Every industry has its own acronym and real estate is no different.


Real estate is full of jargon that can add confusion to an already elusive process. Whether you’re selling or buying here are the essential real estate terms you should know.
Asking questions should not be intimidating. Would it help you to know that you’re not alone? Real estate is intimidating and overwhelming for most people. My goal is to make it as simple for you to navigate as possible. Let’s dive in:
1) Pending
Once a residential buyer and seller have reached a mutual agreement on the terms of a sale, the property will then be moved from “Active” to “Pending” or “Pending Inspection”. The contract timelines are very important.
2) Earnest Money (EM)
Once a buyer and seller have reached a mutual agreement on a contract, the buyer will then deposit a set amount into an escrow account. This earnest money (EM) shows the seller that the potential buyer is EARNEST about buying the property. When the property closes, the EM is then put towards the buyer’s down payment or returned.
3) Escrow
Escrow is a term that refers to a third party that is hired to handle the transaction, the exchange of money and any related documents. Placing Earnest Money, for example, into escrow means to place it in the hands of a third party until certain conditions are met; once the transaction has closed the escrow company will disburse the funds appropriately.
4) Appraisal
An appraisal is an assessment done by a certified appraiser to determine the value of the property. The appraisal is usually based on an analysis of comparable sales of similar homes nearby.
5) Dual Agency
Dual Agency is when one agent represents both the buyer and the seller, instead of just one or the other. Depending on state laws, real estate agents are able to represent both the buyer and the seller in the same transaction. There are some states that do not allow dual agency.
6) Bank Owned & Short Sale
When a property owner defaults on their mortgage, the lender will sometimes allow the seller to sell as a short sale. That means that the bank has agreed to let the home be sold for less than the balance on the current owner’s loan. A bank-owned property is when a lender won’t agree to sell the property for less than what is currently owed on it, so the property has been foreclosed on and is now “Bank Owned.”
7) Comparative Market Analysis (CMA)
A CMA is an analytic report to help real estate agents strategize what the hyper-local market is doing in order to determine your property value. The analysis is conducted based on the active, pending, and sold values of similar properties in the same area within a specific time frame. The CMA report should help you in understanding what a realistic listing price is, and whether or not you’re buying a property for the right price.
8) Commission
Real Estate agents are paid on commission. This is an agreed-upon % of the sale price which is then divided between the selling and listing agent, it is typically 6%. Once a transaction closes, the seller will pay the originally agreed-upon percentage of the purchase price from the net proceeds of the sale. In Washington State, the seller pays 100% of the real estate commissions.
9) Equity
A property owner’s Equity is the difference between the fair market value of the property and the amount still owed on its mortgage or other liens. It is common for people to borrow against their equity to do property improvements.
10) Encumbrance
An encumbrance is a claim against, limitation on, or liability against real property. Encumbrances can restrict the owner’s ability to transfer title to the property or lessen its value. Having an awkward conversation is worth it, guys.
Helping you understand real estate lingo is one of my favorite topics because it is SO important. If you have any Real Estate questions or pain points in your Real Estate journey, I would love to break it down into bite-sized pieces and serve you up a hot plate of awesome.
Leave a comment with any other terms or resources that you would find helpful!
All the best,

