by lenders to ensure the home is worth what the buyer is paying. If the appraisal comes in low, the deal may need to be renegotiated.
📑 For Both Parties
10. Closing Costs
The fees paid at the end of the transaction—typically 2–5% of the purchase price. These may include lender fees, title insurance, escrow charges, and more. Sellers also have their own closing costs (like agent commissions).
11. Title
Legal ownership of a property. Title companies research the home’s history to make sure it’s free of liens or ownership disputes before the sale is complete.
12. MLS (Multiple Listing Service)
A database real estate agents use to list and find homes. Homes listed on the MLS get more exposure and are typically shared across dozens of real estate websites.
Final Thoughts:
You don’t have to be an expert in real estate jargon to buy or sell a home—but having a solid understanding of these key terms can help you feel empowered, avoid surprises, and ask better questions throughout the process.
And the best way to stay informed and protected? Work with a knowledgeable real estate professional who can guide you every step of the way.
Have questions about buying or selling in the Sacramento area?
Contact Randall Ortiz at Zitro Real Estate Services today. I’ll walk you through every term, document, and decision—so you can move forward with clarity and confidence.
