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The offer dictionary.

138 terms of a home offer, defined. Each entry has its own link; each definition stands on its own.

Addendum: A document attached to a purchase contract at the time of signing that adds terms to it, such as a financing addendum or an HOA addendum. It is part of the contract from the start, which distinguishes it from an amendment, which changes a contract already in force.
Adjustable-rate mortgagealso called ARM: A mortgage whose interest rate is fixed for an initial period, commonly 5, 7, or 10 years, and then adjusts at set intervals based on a market index plus a fixed margin. Rate caps limit how much the rate can change at each adjustment and over the life of the loan.
Amendment: A written change to a contract that is already executed, signed by both parties. Repair agreements after inspection, price changes after appraisal, and closing date extensions are all documented as amendments.
Amortization: The repayment of a loan through scheduled installments that cover both interest and principal. Early payments on a long-term mortgage consist mostly of interest; the principal share grows over time until the balance reaches zero at the end of the term.
Annual percentage ratealso called APR: The yearly cost of a loan expressed as a rate that includes the interest rate plus certain lender fees and charges. Because it folds fees in, the APR is higher than the note rate and is the standard figure for comparing loan offers on equal footing.
Appraisal: A licensed appraiser's independent opinion of a property's market value, ordered by the lender after an offer is accepted. The lender bases the loan on the lesser of the appraised value and the purchase price, so an appraisal below the contract price reduces what the lender will finance.
Appraisal contingency: A contract provision that lets the buyer renegotiate or withdraw with the earnest money returned if the property appraises below the purchase price. Without it, the buyer is obligated to cover any shortfall between the appraised value and the price in cash or forfeit the deposit.
Appraisal gap: The difference between the contract price and a lower appraised value. Appraisal gap coverage is a written commitment, in dollars, that the buyer will pay some or all of that difference in cash rather than renegotiate, made to strengthen an offer in competition.; guides on this: Appraisal Gap vs. Waiving the Appraisal: Two Very Different RisksAppraisal Gap Coverage: How Much Should You Offer?
Appraisal waiveralso called Property inspection waiver, Value acceptance: A lender's offer to originate the loan without a new appraisal, extended when automated underwriting finds sufficient data on the property and borrower. It removes appraisal timing risk from the transaction. It is the lender waiving its own requirement, which is distinct from the buyer waiving the appraisal contingency.
As-is sale: A sale in which the seller declines in advance to make repairs or offer credits for the property's condition. In most contracts, as-is does not remove the buyer's right to inspect or to withdraw under an inspection contingency; it removes the expectation that findings will be negotiated.
Asking pricealso called List price, Listing price: The price at which a property is publicly offered for sale. It is the seller's opening position, not a valuation; offers may be made above or below it, and in competitive markets the sale price regularly departs from it in either direction.
Assessed value: The value a local government assigns to a property for calculating property taxes. It is produced by the assessor's office on its own schedule and methodology, and it routinely differs from both the market value and the appraised value. Many jurisdictions reassess after a sale.
Assignment: The transfer of a party's rights under a contract to another person or entity, as when a buyer assigns a purchase contract to an LLC before closing. Many purchase contracts prohibit assignment without the seller's written consent, and offers written as assignable read as investor offers.
Assumable mortgage: A mortgage that a qualified buyer may take over from the seller on its existing terms, including its interest rate. FHA, VA, and USDA loans are assumable with lender approval; most conventional loans are not. Assuming a low-rate loan requires the buyer to cover the seller's equity in cash or with secondary financing.
Attorney review period: A window after signing, standard in New Jersey and parts of New York and Illinois, during which each party's attorney may review, revise, or disapprove the contract. The contract does not become fully binding until the period ends.

