Published On: July 18, 2025|Categories: Real Estate|

Buying or selling a home is one of the biggest financial moves you’ll ever make—so it helps to understand the terms being used. From the moment you hire a REALTOR® to the day you close, you’ll hear a lot of real estate-specific language that can get confusing fast. Whether you’re moving to Jasper, relocating from Evansville, or buying your first home in Dubois County, this guide will help you speak the language of real estate like a pro.

This guide explains the following:

Key terms buyers need to know
Important terms for home sellers
Contract and offer-related terms
Financial and mortgage terms
Closing terms you’ll hear at the finish line

Here’s a closer look at each.

Key Terms Buyers Need to Know

Pre-approval
A letter from a lender stating how much they’re willing to lend you based on your income, credit, and debts. Sellers often require a pre-approval letter with your offer to show you’re financially ready.

Down payment
The portion of the home’s purchase price you pay upfront. In most cases, this is 3%–20% of the price, depending on your loan.

Earnest money
A good-faith deposit made when your offer is accepted. It shows you’re serious about buying. It’s usually held in escrow and applied to your closing costs or down payment later.

Contingency
A condition in the contract that must be met for the sale to go through. Common contingencies include financing, home inspections, and appraisals.

Inspection
A detailed review of the home by a licensed inspector, checking for issues like roof damage, plumbing leaks, or faulty wiring. You can negotiate repairs or back out of the deal if big problems are found.

Important Terms for Home Sellers

Listing agreement
The contract you sign with your REALTOR that gives them permission to market and sell your home. It outlines commission, marketing strategy, and more.

Listing price
The price your home is listed for on the market. This isn’t always the final sale price—it’s the starting point for negotiations.

Showing
A scheduled time when potential buyers visit your home. These can be private showings or open houses.

Disclosure
As a seller, you’re required to disclose known issues with the property. This includes structural problems, past water damage, or anything else that could affect the home’s value or safety.

Seller concessions
An agreement where the seller pays for certain buyer expenses—like closing costs or repairs—as part of the deal. This can help attract buyers or keep a deal from falling through.

Contract and Offer-Related Terms

Purchase agreement
The written contract between buyer and seller. It includes the purchase price, closing date, contingencies, and any other negotiated terms.

Counteroffer
If a buyer or seller doesn’t accept the initial offer, they can propose changes. This is a counteroffer—and it’s common to go back and forth a few times before both parties agree.

Appraisal
An evaluation ordered by the lender to determine the home’s value. If the appraisal comes in lower than the offer price, you may need to renegotiate or bring extra cash to the table.

Home warranty
A service plan that covers repairs or replacements for appliances and systems in the home, like HVAC or plumbing. Sellers sometimes offer this as an incentive.

Option period (rare in Indiana)
In some states, this is a short time where the buyer can back out without penalty. While not common in Indiana, your REALTOR can explain if anything similar applies in your deal.

Financial and Mortgage Terms

Escrow
An account where money is held by a third party (often the title company) during the transaction. After closing, lenders use escrow accounts to pay property taxes and insurance on your behalf.

Principal
The original amount of money borrowed to buy the home. This is separate from interest, which is the cost of borrowing.

Interest rate
The cost of borrowing money from the lender, expressed as a percentage. Lower interest rates typically mean lower monthly payments.

Private Mortgage Insurance (PMI)
If your down payment is less than 20%, your lender might require PMI. It protects them in case you default on your loan.

Debt-to-income ratio (DTI)
A measure of how much of your income goes toward debt each month. Lenders use this to determine how much house you can afford.

You can explore more mortgage and financial terms with resources from IN.gov, especially if you’re a first-time homebuyer in Indiana.

Closing Terms You’ll Hear at the Finish Line

Closing disclosure
A document that outlines all your final loan terms, monthly payment, and closing costs. Buyers receive this at least three days before closing.

Closing costs
Fees and charges due at closing. These include lender fees, title insurance, taxes, and more. Buyers in Indiana typically pay 2%–5% of the home’s price in closing costs.

Title search
A review of public records to make sure the seller has the legal right to sell the home—and that there are no liens or disputes.

Deed
The legal document that transfers ownership from the seller to the buyer. Once signed and recorded, the buyer officially owns the property.

Settlement or closing
The final step where all documents are signed, funds are transferred, and the keys are handed over. This usually takes place at a title company or attorney’s office.

FAQ About Real Estate Terms for Buyers and Sellers

Check out these commonly asked questions about real estate terminology. If you don’t see your question here, please call our office and we’ll find you the answers you need.

What’s the Difference Between a REALTOR® and a Real Estate Agent?

A REALTOR® is a licensed real estate agent who is also a member of the National Association of REALTORS®. All REALTORS follow a strict code of ethics, but not all agents are REALTORS.

What Is the Difference Between Pre-Approval and Pre-Qualification?

Pre-qualification is an estimate based on your income and credit. Pre-approval is more in-depth and shows sellers that a lender has reviewed your finances and is ready to lend.

What Does “Under Contract” Mean?

This means the seller has accepted an offer, but the sale hasn’t closed yet. The buyer is working through inspections, financing, and other conditions.

What Is a Contingency?

A contingency is a clause in the contract that allows the buyer to back out if certain conditions aren’t met—like if they can’t get financing or the home fails inspection.

Is Escrow the Same as a Down Payment?

No. Your down payment goes directly toward your loan, while escrow holds funds temporarily for taxes, insurance, or as part of the transaction process.

Learning the lingo helps you feel more confident during the homebuying or selling process. With a trusted REALTOR by your side and a solid understanding of key real estate terms, you can make smart, informed decisions—whether you’re moving to or from Dubois County or anywhere in southern Indiana.

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Are You Thinking of Buying a Home in Dubois County?

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