Real Estate Jargon Explained: A Glossary for Buyers

Navigating the world of real estate can feel overwhelming, especially when you encounter unfamiliar terms. As you consider buying or selling a home, it's important to understand the key terminology that you'll come across in contracts, listings, and conversations with agents. At Keller Williams Evolution, we’re here to break down some common real estate jargon to make the process simpler and more transparent.

1. Pre-Approval vs. Pre-Qualification
These terms often get confused, but they have distinct meanings. A *pre-qualification* is an estimate of how much you can borrow based on the information you provide to a lender, while a *pre-approval* is a more detailed analysis that includes a credit check and documentation of your income and assets. A pre-approval carries more weight when you're ready to make an offer on a home. KWEvolution has a lender partner company, Lendizen. Be sure to contact them for your pre approval.

2. Appraisal
An *appraisal* is a professional assessment of a property's market value conducted by a licensed appraiser. Lenders require appraisals to ensure the home is worth the amount they are lending. It protects both the buyer and the lender from overpaying for a property.

3. Closing Costs
These are fees associated with the final transaction when you close on a property. *Closing costs* typically include loan origination fees, title insurance, appraisal fees, and attorney costs. These can range from 2% to 5% of the home’s purchase price, so it’s important to budget for them.

4. Contingencies
A *contingency* is a condition that must be met for the sale to proceed. Common contingencies include the sale of the buyer’s current home, the home passing an inspection, or securing financing. If a contingency isn't met, the buyer can back out of the sale without penalty.

5. Earnest Money 
When making an offer, buyers often put down a deposit, known as *earnest money* to show they are serious. This money is held in escrow and typically applied to the closing costs or down payment if the sale goes through. If the deal falls apart due to the buyer’s fault, the seller may keep the earnest money.

6. Escrow
*Escrow* refers to a neutral third party that holds funds or documents during the real estate transaction. Once all conditions of the sale are met, the escrow company releases the funds to the seller, and the deal is closed.

7. Home Inspection 
A *home inspection* is an assessment of a property’s condition, including its structure, electrical systems, plumbing, and more. While not mandatory, it's highly recommended for buyers to uncover any potential issues before finalizing the purchase.

8. Title Insurance
*Title insurance* protects the buyer and lender from any claims or legal issues related to the ownership of the property. This is a one-time payment made during closing, and it safeguards your ownership rights.

9. Multiple Listing Service (MLS)
The *MLS* is a database used by real estate agents to list properties for sale. It’s an important tool for buyers because it allows them to view up-to-date information on available homes.

10. Under Contract vs. Pending  
When a home is *under contract*, the buyer and seller have agreed on the terms, but the sale hasn't been finalized. *Pending* means that all contingencies have been met, and the sale is close to closing.

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Buying or selling a home is a major financial decision, and understanding these terms will help you feel more confident throughout the process. At Keller Williams Evolution, we're committed to making the experience as seamless and stress-free as possible. If you have any questions, our team is here to help guide you every step of the way. 

Let us help you make your real estate journey a successful one!