20 Real Estate Terms to Know In Today’s Market (and Why)

They often say in business, “It’s all about who you know.” However, for agents, it truly is all about what you know.

In a 2024 study of buyer and seller expectations, it was found that buyers most value:

• An agent who acts as a guide and coach throughout the transaction
• An agent with an eye for detail when it comes to pointing out flaws or features they know don’t align with their client’s preferences.
• Strong negotiation skills
• Help with finding the right home to purchase

In that same study, it was found that sellers most value:

• Agents who can help sell quickly
• Competitive pricing strategies
• Marketing expertise
• Strong negotiation skills

All of these skills involve a strong understanding of specific real estate terms. The more terms an agent is familiar with regarding paperwork, negotiation, client representation, etc., the more power they have to facilitate the deal (e.g., they have a stronger understanding of their scope of options throughout the transaction). 

Now that you know why having a sophisticated library of real estate terms in your mind is essential, let’s explore 20 that agents should know in today’s market specifically and why they are vital.

1. Accessory Dwelling Unit (ADU)

An accessory dwelling unit (ADU) is an additional living space that can be added to a property with a primary residence. ADUs can be guest houses, garages, or attics converted into liveable spaces.

The zoning laws surrounding ADUs vary from city to city, so it’s essential to understand if they are legal in your region before advising your clients.

ADUs are a must-know real estate term today because of the market's lack of inventory and affordability. Many aspiring homeowners are locked into their current apartment leases due to their inability to compete with homeowners who can put down a substantial down payment. However, they may desire more privacy or outdoor living space that comes with renting an ADU on a landlord’s property.

An ADU can be an excellent starting point if you’re working with a client interested in breaking even on their mortgage or dipping their toes into the real estate investment industry.

Related: What Is an Accessory Dwelling Unit (ADU)?

2. Addendum

In real estate, an addendum is a document that adds additional terms, conditions, or clarifications to the original purchase agreement or contract. Once signed by all parties, it becomes a legally binding part of the contract.

Standard specifications in an addendum are:

• Specific repairs that must be made before closing
• Furniture and/or appliances that should be included in the sale
• Financing, appraisal, or inspection contingencies
• Modifications to the closing timeline

Understanding addenda (plural for “addendum”) is critical in today’s real estate market due to the complex and dynamic nature of transactions, especially in markets with high competition, fluctuating interest rates, and evolving buyer and seller expectations.

3. Amortization

In real estate, amortization refers to the process of paying off a loan (typically a mortgage) over time through regular payments. Each payment is divided into two parts:

• Principal: The portion that reduces the loan balance.
• Interest: The portion paid to the lender as the cost of borrowing.

Understanding amortization as an agent is vital for advising clients on setting a budget and financial plan for their new home purchase. Particularly in a market driven by high interest rates and elevated home prices, part of your job is ensuring buyers understand what they’re signing up to pay (short-term and long-term).

4. As Is (AKA “Where Is”)

Sometimes, a seller wants to sell as quickly as possible and is okay with accepting a lower return on the sale because of this.

Maybe they have already purchased another property and want to avoid paying double mortgages for too long, or maybe they need to settle debt ASAP. Regardless of why, this seller will often sell the property “as is,” meaning they will not compromise on performing any additional renovations or updates before the sale. 

As an agent, understanding the term “as is” is vital for educating your clients on what they’re taking on when they purchase the property. For example, an as-is property may have decades of mold in the walls, requiring months of work to remove it and pushing back a safe move-in time. Or, the roof may be on its last legs, requiring an expensive replacement shortly after moving in.

It’s your job to ensure your clients know there is no promise of the property’s features being in working condition. So, if they’re seeking a move-in-ready home, you may want to explore other options.

5. Blind Offer

A blind offer is when a buyer chooses to purchase a property without seeing it in person. Though it’s not typically advisable and more common in a seller’s market, there are buyers who are desperate to get into a property, so much so, that they’ll put down money before they have seen it in person.

As an agent, you must understand the risks associated with this type of offer, including:

• Unknown property condition (may miss risks like intense structural damage, outdated systems, etc., not evident in the listing photos or descriptions)
• Misleading marketing: The photos may have been heavily edited and deceptive compared to the property's actual state and/or size.
• Location issues: There may be excessive noise, flooding concerns, or other disruptive location elements that remain unknown until the property is visited in person.
• Lower negotiation power: If your buyer submits a blind offer with no contingencies, they lose leverage for you to negotiate if you find issues on a walkthrough or inspection.

Whether the buyer listens to your advice is up to them. Still, as a professional dedicated to helping them find the best property for their needs, it is crucial to help them understand the risks of submitting a blind offer.

