Real estate has a language all its own. When you’re in the middle of a transaction, the last thing you want is to feel like you’re “missing something” because of an acronym or a legal term.
As your advocate, I believe that clarity leads to confidence. Here is a cheat sheet of the most common terms you’ll hear when buying or selling a home, explained in plain English.
The Essentials
- MLS (Multiple Listing Service): The private database where real estate professionals list homes for sale. When I list your home on the MLS, it “syndicates” to sites like Zillow and Redfin to give you maximum exposure.
- CMA (Comparative Market Analysis): A report I create that compares your home to recently sold properties (“Comps”) to determine its true market value.
- PITI: An acronym for the four components of a monthly mortgage payment: Principal, Interest, Taxes, and Insurance.
The “Good Faith” Phase
- Earnest Money Deposit (EMD): A “good faith” deposit you make after your offer is accepted. It’s held in escrow and shows the seller you’re serious. It eventually goes toward your down payment.
- Escrow: A neutral third party that holds all the money and paperwork. They don’t work for the buyer or the seller; they ensure all the “rules” of the contract are followed before any money changes hands.
- Title: This refers to your legal right to own the property. A Title Search ensures no one else (like a distant relative or a tax collector) has a claim to the house.
The Contingency Period (The “Safety Net”)
A Contingency is a “what-if” clause that allows you to cancel the contract without losing your deposit if certain conditions aren’t met.
- Inspection Contingency: Gives you the right to have the home professionally inspected and negotiate repairs or walk away if major issues are found.
- Appraisal Contingency: Ensures the home is worth what you’re paying. If the Appraisal (a professional estimate of value) comes in lower than the price, this clause lets you renegotiate or exit.
- Loan (Financing) Contingency: Protects you in case your mortgage doesn’t get final approval from the bank.
The Final Stretch
- Appraisal Gap: This happens when the home’s value comes in lower than the agreed price. We then have to decide if the seller will drop the price, or if the buyer will pay the difference in cash.
- Closing Costs: The fees paid at the very end of the transaction. For buyers, this is usually 2–5% of the home price; for sellers, it includes things like commissions and transfer taxes.
- Recording: The final step where the county officially updates their records to show you are the new owner. This is when I get to hand you the keys!
The Cathleen Cull Difference: I don’t expect you to memorize this list. My “service-first” philosophy means I’ll be right there to translate the legalese into a strategy that works for you.