Backup offer: An offer a seller accepts in a secondary position while under contract with another buyer. If the primary contract terminates, the backup moves into first position on its agreed terms without the property returning to market.
Best and final: A deadline procedure in a multiple-offer situation in which the listing side asks every bidder to submit their highest and best terms at once, after which the seller selects among them. It signals that there will be no further round of counteroffers, although a seller is not legally bound to that.
Bridge loan: A short-term loan secured by a buyer's current home that advances its equity for use on the next purchase before the current home sells. It allows an offer without a home sale contingency, at the cost of interest and fees on a second loan carried until the sale.
Broker: A real estate licensee holding the senior license class, authorized to operate a brokerage and supervise agents. Every agent works under a broker, and the brokerage is the legal party to listing and buyer agency agreements.
Buydown: Prepaid money that lowers a loan's interest rate. A permanent buydown purchases discount points to reduce the rate for the life of the loan. A temporary buydown, such as a 2-1, deposits funds that subsidize the payment at a reduced rate for the first years, commonly funded by a seller or builder credit.
Buyer agency agreementalso called Buyer representation agreement: The written contract between a buyer and a brokerage establishing representation, its duration, and the agent's compensation. Since the 2024 industry rule changes, agents on multiple listing services must have one signed before touring homes with a buyer.
Buyer's agent: The real estate agent who represents the buyer in a transaction and owes fiduciary duties to the buyer, including loyalty and confidentiality. Compensation is set by written agreement and, since 2024 industry rule changes, is negotiated rather than fixed by the listing.
Buyer's market: Market conditions in which homes for sale outnumber active buyers, marked by longer days on market and prices negotiated below asking. The conventional benchmark is more than six months of inventory at the current sales pace. Contingencies and concessions are easier to obtain in one.

Cash to close: The total amount of money a buyer must deliver at closing to complete the purchase. It comprises the down payment, closing costs, prepaid items, and any cash commitments in the offer's terms, less the earnest money already on deposit and any credits. It is larger than the down payment alone.; guides on this: How Much Cash Do You Really Need to Buy a $400,000 House?Cash to Close vs. Down Payment: The Full Breakdown (With Worked Example)
CC&Rsalso called Covenants, conditions, and restrictions: The recorded rules that bind every property in a subdivision, condominium, or planned community, governing matters from architectural changes to rentals and parking. They run with the land: a buyer takes title subject to them whether or not they were read. They are enforced by the homeowners association.
Certificate of occupancy: A local government certificate stating that a building complies with applicable codes and may be occupied. It is required for new construction, and some municipalities require a new or updated one at resale before a closing can occur.
Clear to close: The lender's formal determination that underwriting is complete, every condition on the loan has been satisfied, and the loan documents may be drawn for signing. It is the final lending milestone before closing day.
Closingalso called Settlement: The event at which the purchase completes: the buyer delivers the cash to close, the loan funds, the deed transfers to the buyer, and the transaction records with the local government. Depending on the state, it is conducted by a title company, an escrow company, or an attorney.
Closing agentalso called Settlement agent, Escrow officer: The neutral professional who conducts the closing: preparing the settlement statement, collecting and disbursing funds, obtaining signatures, and recording the deed. Depending on the state, the role is filled by a title company, an escrow company, or an attorney.
Closing costs: The fees and charges due at closing beyond the purchase price. For a buyer they typically include lender fees, title insurance, escrow or attorney fees, recording charges, and prepaid items, and they commonly total 2 to 5 percent of the purchase price. Sellers pay their own set, including any agreed commissions.
Closing disclosurealso called CD: The standardized five-page federal form stating the final terms of a mortgage: loan amount, rate, monthly payment, closing costs, and cash to close. The lender must deliver it at least three business days before closing, and the buyer compares it against the loan estimate for changes.
Cloud on titlealso called Title defect: Any claim, lien, or document in the record that puts the seller's clear ownership in question, such as an unreleased mortgage, an heir's potential interest, or a break in the chain of title. Clouds must be cleared, or insured around by the title company, before closing.
Co-borroweralso called Cosigner: An additional person on the loan whose income, assets, and credit are considered in qualifying and who is equally liable for repayment. A co-borrower typically holds title with the primary borrower; a cosigner is liable on the note without necessarily being on title.
Commission: The compensation paid to real estate brokerages in a sale, historically quoted as a percentage of the sale price. Following 2024 industry rule changes, each side's compensation is negotiated in its own agreement: the seller's in the listing agreement, the buyer's in the buyer agency agreement, with sellers free to offer or decline to cover the buyer's side.
Comparable salesalso called Comps: Recently sold properties similar in location, size, condition, and features to a subject property, used by appraisers and agents to estimate its market value. The reliability of a value opinion rests on how truly comparable and how recent the chosen sales are.
Comparative market analysisalso called CMA: An agent's estimate of a property's likely sale price, built from recent comparable sales, active competition, and market conditions. It serves the same question as an appraisal but is informal, unlicensed as a valuation, and used for pricing and offer strategy rather than lending.
Concessionsalso called Seller concessions, Seller credits: Costs of the buyer's that the seller agrees to pay, most often as a credit at closing toward the buyer's closing costs, prepaid items, or rate buydown. Loan programs cap concessions as a percentage of the price, and a credit exceeding the buyer's eligible costs is forfeited, not refunded.; guides on this: Ask for Concessions or a Price Cut? The Math That DecidesSeller Concessions in 2026: How Much You Can Ask For by Loan Type
Conforming loan: A conventional mortgage within the loan limits set annually by the Federal Housing Finance Agency and meeting Fannie Mae and Freddie Mac standards, making it eligible for purchase by them. Loans above the limit are jumbo loans and are priced and underwritten separately.
Contingency: A written condition in a purchase contract that must be satisfied for the sale to proceed. If the condition fails, the contingency defines the parties' rights, typically allowing the buyer to withdraw with the earnest money returned. The common contingencies cover inspection, financing, appraisal, title, and the sale of the buyer's current home.
Conventional loan: A mortgage that is not insured or guaranteed by a federal agency. Most conventional loans conform to Fannie Mae and Freddie Mac standards. Private mortgage insurance is required when the down payment is under 20 percent and is cancellable once sufficient equity exists.
Counteroffer: A response to an offer that changes any of its terms, which rejects the original offer and replaces it with new terms for the other party to accept, reject, or counter again. Once a counteroffer is made, the original offer can no longer be accepted.

