Real Estate Glossary

Plain-English definitions for terms that actually come up buying or selling in Seattle and on the Eastside, not a copy of a generic national glossary. Where a term has Washington-specific nuance, that's noted; legal, lending, title and tax wording stays general and educational.

A

ADU (Accessory Dwelling Unit): A secondary, smaller residence on the same lot as a primary home, such as a basement apartment or a backyard cottage. Washington state law has made ADUs easier to build in many cities in recent years, though specific size, parking and permit rules still vary by city.
Appraisal: An independent opinion of a property's value, prepared by a licensed appraiser, usually required by a lender before approving a mortgage.
Appraisal gap: The difference between an accepted offer price and a lower appraised value. Buyer and seller have to negotiate who covers the gap, or the deal can fall through if a financing or appraisal contingency applies.
Assessed value: The value a county assessor assigns to a property for property-tax purposes. It's calculated differently than market value and often doesn't match what a property would actually sell for.

B

Buyer brokerage agreement: A written agreement between a buyer and their real estate broker setting out the broker's duties and compensation. In Washington, buyers typically sign this before touring homes with a broker.

C

Closing costs: Fees and expenses, beyond the purchase price, paid at closing by the buyer and/or seller: lender fees, title insurance, escrow fees, recording fees and prorated taxes among them.
Comparative Market Analysis (CMA): A broker's analysis of recent comparable sales, used to help price a listing or evaluate an offer. It's informal and relies on professional judgment, unlike a formal appraisal.
Contingency: A condition written into a purchase contract that must be satisfied for the deal to move forward, such as inspection, financing or appraisal. If a contingency isn't met, the buyer typically has the right to renegotiate or cancel.
Conventional loan: A mortgage not insured or guaranteed by a government agency (unlike FHA or VA loans), generally requiring stronger credit and a larger down payment.

D

Days on Market (DOM): How long a listing has been actively for sale. Cumulative days on market across relistings or a relaunch often tells you more than the current listing period alone.
Due diligence: The buyer's process of investigating a property, its condition, disclosures and other material facts before removing contingencies or closing.

E

Earnest money: A deposit submitted with an offer to show good faith. It's credited toward the purchase at closing if the deal proceeds, and is refundable or forfeitable depending on the contract's contingencies.
Easement: A legal right for someone other than the property owner to use a defined part of the property for a specific purpose, such as a utility line or a shared driveway.
Encroachment: When a structure or improvement, like a fence, shed or eave, crosses onto a neighboring property, a setback, or an easement area.
Equity: The difference between a property's market value and what's still owed against it.
Escalation clause: A clause in an offer that automatically increases the offer price, up to a stated maximum, if a competing offer comes in. Common in competitive Puget Sound markets, but it reveals the buyer's ceiling, which has real tradeoffs.

F

FHA loan: A mortgage insured by the Federal Housing Administration, typically allowing a lower down payment and more flexible credit requirements than a conventional loan.
Financing contingency: A contract condition allowing the buyer to cancel and recover their earnest money if they can't secure financing on the agreed terms within a specified period.

H

Home inspection: A licensed inspector's visual, non-invasive evaluation of a home's condition and major systems, performed for the buyer's information. It's not a warranty and not a code-compliance review.

I

Inspection contingency: A contract condition giving the buyer the right to inspect the property and negotiate repairs, a credit, or withdraw, within a set window after the offer is accepted.

J

Jumbo loan: A mortgage that exceeds the conforming loan limit set for the area. Conforming limits are notably higher in King County than in much of the country, so a loan that would be "jumbo" elsewhere may not be here.

L

Listing broker: The real estate broker representing the seller, responsible for marketing the property, managing the listing and negotiating on the seller's behalf.
Loan-to-value (LTV): The loan amount as a percentage of the property's value or purchase price. Lenders use it to assess risk; a lower LTV generally means a larger down payment.

N

NWMLS: Northwest Multiple Listing Service, the regional multiple listing service most Seattle-area and Puget Sound brokers use to list properties and share listing data with each other.

P

Pending: A listing status meaning the seller has accepted an offer and the transaction is moving toward closing. It isn't final; financing, inspection or other contingencies can still affect the outcome.
Points: Also called discount points: fees paid at closing to reduce a loan's interest rate, each point generally equal to 1% of the loan amount.
Preapproval: A lender's conditional estimate of how much a buyer can likely borrow, based on a review of their financial documentation. Stronger than a prequalification, but still not a final loan commitment.
Preinspection: A home inspection the seller commissions before listing, to understand and disclose condition issues proactively. Common in competitive markets where buyers may waive their own inspection contingency.
Property disclosure (Form 17): Washington's statutory seller disclosure statement, commonly called "Form 17" in local practice, where a seller discloses known material facts about a property's condition.

R

Rate buydown: Paying additional cost upfront, as points or a seller concession, to temporarily or permanently reduce a mortgage's interest rate and lower the monthly payment.

S

Seller concession: Money or credit a seller agrees to contribute toward a buyer's closing costs or a rate buydown, usually negotiated as part of the offer.
Sewer scope: A camera inspection of a home's sewer line, commonly recommended for older homes, to check for cracks, root intrusion or other issues a standard inspection can't see.

T

Title: Legal ownership of a property, along with the history and documentation establishing who holds the rights to it.
Title insurance: An insurance policy protecting a buyer or lender against claims or defects in a property's title that existed before purchase, such as an unresolved lien or an ownership dispute.

U

Underwriting: A lender's process of verifying a borrower's financial information and the property's value before making a final decision on approving a mortgage.

V

VA loan: A mortgage guaranteed by the U.S. Department of Veterans Affairs for eligible veterans, service members and some surviving spouses, often allowing no down payment.

W

Waterfront rights: The rights and restrictions associated with owning property on or near a shoreline. These are property-specific and subject to state and local shoreline regulations worth confirming directly, not assumed from the address alone.

Z

Zoning: Local rules, set by the city or county, that govern how a specific property can be used and what can be built on it: use type, setbacks, height limits and similar restrictions.

Have a term you'd like explained, or a question about how one applies to your situation? Ask Will.