The amount of real estate language, especially when coupled with Realtor slang and abbreviations, can be astounding! COE, close, on record – they all mean basically the same thing, and consistent with the English language there are many variations of the same real estate terms, so we put together a list of some terms to understand going into a home purchase. 


An appraisal is commonly mistaken for a Realtor’s opinion of value. It is not – it’s an appraiser’s opinion of value. A Realtor and an appraiser may agree or disagree, and value is subjective.

An appraisal is required when you get a mortgage. A licensed appraiser visits the property and gives their opinion of value to the bank. If the appraisal comes in low, you might consider re-negotiating the contract. If it comes in at purchase price, that’s great news. If it comes in higher than you are paying, fantastic news! 

Contingent vs. Pending

When your agent sets up a listing alert for you, it may include contingent and pending properties as well as sales. You might be thinking, “why would they send me properties that aren’t available?” Seeing what is selling and going into contract helps educate you on what’s happening in neighborhoods you’re interested in. It’s great information! If your agent has you on a MLS listing alert, you’ll likely see properties listed as Active, Contingent, Pending, and Sold. If you go on Zillow, Redfin, or Realtor, the Contingent and Pending properties might be listed as simply “Pending,” “Contingent,” or “Under Contract.” MLS is more specific by separating Contingent and Pending into separate categories, and this is great info for you as a buyer because they are different! Contingent means the house is in contract with a buyer, but the buyer hasn’t removed contingencies. We’ll talk about this further below, but it means that transaction is still in the midst of inspections and potential negotiations. The likelihood of that contract falling through is greater than that of a pending sale. When you see a property listed as a Pending sale on MLS, it usually means the buyer has removed contingencies and they are preparing to close escrow and transfer ownership. 

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Closing Costs

Closing costs are what a buyer and seller will pay in order to close escrow. As a buyer, when you get into contract on a property, you should request a buyer settlement statement from the title company holding escrow. This statement will walk you through all of the closing costs with the exception of lender fees. Request a sheet from your lender breaking down the loan costs and review this with the settlement statement to get a full scope of your closing costs. Many first time buyers forget that you don’t just need the down payment, you need enough money for closing costs as well! A few examples of closing costs include title and escrow fees, prorated taxes and insurance, lender fees, and sometimes impound accounts if you’re putting down less than 20%. 

Due Diligence

Due diligence is a buyer’s discovery process during escrow to find out information on the property. Some listings are presented with inspections up front, others are not. That depends on the listing strategy between the seller and listing agent. If a seller has some inspections presented in the marketing, a buyer can always conduct their own inspections with their own vendors. Due diligence also includes reading through disclosures and asking questions. This is the time to be thorough!


Contingencies are a buyer’s right to cancel the transaction and receive back their initial deposit as long as they are still acting in good faith and within their allotted time frame by contract. If you’re getting a loan, you should have an appraisal contingency, which would protect you from buying the house if the house doesn’t appraise. You should have a financing contingency, which protects you in the event you can’t secure financing for the home. You should have a physical contingency which gives you a certain amount of days(usually 17 in our market) to conduct inspections and negotiate if necessary. There may be other contingencies you write in the offer that may be particular to your situation. For example, you might have a contingency to sell a property in order to buy. 


When you enter escrow you start your inspection period usually the day after acceptance. Standard in our area is 17 calendar days. Your agent should have local contacts for inspectors. Good to start with a home inspection, pest inspection, and potentially a roof inspection and evaluate from there if additional inspections are needed. Properties on septic should have the septic system inspected as well. 

Initial Deposit vs. Down Payment

One common misconception is that the initial deposit is not the down payment and vice versa. The initial deposit is a deposit made into the escrow account, usually 3% of the purchase price and within 3 business days of acceptance. Funding the down payment will consist of the remaining balance of your down payment after subtracting the 3% deposit. 


This is a very complex term in real estate, and is used in the real estate industry in several ways. A good summary is available here


Appreciation in real estate refers to properties or neighborhoods going up in value. When buyers look for a home, they want to know which neighborhoods have been appreciating or show signs of future appreciation. Zillow has great data that shows neighborhood value graphs over time showing whether a neighborhood has been appreciation or depreciating, as well as projected value increases or decreases for both individual properties and neighborhoods. While I don’t believe Zillow is accurate all the time particularly for individual properties, I like to use the charts to keep up on general neighborhood trends. 

Impound Accounts

Impound accounts are used when a buyer is putting less than 20% down. It is used to collect real estate taxes and insurance. In Monterey County, real estate taxes are collected biannually in November and April, so without impound accounts, a homeowner would pay those taxes on their own and have to budget for them accordingly. Impound accounts can be an effective tool to be sure you are budgeting appropriately for those expenses. 


These are just a few of the many important real estate terms involved in the buying process. What questions do you have about real estate? Connect with us any time here