Days on marketalso called DOM: The number of days a listing has been active without going under contract. Low figures signal fresh listings and stronger seller leverage; high figures, relative to the local norm, signal a listing the market has passed over and often more room to negotiate.
Debt-to-income ratioalso called DTI: A borrower's total monthly debt obligations, including the proposed housing payment, divided by gross monthly income. Lenders use it as a primary qualification measure; many loan programs allow ratios into the mid-40s percent range, with limits varying by program and compensating factors.
Deed: The legal document that transfers ownership of real property from seller to buyer, signed at closing and recorded with the local government. The common forms differ in the guarantees they carry: a general warranty deed warrants title against all claims, while a quitclaim deed transfers only whatever interest the grantor holds, with no warranty.
Deed of trust: The security instrument used instead of a mortgage in many states, in which the borrower conveys bare legal title to a neutral trustee as security for the loan. It permits nonjudicial foreclosure through the trustee if the borrower defaults, which is faster than the court foreclosure a mortgage requires.
Default: The failure to perform a material obligation of a contract or loan, such as a buyer failing to close on time or a borrower failing to make payments. The remedies for a contract default are those the contract states, commonly retention of the earnest money as to a buyer.
Down payment: The portion of the purchase price the buyer pays in cash rather than borrows. It is expressed as a percentage of the price, sets the loan-to-value ratio, and determines whether mortgage insurance applies on a conventional loan. It is one component of cash to close, not the whole of it.
Dual agency: An arrangement in which one agent or one brokerage represents both the buyer and the seller in the same transaction. It limits the advocacy either side can receive, requires written informed consent where it is permitted, and is prohibited outright in several states.
Due diligence: The buyer's investigation of a property after going under contract: inspections, title review, insurance quotes, HOA document review, and any other verification the contract allows. In some states, notably North Carolina, a negotiated due diligence period with a separate nonrefundable due diligence fee is the standard contract structure.

