Jargon, translated

Real estate,
in plain English.

The industry loves its jargon; we don't. Here are 72 terms you'll actually hear during a purchase or sale, explained the way we'd explain them across a kitchen table. General education, not legal, tax, or lending advice.

The terms every buyer and seller meets.

Financing

Pre-qualification: A lender's rough estimate of what you might borrow, based on what you tell them — nothing verified. Useful for a ballpark; carries little weight with sellers.
Pre-approval: A lender has actually verified your credit, income, and assets and committed to a specific amount in writing. This is the one that makes sellers take your offer seriously.
Conventional loan: A mortgage not backed by a government program. Strong credit gets the best rates, and mortgage insurance drops off once you build enough equity.
FHA loan: A government-backed loan that's friendlier on credit and allows 3.5% down. Trade-off: mortgage insurance that usually sticks for the life of the loan unless you refinance.
VA loan: For eligible veterans and service members — often zero down with no monthly mortgage insurance. If you qualify, it's usually hard to beat.
USDA loan: Zero-down financing for homes in eligible rural areas. Plenty of the towns around Bloomington qualify even when the city itself doesn't — worth checking before you rule anything out.
Interest rate vs. APR: The interest rate is the cost of borrowing the money; APR folds in most fees to show the true annual cost. Compare loans on APR, not just the rate on the billboard.
Points (discount points): Prepaid interest — you pay more up front to lower your rate. Whether it's worth it depends on how long you'll actually keep the loan; we'll run that math with you.
Private mortgage insurance (PMI): Insurance that protects the lender when you put less than 20% down on a conventional loan. It's a line on your payment until you reach enough equity to remove it.
Escrow account (for taxes & insurance): The lender collects a slice of your property taxes and insurance with each payment and pays those bills for you. It's why two identical loans can have very different monthly payments in different counties.
Rate lock: Your lender freezes your quoted rate for a set window while the loan closes. Ask what the lock costs, how long it lasts, and what happens if closing slips.
Debt-to-income ratio (DTI): Your monthly debt payments divided by your gross monthly income — one of the main dials lenders use to size your loan. Paying down a car loan can move your budget more than you'd think.

Making an offer

Comps (comparable sales): Recent sales genuinely similar to a home — same area, size, condition, and school-district lines — used to establish value. The comp on your block isn't automatically your comp; picking the right ones is the whole art.
Earnest money: A deposit that shows a seller you're serious, held by a neutral party after your offer is accepted. In normal paths it credits toward your purchase at closing; walk away outside your contingencies and you can lose it.
Contingency: A written condition that lets you exit the contract with your earnest money if something specific fails — commonly inspection, financing, or appraisal. Waiving them makes an offer stronger and riskier at the same time.
Counteroffer: The seller's response that changes your terms — price, dates, inclusions. Each counter restarts the clock; nothing binds until both sides sign the same version.
Escalation clause: An offer that automatically outbids competitors up to your stated cap. Powerful in multiple-offer situations, but it shows the seller your maximum — use deliberately.
Seller concessions: Money the seller agrees to put toward your closing costs or repairs. It effectively lowers your cash to close — often more valuable to a buyer than the same amount off the price.
Under contract (pending): Both sides have signed; the home is off the active market while inspections, appraisal, and financing run their course. Deals can still fall through — that's what the contingencies are for.
Multiple-offer situation: More than one buyer bidding on the same home. Price matters, but so do financing strength, contingencies, and timeline — sellers pick the offer most likely to actually close.
As-is sale: The seller won't make repairs. You can and should still inspect — 'as-is' changes what they'll fix, not what you're allowed to know before committing.

Inspection & appraisal

Home inspection: A licensed inspector's top-to-bottom exam of the home's condition. Every report lists issues — the skill is sorting the expensive and unsafe from the cosmetic, then negotiating accordingly.
Inspection response: Your formal ask after inspection: repairs, credits, a price change — or acceptance as-is. This is a second negotiation, and it's where deals are saved or lost.
Appraisal: The lender's independent opinion of the home's value, protecting them from lending more than it's worth. If it comes in below your contract price, the gap has to be negotiated, paid, or walked from.
Appraisal gap: The difference when a home appraises below the agreed price. Buyers can cover it in cash, renegotiate, or exit via an appraisal contingency — decide which before you offer, not after.
Radon test: A common Indiana add-on inspection for a naturally occurring gas that accumulates in some homes. Mitigation systems are routine and effective; testing is cheap insurance.
Seller's disclosure: Indiana sellers complete a form disclosing known property conditions. Read it closely — it tells you where to point the inspector.
Final walk-through: Your last look at the home right before closing, confirming its condition and any agreed repairs. Not a second inspection — a verification.

Closing

Closing costs: The transaction's fees beyond the price — lender charges, title work, recording, prorations. Buyers and sellers each have their own set; your side gets itemized before closing day.
Closing Disclosure (CD): The final, official statement of your loan terms and cash to close, delivered at least three business days before closing. Compare it against what you were quoted and ask about anything that moved.
Clear to close: The lender's underwriting is finished and the loan is approved for funding. It's the green light that turns a scheduled closing date into a real one.
Title & title search: Title is the legal ownership of the property; the search confirms the seller can actually transfer it free of surprises like liens or unresolved claims.
Title insurance: A one-time policy protecting against ownership problems the search didn't surface. Lenders require their policy; an owner's policy protects you — usually worth it.
Deed: The document that actually transfers ownership, signed at closing and recorded with the county. Recording is the moment it's officially yours.
Tax proration: Because Indiana property taxes are paid in arrears, sellers typically credit buyers at closing for taxes accrued while they still owned the home. It's a normal line on the settlement statement, not a penalty.
Settlement statement: The line-by-line accounting of where every dollar in the transaction goes — the document version of the net sheet we build with sellers up front.
Possession: When you actually get the keys — often at closing, but sometimes negotiated days later. Put the date in the contract, not in a handshake.

Investor terms

Cash flow: What's left of the rent after every expense — mortgage, taxes, insurance, maintenance, vacancy. Bloomington's price-to-rent math makes strong cash flow rare here; we'll tell you that on the first call.
ARV (after-repair value): What a property should be worth after renovation — the number a flip lives or dies on. Built from comps of finished homes, not wishful thinking.
Cap rate: A property's annual net operating income divided by its price — a quick way to compare rentals before financing enters the picture. Useful shorthand; never the whole story.
Net operating income (NOI): Rental income minus operating expenses (taxes, insurance, maintenance, management) — before the mortgage. The honest starting point for any rental analysis.
House hacking: Living in part of a property while renting the rest — a duplex half, or spare rooms. Around IU, the parent-owned version (student lives in it, roommates offset the cost) is the most common flavor.
1031 exchange: A tax-deferred swap of one investment property for another under strict IRS timelines. Powerful, unforgiving of missed deadlines — get the tax professional involved before you list, not after.
Vacancy allowance: The percentage of the year you assume a rental sits empty. In a lease-cycle town like Bloomington, missing the IU calendar can turn a two-week vacancy into a fifty-week one — plan around it.

Hit a term we didn't cover?

Ask — explaining the why before the what is the whole way we work. And when you're ready to put the vocabulary to use, we'll walk the process with you step by step.

How buying works