Key Real Estate Terminology Used Daily in Realtor Workflows

This chapter is a working vocabulary guide: terms you will see repeatedly in calls, emails, texts, MLS notes, and contract paperwork. For each term, you’ll get (1) a simple definition, (2) where it shows up in a typical workflow, and (3) a common beginner mistake to avoid.

Property and Listing Terms (Daily MLS + Showing Workflow)

MLS (Multiple Listing Service)

• Simple definition: A shared database where participating agents/brokers publish and access property listings, status changes, and showing/offer instructions.
• Where it appears in the workflow: Searching inventory for buyers, entering a new listing, updating status (Active, Pending, Sold), pulling listing history, exporting reports to clients.
• Common beginner mistake: Assuming the MLS is “the public listing” (it feeds public sites, but rules/data fields can differ) or copying MLS remarks into marketing without checking what is allowed (e.g., fair housing, accuracy, or private remarks).

DOM (Days on Market)

• Simple definition: The number of days a listing has been active on the market under MLS rules (often resets or changes depending on status changes and local MLS policy).
• Where it appears in the workflow: Pricing conversations, buyer objections (“Why hasn’t it sold?”), and market updates; used when comparing listings and advising on strategy.
• Common beginner mistake: Treating DOM as a universal, perfectly comparable metric across all listings without checking MLS definitions (e.g., cumulative DOM vs. current DOM, relists, withdrawn/expired rules).

Comps (Comparable Sales)

• Simple definition: Recently sold (and sometimes pending/active) properties similar to the subject property used to estimate value.
• Where it appears in the workflow: Listing pricing, buyer offer strategy, appraisal expectations, and “is this priced right?” discussions.
• Common beginner mistake: Using actives as if they are value proof (they are competition, not market-accepted price) or choosing comps that are not truly comparable (different neighborhood, school zone, condition, lot size, or property type).

CMA (Comparative Market Analysis)

• Simple definition: A structured analysis (usually a report) that uses comps and market context to recommend a price range.
• Where it appears in the workflow: Pre-listing meetings, pricing updates, buyer consultations, and responding to “What’s it worth?” emails.
• Common beginner mistake: Presenting a CMA as an appraisal or guaranteeing a value. A CMA supports a pricing opinion; it is not a certified valuation.

Showing Instructions

• Simple definition: The rules for accessing and showing a property (how to schedule, lockbox details, notice required, occupancy notes, restrictions, and what to do after showing).
• Where it appears in the workflow: In MLS fields/remarks, showing service notes, and listing agent emails; used every time you schedule and conduct showings.
• Common beginner mistake: Skipping the instructions and creating friction (showing without required notice, bringing unapproved parties, ignoring pet/occupancy rules, or failing to follow post-showing steps like lights/doors/feedback).

Practical step-by-step: reading showing instructions before you confirm a tour

1. Open the MLS listing and read both public remarks and agent-only/private remarks.
2. Check the showing method (showing service, call/text listing agent, go-and-show) and required notice window.
3. Confirm access method (lockbox type, code delivery, ID requirements).
4. Note restrictions (limited hours, pets, tenant rules, shoes/booties, photo/video limits).
5. Send the buyer a short itinerary message that includes timing expectations and any special rules.

Offer and Contract Terms (From Draft to Acceptance)

Earnest Money (EMD)

• Simple definition: A buyer’s good-faith deposit submitted after acceptance (or per contract timing) and held by a neutral party (often escrow/title) to show intent to perform.
• Where it appears in the workflow: Offer drafting, acceptance checklist, escrow opening, and contingency timelines; referenced in contract sections and receipts.
• Common beginner mistake: Saying “it’s non-refundable” or “it’s always refundable.” Refundability depends on contract terms, deadlines, and contingencies—not on the label “earnest money.”

Contingencies

• Simple definition: Contract conditions that must be met for the deal to proceed (e.g., financing, appraisal, inspection, sale of buyer’s property), often with deadlines.
• Where it appears in the workflow: Offer strategy, contract drafting, timeline tracking, negotiation after inspections/appraisal, and determining if/when deposits are at risk.
• Common beginner mistake: Tracking only the “big” dates (closing date) and missing contingency deadlines, or using the word “contingent” loosely without specifying which contingency and what the deadline is.