Earnest moneyalso called Good faith deposit: A deposit the buyer delivers shortly after contract acceptance, held in trust by a neutral party such as a title company, escrow agent, or brokerage. Customary amounts run 1 to 3 percent of the price. At closing it is credited toward the buyer's cash to close; if the buyer terminates under a contingency it is returned; if the buyer walks away without a contractual right, the seller may claim it.; guides on this: How Much Earnest Money Should You Offer? A 1–3% Decision FrameworkDoes Earnest Money Count Toward Your Down Payment? (Yes: Here's the Flow)
Easement: A recorded right allowing someone other than the owner to use part of a property for a stated purpose, such as utility lines, shared driveways, or access to a neighboring parcel. Easements run with the land and bind future owners; the title commitment lists them as exceptions.
Encroachment: A structure or improvement that extends across a property boundary, such as a fence, driveway, or building edge on a neighbor's land. Surveys exist to reveal them; unresolved encroachments can cloud title and complicate future sales.
Encumbrance: Any claim, lien, easement, or restriction attached to a property that limits its use or transfer. Title is conveyed subject to the encumbrances of record; the title search inventories them and the buyer accepts, clears, or insures around each.
Equity: The owner's stake in a property: its market value minus all debt secured by it. Equity grows through principal repayment and appreciation, and it is the source of proceeds when a home is sold.
Escalation clause: An offer provision that automatically raises the buyer's price above any competing bona fide offer by a stated increment, up to a stated cap. It discloses the buyer's maximum to the seller by its nature, and some listing agents decline to work with escalation clauses and instead call for best and final offers.; guides on this: Escalation Clause Sample Language: What It Says and How Sellers Read ItEscalation Clause Calculator: Set Your Increment and Cap Without Overpaying
Escrow: The holding of money or documents by a neutral third party until stated conditions are met. In a purchase, the earnest money is held in escrow until closing. The word also names the account a mortgage servicer maintains to collect and pay a borrower's property taxes and insurance; the two uses are related but distinct.
Escrow accountalso called Impound account: An account held by the mortgage servicer into which a portion of each monthly payment is deposited to pay the borrower's property taxes and homeowners insurance when they come due. Lenders commonly require it on loans with less than 20 percent down, and they analyze it annually, adjusting the monthly deposit as taxes and premiums change.
Escrow holdback: Funds withheld from the seller's proceeds at closing and held in escrow until an agreed obligation is completed after closing, most often a repair that could not be finished in time. The closing proceeds; the money enforces the promise.

Fair market value: The price a willing buyer and willing seller would agree to with neither under compulsion and both reasonably informed. It is the standard appraisals estimate, and it is established in fact only by an actual sale.
Fannie Mae and Freddie Mac: The two government-sponsored enterprises that buy conforming mortgages from lenders and package them into securities, supplying the liquidity that makes the 30-year fixed-rate mortgage widely available. Their underwriting standards define what a conforming loan is.
FHA loan: A mortgage insured by the Federal Housing Administration, available with down payments as low as 3.5 percent and more flexible credit standards than conventional lending. It carries an upfront mortgage insurance premium, commonly 1.75 percent of the loan, and a monthly premium that on most FHA loans does not cancel for the life of the loan.
Fiduciary duty: The legal obligation of an agent to act in the client's best interest, encompassing loyalty, confidentiality, disclosure, obedience to lawful instructions, and accounting for funds. It is the difference between a client and a customer: an agent owes fiduciary duties to the party they represent.
Financing contingencyalso called Loan contingency, Mortgage contingency: A contract provision allowing the buyer to withdraw with the earnest money returned if, by a stated deadline, the buyer cannot obtain the loan described in the contract. It protects the deposit against a lending failure; waiving it puts the deposit at risk if the loan does not fund.
Fixed-rate mortgage: A mortgage whose interest rate is set at origination and does not change for the life of the loan, producing a constant principal-and-interest payment. The 30-year fixed is the most common mortgage in the United States; shorter terms carry lower rates and higher payments.
Fixture: An item attached to the property in a manner that makes it part of the real estate, such as built-in appliances, mounted lighting, and landscaping. Fixtures convey with the home unless the contract excludes them; freestanding items are personal property and convey only if the contract includes them.
Flood zone: A FEMA-mapped designation of a property's flood risk. In high-risk zones, lenders require flood insurance as a condition of the loan, a separate policy from homeowners insurance with its own premium and, for new policies, a possible waiting period.
For sale by owneralso called FSBO: A property marketed by its owner without a listing brokerage. The seller pays no listing commission and handles pricing, marketing, and negotiation directly. A buyer may still be represented; the buyer's agent's compensation is whatever the parties negotiate.
Foreclosure: The legal process by which a lender enforces its security interest after default, resulting in the sale of the property to satisfy the debt. Depending on the state and instrument, it proceeds through the courts or through a trustee's nonjudicial sale.