6. Broker Price Opinion

A broker price opinion is an estimate of a property's value provided by a licensed real estate broker or agent. It’s less formal and expensive than a full appraisal and is often used in situations where a detailed, professional valuation isn’t required.

The broker price opinion is typically gathered by performing a comparative market analysis (more on this later). A standard report should describe the property’s features and overall condition, an analysis of comparable properties, and a suggested listing price or value range.

Understanding broker price opinion is vital for agents because sellers’ most significant motivation for listing with an agent is to get the highest possible return from their sale. Particularly in a market where buyers are weary of paying too much due to high interest rates, a well-thought-out broker price opinion can help sellers limit the days on market while earning a fair offer for their property.

7. Buyer Concessions

Buyer concessions are the costs that the seller agrees to pay on behalf of the buyer to help close the deal. These concessions are often negotiated during the offer process and can make the transaction more appealing to buyers, especially in a market with significant competition between sellers or high interest rates.

Typical buyer concessions are:

• Closing costs
• Repair costs (or a credit to cover repair costs)
• Home Warranties
• Prepaid expenses like HOA fees, homeowners insurance, or property taxes

Understanding buyer concessions is helpful for agents in today’s market, as they can potentially use the higher interest rates and lower inventory to their advantage to negotiate the best deal for a buyer client.

8. Cancellation of Contract

Cancellation of contract in real estate refers to the termination of a legally binding agreement between a buyer and a seller before the transaction is finalized. This can occur for various reasons and is typically governed by the terms and conditions outlined in the purchase agreement.

Common reasons for the cancellation of a contract include issues in financing, unmet contingencies within the contract, or inspection complications that cause the buyer to back out. Or, the buyer may just change their mind, the transaction is not meeting its agreed-upon deadlines, or there are issues with the title (e.g., liens or ownership disputes).

Agents must understand the nuances of contract cancellation so they can craft a deal with their buyers best interests in mind. For example, they may want to include contingencies that protect their buyer should they want to back out for an issue that makes the property unsuitable.

Also, agents should understand the potential repercussions of backing out of a contract to advise their clients effectively. For example, there may have been an Earnest Money Deposit (more on this later) that will not be refunded after canceling the contract, depending on why the contract was canceled. Or, the buyer may be in breach of the contract, creating further legal issues which may result in a court order.

9. Comparative Market Analysis (CMA)

A CMA is a detailed evaluation of a property’s value based on the sale prices of similar properties in the same area (or within about a half-mile radius). It’s a critical tool for real estate agents, offering data-backed insights that guide informed decisions.

A CMA cannot replace an official appraisal but can act as a blueprint for determining listing prices and advising buyer clients to avoid overpaying.

Related: What Is a Comparative Market Analysis in Real Estate?

10. Contingent

When a real estate listing is marked “Contingent,” it means the seller has accepted a buyer's offer, but certain conditions (or contingencies) must be met for the sale to be finalized. These contingencies protect the buyer and seller, allowing either party to cancel the contract if specific requirements aren’t satisfied.

Here are some of the most common types of contingencies:

Appraisal Contingency: If the home appraisal comes in lower than the agreed sale price, the buyer can withdraw from the deal without penalty.

Home Sale Contingency: The contract can be canceled if the buyer cannot sell their current home within a specified timeframe.

Financing Contingency: If the buyer cannot secure a mortgage loan to purchase the property, they can back out of the contract.

Home Inspection Contingency: Should a property inspection uncover significant issues, the buyer can choose to terminate the agreement.

Title Contingency: If there are unresolved title issues—like liens, judgments, or ownership disputes—the buyer can rescind their offer.

Understanding contingencies allows agents to create more secure contracts for buyer clients and advise sellers on specific steps to help them sell their property quickly for the highest return.

Related: Contingent vs. Pending in Real Estate: What’s the Difference?

11. Counter Offer

A counteroffer in real estate occurs when a seller or buyer responds to an initial offer with changes to the terms of the agreement rather than accepting it outright. Essentially, a counteroffer acts as a negotiation tool to bridge the gap between what the buyer is offering and what the seller wants.

Understanding counteroffers is crucial for real estate agents in today's market because it directly impacts their ability to negotiate effectively, secure deals, and meet their clients' goals—whether they represent buyers or sellers.

In a seller's market, where inventory is low and multiple offers are common, agents must know how to advise clients on counteroffers strategically.

12. Default

In real estate, default occurs when one party involved in a contract—typically the buyer or borrower—fails to fulfill their agreed-upon obligations. This could include missing payments, violating contract terms, or failing to meet deadlines. Default can lead to significant consequences, such as contract termination, financial penalties, or foreclosure.

Understanding default in real estate is crucial for agents because it directly impacts their ability to guide clients, protect their interests, and prevent deals from falling apart. In a market with high interest rates and above-average prices, defaulting may be more common.