Addenda

• Simple definition: Additional contract forms that modify or add terms to the main agreement (e.g., inspection addendum, financing addendum, HOA addendum, lead-based paint addendum where applicable).
• Where it appears in the workflow: Attached to offers, counteroffers, and acceptance packages; required by property type, jurisdiction, or situation.
• Common beginner mistake: Forgetting to include a required addendum or attaching the wrong version, then assuming “we can fix it later” (missing documents can delay acceptance, create compliance issues, or change enforceability).

Escalation Clause

• Simple definition: An offer term stating the buyer will increase their price above competing offers up to a cap, usually with defined increments and proof requirements.
• Where it appears in the workflow: Competitive offer drafting and negotiation; often triggers follow-up requests for documentation and careful review of seller counter terms.
• Common beginner mistake: Writing an escalation without clear rules (cap, increment, what counts as a competing offer, proof) or assuming it automatically “wins” without considering appraisal risk and seller preferences.

Option Period (where used)

• Simple definition: A negotiated time window (often for a fee) allowing the buyer to terminate for any reason while conducting due diligence (commonly tied to inspections).
• Where it appears in the workflow: Offer drafting, inspection scheduling, repair negotiations, and deadline tracking during the first days after acceptance.
• Common beginner mistake: Confusing the option period with the inspection itself (the inspection is an activity; the option period is the contractual right and deadline) or missing the exact end time/date.

Practical step-by-step: building a “contract dates” tracker

1. Immediately after acceptance, list every deadline from the contract and addenda (earnest money due, option/inspection deadline, financing/appraisal dates if stated, HOA document delivery, closing date).
2. Convert each deadline into a calendar entry with reminders (e.g., 72 hours before and 24 hours before).
3. Confirm who is responsible for each task (buyer, lender, title, listing agent) and what proof you need (receipt, email confirmation, document upload).
4. Send a short “next steps + key dates” email to your client using the exact contract language for dates/times.

Financing Terms (What You’ll Hear From Lenders and Buyers)

Pre-Approval vs. Pre-Qualification

• Simple definition: Pre-qualification is an informal estimate based on unverified information; pre-approval is a stronger lender review that typically includes documentation and credit review (varies by lender).
• Where it appears in the workflow: Before showings (setting expectations), when submitting offers (strength of offer), and when responding to listing agent questions about buyer readiness.
• Common beginner mistake: Treating a pre-qualification like a pre-approval, or assuming all pre-approvals are equal without checking expiration date, conditions, and whether underwriting has reviewed the file.

DTI (Debt-to-Income Ratio)

• Simple definition: A lender metric comparing monthly debt obligations to gross monthly income; used to assess affordability and loan eligibility.
• Where it appears in the workflow: When a buyer asks “How much can I afford?”; during lender updates if the buyer adds debt (car loan, credit card balance) or changes employment.
• Common beginner mistake: Giving definitive lending advice (“Your DTI is fine”) or ignoring that DTI can change quickly with new debt, rate changes, or different loan programs.

Points (Discount Points)

• Simple definition: Upfront fees paid to reduce the interest rate (typically 1 point = 1% of the loan amount, but pricing varies).
• Where it appears in the workflow: Loan estimate discussions, buyer cash-to-close planning, negotiations where seller credits may be used to buy down the rate.
• Common beginner mistake: Calling points “always a good deal.” The value depends on how long the buyer keeps the loan (break-even period) and available cash.

Rate Lock

• Simple definition: A lender agreement to hold an interest rate for a set period while the loan is processed.
• Where it appears in the workflow: After contract acceptance; impacts closing timeline and risk if closing is delayed beyond the lock period.
• Common beginner mistake: Assuming the rate is locked automatically at pre-approval, or overlooking lock expiration and potential extension costs if the closing date shifts.

