REAL ESTATE GLOSSARY
Real Estate Terms, Explained Plainly
Straightforward definitions for the terms California buyers and sellers run into during a transaction -- no jargon, no sales pitch, just what each term actually means.
FLAT FEE & COMMISSION TERMS
The vocabulary around how agents get paid -- flat fee, rebate, dual agency -- and what each actually means for you.
Flat Fee Real Estate Agent
A licensed agent who charges a fixed dollar amount for representation instead of a percentage of the sale price.
Buyer's Agent
The licensed agent who represents a home buyer's interests, separate from the seller's listing agent.
Listing Agent
The licensed agent who represents a home seller and manages the marketing, pricing, and sale of the property.
Commission Rebate
A portion of the buyer-agent commission returned to the buyer, typically as a closing cost credit.
Closing Cost Credit
A seller- or agent-funded credit applied on the settlement statement to offset a buyer's closing costs.
Buyer Representation Agreement
The written agreement, required in California since 2024, that a buyer signs with their agent before touring homes.
Dual Agency
A single agent or brokerage representing both the buyer and seller in the same transaction.
TRANSACTION & CONTRACT TERMS
The terms that come up during escrow, inspections, and closing, regardless of who represents you or how they're paid.
Escrow
A neutral third party that holds funds and documents during a real estate transaction until all conditions of the sale are met.
Contingency Period
A set window of time during a purchase contract when a buyer can investigate the property and cancel without penalty.
Inspection Contingency
A contract condition allowing a buyer to inspect the property and negotiate or withdraw based on findings.
Loan Contingency
A contract condition allowing a buyer to cancel and recover their deposit if their mortgage financing falls through.
Appraisal Contingency
A contract condition protecting a buyer if the lender's appraisal comes in below the agreed purchase price.
As-Is Sale
A sale in which the seller makes no repairs, though disclosure obligations still apply in California.
Earnest Money Deposit
A good-faith deposit a buyer submits with an offer, held in escrow and applied toward the purchase at closing.
Title Insurance
A policy that protects a buyer or lender against defects in a property's ownership history.
Transfer Disclosure Statement
The California-mandated form a seller completes disclosing known material facts about a property's condition.
Natural Hazard Disclosure
A required California disclosure identifying whether a property sits in a flood, fire, or earthquake hazard zone.
Comparative Market Analysis
An agent's report comparing a property to similar recently sold homes to help estimate market value.
Multiple Listing Service
The shared database of for-sale properties that licensed agents use to list and search homes.
Pre-Approval vs. Pre-Qualification
The difference between a lender's informal cost estimate and a verified, underwritten borrowing commitment.
Homeowners Association (HOA)
An organization that manages shared community rules, amenities, and fees for properties within its jurisdiction.
FINANCING TERMS
The loan types buyers choose between, and what actually separates them beyond the interest rate.
FHA Loan
A government-insured mortgage allowing down payments as low as 3.5% with more flexible credit requirements.
VA Loan
A mortgage guaranteed by the VA for eligible veterans and service members, typically with no down payment required.
Conventional Loan
A mortgage not insured by a government agency, typically requiring 3% to 20% down and PMI below 20% down.
Assumable Mortgage
A loan a buyer can take over from the seller, including its existing interest rate and remaining term.
OFFER & NEGOTIATION TERMS
What happens once an offer is on the table -- counters, competing bids, and the notices that keep a deal moving.
Counteroffer
A formal response to an offer that changes one or more terms, replacing the original offer with new proposed terms.
Multiple Offers / Bidding War
A situation where a seller receives two or more competing offers at once, often driving up price and terms.
Backup Offer
An accepted secondary offer that becomes active automatically if the primary contract falls through.
Notice to Perform
A formal demand requiring the other party to complete a required contract action within a set deadline.
Contingent vs. Pending
The difference between a listing with active contingencies and one that has cleared them and is closing soon.
CLOSING, TAX & SPECIAL SITUATIONS
What comes up right before closing, plus the distress-sale and tax terms that don't fit a standard transaction.
Final Walk-Through
A buyer's last inspection before closing to confirm the property's condition and agreed repairs.
Mello-Roos
A special California tax funding infrastructure in newer developments, separate from regular property tax.
FIRPTA
A federal law requiring buyers to withhold a percentage of the sale price when purchasing from a foreign seller.
Short Sale
A sale for less than the amount owed on the mortgage, requiring lender approval of the reduced payoff.
REO / Foreclosure
A property that has completed foreclosure and is now owned and sold directly by the lender.
TAX & OWNERSHIP TERMS
Property tax rules, deed types, and exemptions that affect what you owe and what you actually hold title to.
1031 Exchange
A tax-deferral strategy letting investment property owners reinvest sale proceeds into a like-kind property.
Capital Gains Exclusion (Section 121)
The tax rule excluding up to $250K/$500K in gains from the sale of a qualifying primary residence.
Prop 13
The California law capping property tax at 1% of assessed value with limited annual increases.
Prop 19
The California rule letting eligible homeowners transfer their property tax base to a new home.
Quitclaim Deed
A deed transferring whatever interest the grantor has, with no warranty on the condition of title.
Grant Deed
The standard California deed carrying implied warranties about clear title and ownership.
California Homestead Exemption
The automatic protection shielding a portion of home equity from certain creditors.
LOAN STRUCTURE TERMS
How different mortgage structures actually work, beyond just comparing interest rates.
Adjustable-Rate Mortgage (ARM)
A mortgage with a fixed initial rate that later adjusts periodically based on a market index.
Fixed-Rate Mortgage
A mortgage with a locked interest rate and payment for the entire loan term.
Jumbo Loan
A mortgage exceeding the conforming loan limit, requiring stricter qualifying standards.
Mortgage Points
An upfront fee paid at closing to reduce a loan's interest rate over its term.
HELOC / Second Mortgage
A revolving credit line or lump-sum loan secured by a homeowner's existing equity.
Rent-Back Agreement
An arrangement letting a seller stay in the home as a tenant after closing.