13. Earnest Money Deposit (EMD)

An earnest money deposit is a sum of money the buyer pays as a sign of good faith to the seller that they will purchase the home. The money goes into an escrow account until it can be applied to the down payment at closing.

Earnest money deposits often range from 1-2% of the purchase price, but the exact amount is typically negotiable.

Since earnest money is at risk if a buyer backs out of a sale for reasons not covered by the contingencies in the real estate contract, real estate agents should be well-versed in this term and able to advise buyers when their deposit may be forfeited.

Related: What Is an Earnest Money Deposit?

14. Encroachment

Encroachment occurs when a property owner’s structure or improvement illegally extends onto a neighboring property or public land. This can include physical structures such as fences, driveways, sheds, or even tree branches that cross property boundaries without permission.

Encroachment examples:

• A neighbor's fence extends a few feet into your property.
• A homeowner builds a shed or garage that partially crosses onto a neighboring lot.
• A tree’s branches or roots grow into a neighbor’s property, potentially causing damage.
• A driveway or sidewalk unintentionally crosses a property line.

Encroachments can derail deals if not addressed early in the process. Agents who understand encroachments can:

• Spot red flags during property inspections or reviews.
• Advise clients to order a property survey to confirm boundaries.
• Collaborate with surveyors, attorneys, and title companies to resolve issues before closing.

Proactively addressing encroachments prevents surprises that could cause buyers to back out or lenders to withhold financing.

15. Pending

When a home listing changes from "Active" to "Pending," the seller has accepted an offer and signed the contract, and no significant obstacles are preventing the sale from closing. The listing remains "Pending" from when the seller accepts the offer until the official closing occurs.

Pending and contingent vary slightly, with pending indicating that the transaction is a little further along. 

Agents who understand pending status understand that there is still a chance that the deal may not go through. So, if your client found the home of their dreams and it is in pending status, you can keep an eye on the listing to see if it falls through—making you the star agent to help them snag a property they may have thought unattainable.

The ability to look between the lines on transaction statuses is especially important when there is less on-market inventory for your buyer clients to sort through.

16. Settlement

In real estate, a settlement is the final step in the home-buying or selling process, also known as “closing.” Property ownership is officially transferred from the seller to the buyer during settlement, and all financial and legal obligations are completed.

Real estate agents are essential in helping clients navigate the settlement process by:

• Clarifying closing costs and necessary documentation.
• Collaborating with lenders, title companies, and attorneys.
• Managing timelines to prevent delays.

The better real estate agents understand the settlement process, the better they can ensure their clients get the most out of the deal as quickly as possible.

17. Title

In real estate, the title is a critical component of property ownership, as it confirms the legal right to own the home. Before the transaction is completed, a title company or attorney will conduct a “title search.” 

A title search ensures the buyer's legal rights to own or use the property while protecting them from potential claims or disputes. Agents, buyers, and sellers must understand the importance of title searches and insurance to ensure smooth, trouble-free transactions.

18. Under Contract

“Under contract” means the home seller has accepted an offer, but the deal hasn’t closed yet. In practice, this means the seller and a potential buyer have both signed a “purchase agreement,” which outlines the terms of a prospective sale.

Even when a property is considered under contract, the contingencies must be met before the sale goes through. Though unlikely, a contract can still be canceled during this stage if either party violates it.

Like pending and contingent statuses, an agent understanding that “under contract” does not mean the sale is final allows them to monitor the property and update clients in case anything changes.

Related: What Does Under Contract Mean in Real Estate?

19. Upside Down

“Upside down” refers to when a homeowner owes more on their property than it is worth. It is also known as negative equity or underwater.

Upside-down properties are vital off-market resources for agents attempting to find inventory in a bare market. For example, if a homeowner is upside down on their mortgage, they may be willing to sell for a discounted price depending on other financial factors.

If you’re working with a buyer on a tight budget and struggling to compete with other buyers, this may be an excellent opportunity to impress them.

20. Walkthrough

In real estate, a walkthrough refers to a buyer’s final property inspection before closing. It is typically done shortly before the settlement date—often 24 to 48 hours prior—to ensure the property is in the agreed-upon condition and that any repairs or terms outlined in the purchase contract have been completed.

Common things that are checked during a walkthrough are:

• Repairs requested and agreed upon in the contract.
• Appliances, HVAC, plumbing, and electrical systems.
• Walls, floors, windows, and doors for new damage.
• Fixtures, like light fixtures, faucets, and cabinets, are present and functional.
• Any personal property the seller agreed to leave behind.

Real estate agents play an essential role in the walkthrough process. In addition to guiding the buyer through and helping complete the checklist, they can communicate with the seller to ensure all contingencies are met and minimize the burden of these issues for the buyer.

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