Practical step-by-step: questions to ask a lender (with buyer permission) to avoid financing surprises

• Is the buyer pre-qualified or pre-approved? What documentation has been reviewed?
• Any known conditions (employment verification, asset seasoning, gift funds documentation)?
• What is the current estimated cash to close (including points, prepaid items, and reserves if applicable)?
• Has the rate been locked? If yes, when does it expire?
• Any red flags that could affect timing (self-employment, recent job change, credit events)?

Closing Terms (From “Clear to Close” to Keys)

Settlement Statement / Closing Disclosure (CD)

• Simple definition: A detailed accounting of the transaction’s money flows and closing costs. Many transactions use a Closing Disclosure for financed deals; other formats may be used depending on transaction type and jurisdiction.
• Where it appears in the workflow: Near closing when title/escrow and lender finalize figures; used to confirm credits, fees, prorations, and the amount the buyer must bring.
• Common beginner mistake: Treating the first draft as final or telling clients exact cash-to-close too early. Figures often change with prorations, repairs/credits, and lender adjustments.

Prorations

• Simple definition: Splitting certain expenses/income between buyer and seller based on the closing date (commonly property taxes, HOA dues, rent in investment properties).
• Where it appears in the workflow: On the settlement statement/CD; discussed when clients ask “Why is this number here?”
• Common beginner mistake: Assuming taxes are always paid the same way everywhere (arrears vs. advance) or forgetting that prorations can move cash-to-close significantly.

Title Commitment

• Simple definition: A title company’s preliminary report stating the conditions under which it will issue title insurance, including exceptions (items that affect title, like easements, liens, or restrictions).
• Where it appears in the workflow: After escrow opens; reviewed during due diligence; may trigger requests for payoff statements, releases, or clarification of recorded items.
• Common beginner mistake: Ignoring the commitment until the last week, or assuming “title is fine” without scanning exceptions that could affect use (access easements, HOA restrictions, prior liens).

Recording

• Simple definition: Filing the deed (and often the mortgage/deed of trust) with the local government office to make the transfer official in public records.
• Where it appears in the workflow: Closing day logistics; determines when ownership officially transfers and when keys can be released (varies by local practice and contract terms).
• Common beginner mistake: Promising keys at a specific time without confirming funding/recording procedures and local norms (some areas release keys only after recording confirmation).

Practical step-by-step: a simple “closing day” verification checklist

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1. Confirm signing appointment time/location and whether it’s in-person, mobile notary, or remote (if allowed).
2. Confirm buyer’s funds delivery method and deadline (wire/cashier’s check rules) and remind them to verify wire instructions by a trusted phone number.
3. Ask title/escrow what triggers key release in your area (funding, recording, both).
4. Confirm final walk-through timing and what issues would be escalated before signing.

Risk Terms (What Creates Liability and How to Speak Precisely)

Material Facts

• Simple definition: Information that could reasonably affect a buyer’s decision to purchase or the price/terms they would offer (examples vary by jurisdiction and situation).
• Where it appears in the workflow: Listing intake, marketing, buyer Q&A, negotiation, and disclosure forms; also in emails/texts when asked direct questions about condition, history, or neighborhood issues.
• Common beginner mistake: Minimizing or withholding information because it feels “negative,” or guessing instead of verifying. If you don’t know, the safer workflow is to document the question and direct it to the appropriate source (seller, inspector, HOA, public record) rather than speculate.

Disclosures

• Simple definition: Required or customary statements/forms that reveal known property conditions or other relevant information (the exact forms and requirements depend on location and property type).
• Where it appears in the workflow: Provided early in listing/offer stages; reviewed during due diligence; referenced when negotiating repairs or credits.
• Common beginner mistake: Treating disclosures as “just paperwork” and not ensuring the correct version is delivered, acknowledged, and stored; or advising a seller to omit items rather than disclose accurately.

Practical step-by-step: how to handle a risky question in writing (email/text)

1) Restate the question briefly (so the record is clear). 2) State what you know vs. what you do not know. 3) Point to the best source (disclosure, inspection, HOA docs, public record, specialist). 4) Offer the next action step (request document, schedule inspection, ask seller for written clarification). 5) Avoid guarantees or speculation.