Glossary

The words you'll meet in offers and at closing, in plain English.

Offer terms

Earnest money: A deposit the buyer puts down to show they are serious. It usually applies to the purchase price at closing and can be at risk if the buyer walks away without a contingency.
Inspection contingency: The buyer may inspect the home and walk away, or ask for repairs, within this many days.
Financing contingency: The buyer can cancel if their loan is not approved by the deadline.
Appraisal contingency: The buyer can cancel or renegotiate if the lender's appraisal comes in below the price.
Home sale contingency: The buyer must sell their current home first.
Escalation clause: The offer automatically rises above a competing offer by the increment, up to the cap. You usually must show the competing offer.
Seller concessions: Money the seller credits the buyer at closing, usually toward closing costs; it comes off your proceeds.
Closing date: The target day ownership transfers. Earlier is not always better; it depends on your move.

Closing terms

Escrow: A neutral company holds the money and documents until everything the contract requires is done, then pays everyone and hands over the deed. Neither the buyer nor the seller controls the funds in between.
Earnest money: The buyer's good-faith deposit, held by escrow. It usually counts toward the buyer's down payment at closing; the contract says when it can be returned or kept.
Title search: The title company reviews public records to confirm who owns the home and what is recorded against it, such as mortgages, liens and easements.
Title commitment: The title company's report of what it found and what must be cleared before it will insure the buyer. Items listed there, like an old mortgage, are usually handled at closing.
Lien: A legal claim against the home for a debt, such as a mortgage, unpaid taxes or a contractor's bill. Liens are normally paid off from the sale proceeds at closing so the buyer gets clear title.
Easement: A right someone else has to use part of the property for a specific purpose, like a utility line or a shared driveway. It usually stays with the property after the sale.
Payoff statement: Your lender's statement of the exact amount needed to pay off your loan on a given date. Escrow requests it and pays the loan from your proceeds.
Title insurance: A policy that protects against covered problems with ownership that were missed in the records. In many areas the seller pays for the buyer's owner's policy; the contract and local custom decide.
Settlement statement: The itemized list of every charge and credit for buyer and seller: price, payoffs, fees, prorated taxes, credits. You review it before signing.
Proration: Splitting costs like property taxes or HOA dues by the day, so each side pays for the time they own the home.
Deed: The document that transfers ownership from the seller to the buyer. The seller signs it, usually in front of a notary, before closing.
Recording: Filing the deed and other documents with the county so the public record shows the new owner. In many places the sale officially closes when recording happens.
Reconveyance: The record that your old loan was paid and its claim on the home released. The lender or trustee records it after the payoff, often a few weeks after closing.
Contingency: A condition in the contract, such as an inspection, appraisal or loan approval, that lets the buyer cancel or renegotiate if it isn't met by its deadline.
Appraisal: The buyer's lender has an independent appraiser estimate the home's value. If it comes in below the price, the contract says what can happen next.
Wire fraud: Criminals send fake emails with new wiring instructions. Never send money based on an email; call your escrow officer at a number you find yourself and confirm by voice.

General information, not legal, tax or financial advice. Your agent, escrow officer, lender or an attorney can answer for your sale.