Gift funds: Money given to a buyer, typically by a family member, and applied to the down payment or closing costs. Lenders require a signed gift letter stating that no repayment is expected and document the transfer; loan programs restrict who may give and toward what.

Home inspection: A trained inspector's visual examination of a property's structure, systems, and major components, produced as a written report for the buyer during the contingency period. It is an assessment of condition, not a pass-or-fail certification and not an appraisal of value.
Home sale contingency: A contract provision making the purchase contingent on the sale of the buyer's current home by a stated date. It protects the buyer from owning two homes at once and is among the weakest terms an offer can carry in competition, because it imports another transaction's risk into the seller's timeline.
Home warranty: A service contract, distinct from homeowners insurance, that covers repair or replacement of designated home systems and appliances for a set period, commonly one year. Either party may purchase one, and sellers sometimes include one as an inducement. Coverage terms, exclusions, and service fees vary by provider.
Homeowners associationalso called HOA: The governing organization of a planned community, condominium, or subdivision that maintains common elements and enforces recorded rules. Membership is mandatory for owners within it. Dues are a recurring cost of ownership, and special assessments can be levied for major expenses. Lenders count dues in the housing payment when qualifying a loan.
Homeowners insurancealso called Hazard insurance: The policy covering the dwelling and the owner's liability against covered perils. Lenders require a policy naming the lender before a mortgage will fund, and the first year's premium is commonly paid at or before closing as a prepaid item. Flood and earthquake coverage are separate policies.

Inspection contingencyalso called Due diligence contingency: A contract provision granting the buyer a stated period to inspect the property and, based on the findings, request repairs or credits, proceed, or withdraw with the earnest money returned. Its length is negotiated in days, and shorter periods read as stronger offers because they shorten the seller's uncertainty.
Interest ratealso called Note rate: The annual percentage the lender charges on the loan's outstanding principal, set by the market, the borrower's credit profile, the loan type, and the points paid. It determines the principal-and-interest payment and is distinct from the APR, which folds in fees.

Joint tenancy: A form of co-ownership in which owners hold equal shares with the right of survivorship: when one owner dies, their interest passes automatically to the surviving owners rather than through the estate. How buyers take title is chosen at closing and has estate and tax consequences.
Jumbo loan: A mortgage larger than the conforming loan limits set annually by the Federal Housing Finance Agency for purchase by Fannie Mae and Freddie Mac. Because jumbo loans are not eligible for agency purchase, lenders hold or sell them privately and typically apply stricter credit, reserve, and documentation standards.

Kick-out clausealso called Bump clause: A provision that lets a seller who accepted an offer with a home sale contingency continue marketing the property. If another acceptable offer arrives, the first buyer is given a stated period to remove the contingency or release the contract.

Lender credit: Money the lender contributes toward the borrower's closing costs in exchange for a higher interest rate, the mirror image of paying points. It reduces cash to close and raises the payment; whether it is worthwhile depends on how long the loan is kept.
Lien: A legal claim against a property as security for a debt, such as a mortgage, unpaid taxes, or a contractor's judgment. Liens attach to the property rather than the owner, so a sale cannot deliver clear title until they are paid or released. The title search exists to find them.
Listing agentalso called Seller's agent: The real estate agent who represents the seller, markets the property, and owes fiduciary duties to the seller. Statements the buyer makes to the listing agent can be relayed to the seller, which is why buyers negotiate through their own representation.
Listing agreement: The contract between a seller and a brokerage to market the property, stating the list price, the term, and the brokerage's compensation. Under the common exclusive right to sell form, the brokerage earns its fee however the buyer is found.
Loan estimatealso called LE: The standardized three-page federal form a lender must deliver within three business days of a loan application, stating the offered rate, monthly payment, closing costs, and estimated cash to close. Its standard format exists so borrowers can compare lenders line by line before committing.
Loan officer: The licensed individual at a lender who takes the borrower's application, quotes programs and pricing, and shepherds the loan through processing and underwriting. The preapproval letter attached to an offer is issued over a loan officer's signature.
Loan servicer: The company that administers a mortgage after closing: collecting payments, managing the escrow account, and handling payoff requests. Servicing is bought and sold, so the servicer may change during the life of the loan without changing any loan term.
Loan-to-value ratioalso called LTV: The loan amount divided by the lesser of the purchase price and the appraised value, expressed as a percentage. An 80 percent LTV corresponds to 20 percent down. It is a primary measure of lending risk: mortgage insurance, pricing, and program eligibility all key off it.

