Real Estate Vocabulary for New Agents: Speak Like a Pro

Most of the real estate vocabulary a new agent needs describes four things: who represents whom, what a home is worth, how an offer becomes a contract and how ownership passes from seller to buyer. The terms that catch people out come in pairs that sound interchangeable and aren't, such as a deed and a title, a CMA and an appraisal, or an agent and a REALTOR®.

Agent, Broker or REALTOR®

Agent is the everyday word for anyone licensed to help people buy and sell homes, but the licence comes in two levels and each state sets its own rules for them. In California, a salesperson's licence covers licensed real estate work done under the supervision of a licensed broker, and a salesperson without a responsible broker can't do that work at all. The broker's licence asks for two years of full-time experience as a salesperson within the last five years, equivalent experience or a four-year degree in real estate, along with eight college-level courses and a separate exam. A broker can then supervise salespeople who work in the broker's name.

REALTOR® is neither licence. NAR defines it as a registered membership mark for a real estate professional who is a member of the National Association of REALTORS® and subscribes to its Code of Ethics, and it gives the word that one meaning only. A licensed agent becomes a REALTOR® by joining, and NAR asks that the word never be used for agents or brokers in general.

Listing Agent, Buyer's Agent and Dual Agency

An agent acts for someone, and that person is the principal: in California's Department of Real Estate glossary, an agent is "one who acts for and with authority from another called the principal". A listing agent's principal is the seller. A buyer's agent's principal is the buyer, and the agent negotiates on that buyer's behalf.

Buyer's agents now put that relationship in writing. Since 17 August 2024, as part of NAR's settlement of litigation over broker commissions, many agents ask a buyer to sign a written buyer agreement before touring a home with them, in person or virtually. It sets out the services the agent will provide and what they will be paid, and NAR stresses that the pay is negotiable and not set by law.

Dual agency is the case where one agent acts for both principals in the same transaction, the buyer and the seller at once. When you hear the word principal later in a sale, check which sense is meant, because the same glossary gives it two more: the amount of a loan, and simply one of the main parties to a deal, such as the buyer, the seller or the borrower.

An MLS Listing or For Sale by Owner

Once a seller has signed with a listing agent, the home can go on the MLS, the multiple listing service. NAR describes an MLS as a facility that lets real estate professionals learn about and share local property listings in support of their clients.

For sale by owner, shortened to FSBO, is the other route to market: the owner lists and sells the home without an agent. A FSBO seller is a principal with no agent of their own, so a buyer's agent who brings a buyer deals with the owner directly.

Whichever route the home takes, it may be staged first. NAR's consumer guide describes staging as presenting a home at its best so buyers can picture themselves living there, mostly by decluttering and styling it.

CMA, Appraisal or Home Inspection

Three people may look at the same home before it sells, each asking something different. The agent wants a price. A comparative market analysis, or CMA, compares the home with similar homes that sold recently nearby, and the agent bases the list price suggested to a seller on it.

For the lender, the question is value. An appraisal is a professional opinion of what the home is worth, and when a buyer borrows to buy, the lender generally requires one. Lenders aren't allowed to interfere with the appraiser's judgement, and the lender has to send the buyer a copy. When the appraisal comes in below the agreed price, the CFPB suggests the buyer use it to negotiate the price down, and depending on the contract, the buyer may be able to cancel the sale.

A home inspection answers the buyer's question, which is about condition: it is an independent inspector's assessment of the home's physical state, from which the buyer decides whether to go ahead and what repairs to ask the seller for. The CFPB points out that an inspection is different from an appraisal and that buyers generally need both, and that an inspector paid by someone else, or only at closing, might play problems down.

Offer, Counteroffer or Contingency

A buyer usually arrives with a pre-approval letter, a lender's statement that it is generally willing to lend up to a certain amount based on certain assumptions. The CFPB notes that lenders use "prequalification" and "preapproval" differently, and that neither is a guaranteed loan offer, but the letter helps a buyer make an offer because it gives the seller confidence the money can be found.

An offer is the buyer's proposal to buy the home on stated terms. A counteroffer answers it with changed terms, and California's glossary treats it as a rejection of the original offer, binding no one until the other side accepts it. So once a seller counters, the seller can't later accept the buyer's first offer instead; only the counteroffer is open.

A contingency is a condition the contract depends on, an event that has to happen before the contract takes full effect. Inspection, financing and appraisal contingencies are examples, tying the sale to the home's condition, the buyer's loan or the valuation. The buyer backs the offer with earnest money, a deposit paid as evidence of good faith.

Earnest money may be held in escrow. Escrow is the arrangement itself: funds or documents deposited with a neutral third party, with instructions to carry out the contract. That neutral party is the escrow agent. Once buyer and seller have both signed, the home is under contract, often shown as pending, until the sale closes.

Deed or Title

Title is the ownership itself. California's glossary describes it as the lawful ownership of and right to a property, the bundle of rights an owner holds. A deed is the written document that, once signed and delivered, transfers title from the seller to the buyer. So a buyer receives a deed and holds title.

The deed changes hands at closing, which the CFPB says is also called the settlement. The seller signs the deed, the legal document that makes the buyer the owner, the lender sends the loan money to the settlement agent for the seller, and the settlement agent records the papers with the county. That agent is often a title or escrow company in most western states and a closing attorney in some eastern ones. Title insurance protects an owner or a lender, up to a set amount, against losses such as a defective title. Closing costs are the expenses buyers and sellers pay at closing on top of the price of the home.

Principal turns up here in its loan sense, the amount borrowed on the mortgage. A short sale is a sale for less than the seller still owes on the mortgage, so the seller's lender has to agree to it. The CFPB warns that in some states the lender can still sue the seller for the shortfall afterwards, unless it agrees in writing to waive it.

Zoning or HOA Rules

Zoning and homeowners association rules both limit what an owner can do with a property, and they differ in who makes them. California's glossary sorts property restrictions into public and private ones. Zoning is the public kind, set by city or county authorities to specify the type of use property may be put to in each area.

Private restrictions are written by owners, into deeds, agreements or the plan of a whole subdivision. In a development with a homeowners association, or HOA, the covenants, conditions and restrictions set out the owners' rights and obligations toward one another and toward the association that runs the property they own in common. A buyer who asks what they may build on a property may need an answer from both.