MLSalso called Multiple listing service: The cooperative database in which member brokerages share listings, the source feeding most public real estate portals. Listing on the MLS gives a property market-wide exposure, and MLS records of sold prices are the raw material of comparable sales analysis.
Mortgage: A loan secured by real property, and in legal usage the recorded instrument that pledges the property as collateral. If the borrower defaults, the lender may foreclose and sell the property to satisfy the debt. The loan itself is evidenced by a promissory note; the mortgage is the security for it.
Mortgage broker: An intermediary licensed to originate loans on behalf of multiple wholesale lenders, shopping the borrower's file across them for program fit and pricing. A broker is compensated by the lender or the borrower, disclosed on the loan estimate, and is distinct from a loan officer employed by a single lender.
Mortgage insurancealso called PMI, MIP: Insurance that protects the lender, not the borrower, against default. On conventional loans with less than 20 percent down it is called private mortgage insurance and cancels once the loan reaches sufficient equity. On FHA loans it is called the mortgage insurance premium, charged upfront and monthly, and on most FHA loans the monthly premium does not cancel. VA and USDA loans charge program fees instead of monthly mortgage insurance.

Notice to perform: A formal demand, standard in California practice, that the other party complete a contractual duty within a stated period, such as removing contingencies or delivering documents. If the party does not perform, the issuer gains the right to cancel the contract.

Offer expiration: The stated date and time after which an offer can no longer be accepted. It bounds the seller's decision window and prevents an offer from being held open indefinitely while other buyers are solicited. An offer may also be revoked before acceptance.
Option period: In Texas practice, a negotiated number of days during which the buyer holds an unrestricted right to terminate the contract in exchange for a nonrefundable option fee paid to the seller. It functions as the inspection window; the fee is credited at closing if the sale completes.
Origination fee: The lender's charge for making the loan, quoted as a flat amount or a percentage of the loan and itemized on the loan estimate. It is part of closing costs, distinct from discount points, which buy the rate down.

Personal property: Property that is not attached to the real estate, such as furniture, freestanding appliances, and window treatments in some markets. It conveys only if the contract lists it. Including significant personal property in a financed purchase can complicate the appraisal and the loan.
PITI: Principal, interest, taxes, and insurance: the four standard components of a monthly housing payment. Lenders qualify borrowers on PITI plus mortgage insurance and any HOA dues, and the same full figure is the honest basis for judging what a home costs per month.
Planned unit developmentalso called PUD: A community of individually owned homes and lots with shared common areas governed by a homeowners association, recorded as a single development plan. Owners hold title to their lot, pay association dues, and take title subject to the development's CC&Rs.
Pointsalso called Discount points: Prepaid interest purchased at closing to reduce a loan's rate, priced at 1 percent of the loan amount per point. Whether points are worth buying depends on how long the borrower keeps the loan; the break-even is the upfront cost divided by the monthly savings.
Possession: The right to occupy the property, which transfers at the time the contract states. Possession at closing is the default in most markets; a negotiated rent-back leaves the seller in occupancy for a defined period after closing under agreed terms.
Preapproval: A lender's written statement, issued after reviewing a borrower's credit, income, and asset documentation, that the borrower qualifies for a stated loan amount subject to a property and final underwriting. It is evidence of financing strength attached to offers. It is a stronger showing than prequalification and weaker than full underwritten approval.
Prepaids: Items paid at closing that are costs of owning rather than fees of the transaction: typically the first year's homeowners insurance premium, several months of property taxes and insurance to open the escrow account, and interest covering the days between closing and the first payment period. They are part of cash to close.
Prequalification: A lender's informal estimate of what a borrower may be able to borrow, based on stated rather than verified information. It involves no underwriting and carries little evidentiary weight with sellers; it is a starting point for the borrower, not a credential for an offer.
Principal: The amount borrowed, and at any later point the balance still owed excluding interest. Each amortizing payment reduces it; the principal portion of the payment is the part that builds equity.
Proof of funds: Documentation, commonly a bank or brokerage statement, showing that a buyer holds the liquid assets to complete a purchase. It is the standard evidence accompanying a cash offer, serving the role a preapproval letter serves for a financed one.
Property taxes: The annual tax a local government levies on real property, calculated from the assessed value and the local rate. On escrowed mortgages they are collected monthly and paid by the servicer. Many jurisdictions reassess upon sale, so the current owner's tax bill is not a guarantee of the buyer's.
Prorations: The division of ongoing property expenses between seller and buyer at closing, by days of ownership. Property taxes, HOA dues, and prepaid rents are prorated so each party bears exactly the period they own; the amounts appear as credits and debits on the settlement statement.
Purchase agreementalso called Purchase contract, Sales contract: The binding written contract between buyer and seller stating the price, terms, contingencies, deadlines, and obligations of the sale. The accepted offer becomes the purchase agreement; every protection a buyer has during the transaction exists because this document states it.

Radon: A naturally occurring radioactive gas that enters buildings from the soil and is the second leading cause of lung cancer in the United States. It is measured by a standard test during inspection, and elevated levels are corrected with a mitigation system, a bounded and routine repair.
Rate lock: A lender's commitment to hold a quoted interest rate for a set period, commonly 30 to 60 days, while the loan proceeds to closing. If the lock expires before closing, extending it has a cost; without a lock, the rate floats with the market until locked.
Realtor: A real estate licensee who is a member of the National Association of Realtors and bound by its Code of Ethics. The word is a trademark of the association, not a synonym for agent: every Realtor is an agent or broker, but not every licensee is a Realtor.
Recording: The entry of a deed, deed of trust, or other instrument into the county's public land records. Recording gives the world legal notice of the interest and establishes its priority against later claims; a purchase is complete in the record when the deed records.
Rent-backalso called Leaseback, Post-settlement occupancy: An agreement in which the seller remains in the property for a defined period after closing, as a tenant of the buyer, under written terms covering rent, deposit, and liability. Offering one is a term of value to a seller who needs time to move, at no change in price.
REOalso called Real estate owned, Bank-owned: A property owned by a lender after an unsuccessful foreclosure sale. REO homes are sold by the lender's asset managers, typically as-is with no seller disclosures, on the lender's own contract forms and timelines.
Reservesalso called Cash reserves: Liquid assets a borrower still holds after paying the down payment and closing costs, measured in months of the full housing payment. Lenders require stated reserve levels on some programs, and reserves beyond the requirement strengthen a loan file.
Right of first refusal: A recorded or contractual right requiring an owner who receives an acceptable offer to first allow the right's holder to purchase on the same terms. HOAs, tenants, and neighbors sometimes hold one; it adds a waiting period to any sale of the affected property.

Seller financingalso called Owner financing: A sale in which the seller extends credit for part of the price, taking a note and security instrument from the buyer instead of full cash at closing. Terms are negotiated privately. It appears where conventional financing is hard to obtain and requires careful documentation on both sides.
Seller's disclosurealso called Property disclosure: The seller's written statement of known material facts and defects about the property, on forms most states require. It reports what the seller knows; it is not an inspection and does not warrant condition. A buyer reads it as the starting map for due diligence.
Seller's market: Market conditions in which active buyers outnumber homes for sale, marked by short days on market, multiple offers, and sale prices at or above asking. The conventional benchmark is less than six months of inventory. Offer terms, not just price, decide competitions in one.
Short sale: A sale for less than the balance owed on the seller's mortgage, requiring the lender's approval to release its lien for reduced payoff. Approval can take months and is never assured, which makes short sale timelines the least predictable in residential purchase.
Specific performance: A court remedy compelling a party to complete a contract rather than merely pay damages, available in real estate because each parcel is legally unique. A seller who refuses to close without cause can be ordered to convey; the remedy is slow and used when the property itself is what matters.
Survey: A licensed surveyor's measured drawing of a property's boundaries, improvements, and encroachments. It establishes what land the deed actually conveys, reveals fence lines and structures that cross boundaries, and supports the title company's coverage of boundary matters.

Tenancy in common: A form of co-ownership in which owners hold shares that may be unequal, with no right of survivorship: each owner's interest passes through their estate. It is the common form for unrelated co-buyers, often paired with a written agreement governing sale and exit.
Termite inspectionalso called Wood-destroying organism inspection, WDO: A specialized inspection for termites and other wood-destroying organisms and the damage they cause, reported on standardized forms. VA loans require one in most states, and lenders in high-activity regions commonly condition the loan on a clear report or completed treatment.
Time is of the essence: A contract clause making stated deadlines strictly enforceable, so that missing one is a material breach rather than a delay to be tolerated. Where the clause governs, a party who is not ready on the appointed day is in default without further notice.
Title: The legal ownership of real property and the right to use and transfer it. Clear title means ownership free of undisclosed liens, claims, and defects. A title search examines the public record to confirm the seller can convey what the contract promises.
Title commitmentalso called Preliminary title report: The title insurer's binding offer, issued during the transaction, to insure the title subject to listed requirements and exceptions. The requirements must be satisfied before closing; the exceptions, such as easements and CC&Rs, define what the policy will not cover. It is the document a buyer reviews to learn what encumbers the property.
Title company: The company that searches the public record, issues title insurance, and in many states conducts the closing and holds escrowed funds. It acts as a neutral party serving the transaction rather than either side.
Title insurance: Insurance against loss from defects in title that predate the policy, such as undisclosed liens, forged documents, or recording errors. A lender's policy is required on financed purchases and protects only the lender; an owner's policy, purchased once at closing, protects the buyer for as long as they own the property.
Transfer taxalso called Deed stamps, Conveyance tax: A tax levied by state or local government on the conveyance of real property, calculated on the sale price. Which party customarily pays varies by state and county, and the custom is negotiable in the contract like any other cost.

Under contractalso called Pending, In escrow: The status of a property whose seller has accepted an offer and whose sale is proceeding through contingencies toward closing. Listing services distinguish stages of it, commonly showing contingent while contingencies remain and pending once they are cleared.
Underwriting: The lender's verification and risk assessment of a loan file: the borrower's credit, income, assets, and debts, and the property's appraisal and title. It concludes with an approval, an approval with conditions, or a denial. Clear to close is issued when every condition is satisfied.
USDA loan: A mortgage guaranteed by the United States Department of Agriculture for properties in designated rural and some suburban areas, available to income-eligible buyers with no down payment required. It carries an upfront guarantee fee, commonly 1 percent of the loan, and an annual fee paid monthly.

VA loan: A mortgage guaranteed by the Department of Veterans Affairs for eligible service members, veterans, and certain surviving spouses, available with no down payment and no monthly mortgage insurance. It carries a one-time funding fee, commonly around 2 percent of the loan and varying with usage and down payment; some disabled veterans are exempt.

Waiveralso called Waiving a contingency: The deliberate omission or removal of a contractual protection, most often the inspection, appraisal, or financing contingency, to strengthen an offer in competition. A waived contingency transfers its risk to the buyer in full: whatever the protection would have caught, the buyer now absorbs.
Walkthroughalso called Final walkthrough: The buyer's inspection of the property shortly before closing, verifying that its condition is as contracted, agreed repairs are complete, and included items remain. It is a verification step, not a second inspection, and problems found are resolved before the closing table, not after.
Wire fraud: The interception of a real estate closing by criminals who send fraudulent wiring instructions, typically from a compromised or lookalike email account, diverting the buyer's cash to close. Wiring instructions are verified by phone at a number obtained independently of email, and last-minute changes to instructions are treated as fraud until proven otherwise.

Zoning: Local government regulation of how land may be used, dividing a jurisdiction into districts with rules on use, density, height, and setbacks. Zoning determines what may be built or operated on a property, and a use that predates current rules may continue as a legal nonconforming use.