Buying a home in Beverly Hills or anywhere else is exciting, but it can also feel overwhelming, especially if you’re not familiar with the language used in real estate. From “escrow” to “appraisal,” there are dozens of terms that can make even experienced buyers pause.
Whether you’re buying your first luxury property or investing in a second home, understanding key real estate terms will help you make confident and informed decisions. A Realtor in Beverly Hills can guide you through the process, but it’s still important to know what these words mean.
Let’s explore the most important real estate terms every buyer should know explained in plain, simple English.
1. Pre-Approval and Pre-Qualification
Before you start house hunting, you’ll often hear about “pre-approval” or “pre-qualification.” While they sound similar, they’re not the same.
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Pre-qualification is an early estimate from a lender about how much you might be able to borrow, based on basic information like your income and credit score.
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Pre-approval goes deeper, it involves verifying your financial documents, such as pay stubs and bank statements.
A pre-approval letter shows sellers that you’re a serious buyer and already have financing lined up, giving you an edge in competitive markets like Beverly Hills real estate.
2. Listing Agent and Buyer’s Agent
In every transaction, there are typically two sides:
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The listing agent represents the seller and markets the property.
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The buyer’s agent represents you, the buyer, helping you find and negotiate the best deal.
A Real Estate Agent in Beverly Hills works in your best interest they help you evaluate property values, navigate contracts, and handle negotiations with professionalism and local market expertise.
3. MLS (Multiple Listing Service)
The MLS is a database where real estate professionals list available properties for sale. When your Realtor searches for homes that fit your preferences — price, size, location, and features they use the MLS to find up-to-date information.
This system ensures that both buyers and sellers have access to accurate, real-time data about available properties in the area.
4. Contingency
A contingency is a condition that must be met before a real estate transaction can move forward.
Common contingencies include:
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Financing contingency: Ensures the buyer secures a loan.
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Inspection contingency: Allows buyers to back out or renegotiate if the home inspection reveals major issues.
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Appraisal contingency: Protects the buyer if the property’s appraised value is less than the purchase price.
Contingencies protect both sides and make sure that no one is locked into a deal until all key conditions are satisfied.
Read More: How to Find a Good Realtor in Beverly Hills?
5. Escrow
When you make an offer on a home, your deposit doesn’t go directly to the seller it goes into escrow.
Escrow is a neutral third-party account that holds money, property deeds, and important documents until all parts of the sale are completed. Once all terms are met such as inspections, loan approval, and title transfer, the escrow agent releases the funds, and the property officially changes hands.
In competitive markets like Beverly Hills, escrow helps ensure a smooth and secure transaction.
6. Appraisal
An appraisal is a professional estimate of a home’s value, usually required by lenders before they approve your mortgage.
The appraiser considers factors like:
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Location and neighborhood quality
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Recent sales of similar homes (called “comps”)
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Property size, condition, and upgrades
Appraisals are important because they confirm that you’re not overpaying for the home and that the lender isn’t financing more than the property is worth.
7. Earnest Money Deposit
When you make an offer on a home, you’ll typically include an earnest money deposit, also known as a “good faith deposit.”
This deposit usually 1% to 3% of the purchase price shows the seller that you’re serious about buying. The money is held in escrow and applied to your down payment or closing costs once the sale is finalized.
If you back out of the deal for a valid reason covered by a contingency, you can usually get this money back.
8. Closing Costs
Closing costs are the fees and expenses you pay at the end of a real estate transaction. These can include:
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Title insurance
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Appraisal fees
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Loan origination fees
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Recording fees
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Escrow fees
In Beverly Hills, closing costs typically range between 2% to 5% of the home’s purchase price. A good Real Estate Agent in Beverly Hills will review all these costs with you before closing day so there are no surprises.
9. Title and Title Insurance
A title is the legal right to own a property. Before a home is sold, a title company will perform a title search to make sure there are no liens, disputes, or ownership issues.
Title insurance protects both buyers and lenders from future claims against the property such as someone else saying they have a right to it. It’s a one-time cost paid during closing that provides long-term protection.
10. Home Inspection
A home inspection is one of the most critical steps in buying a home. A professional inspector examines the property’s condition including the roof, plumbing, electrical systems, foundation, and HVAC to identify potential issues.
Even in luxury real estate markets like Beverly Hills, inspections are crucial. They ensure that your investment is sound and can sometimes be used to negotiate repairs or price adjustments before finalizing the deal.
Read More: How Much Do Realtors Charge to Find a Rental?
11. Offer and Counteroffer
When you find the perfect home, your Realtor will help you submit an offer a formal proposal that includes your price and terms.
The seller may:
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Accept your offer,
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Reject it, or
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Submit a counteroffer with different terms (such as a higher price or shorter closing time).
This back-and-forth process continues until both parties agree. Working with an experienced Realtor in Beverly Hills is essential they understand local property values and can negotiate effectively on your behalf.
12. Appraised Value vs Market Value
These two terms are often confused but mean different things:
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Appraised Value: Determined by a licensed appraiser, primarily for lending purposes.
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Market Value: What buyers are actually willing to pay based on current market demand and comparable sales.
In competitive areas like Beverly Hills, the market value of a property can often be higher than its appraised value, especially for luxury homes or unique properties with special features.
13. Down Payment
The down payment is the amount you pay upfront when purchasing a home. For most buyers, it ranges from 3% to 20% of the home’s purchase price.
In high-value markets such as Beverly Hills, larger down payments are common, especially for luxury homes or when competing with other buyers. A higher down payment can also lower your monthly mortgage payments and make your offer more attractive to sellers.
14. HOA (Homeowners Association)
If you’re buying a property in a gated community, condominium, or planned neighborhood, you may encounter an HOA.
An HOA is an organization that manages the community and ensures rules are followed regarding property appearance, maintenance, and shared amenities. Homeowners pay monthly or annual HOA fees, which cover costs like landscaping, pool maintenance, and repairs to common areas.
15. Contingent and Pending Status
When browsing listings with your Realtor in Beverly Hills, you might see homes labeled as “contingent” or “pending.”
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Contingent: The seller has accepted an offer, but certain conditions (like inspection or financing) still need to be met.
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Pending: All contingencies have been satisfied, and the deal is almost ready to close.
Knowing the difference helps you understand whether a property might still be available for offers.
16. Equity
Equity is the difference between your home’s current market value and the amount you still owe on your mortgage.
For example, if your home is worth $1,000,000 and your remaining loan balance is $600,000, you have $400,000 in equity.
Building equity over time allows you to refinance, borrow against your home, or profit when selling it later.
Read more: How to Sell Your House Without a Realtor in Beverly Hills
17. Fixed-Rate vs Adjustable-Rate Mortgage
When getting a loan, you’ll choose between two main mortgage types:
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Fixed-Rate Mortgage: The interest rate stays the same throughout the loan term, making monthly payments predictable.
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Adjustable-Rate Mortgage (ARM): The interest rate can change periodically, which may result in lower initial payments but possible increases later.
A knowledgeable Real Estate Agent in Beverly Hills can connect you with trusted lenders who’ll help you decide which option best fits your financial goals.
18. Closing Day
Closing Day is the final step in the home-buying process when ownership officially transfers to you.
You’ll review and sign all the final documents, pay closing costs, and receive the keys to your new home. Your Realtor will be by your side to ensure everything runs smoothly and all details are handled correctly.
Empowering Your Home-Buying Journey
Understanding real estate terms can make the buying process far less intimidating. When you know what each term means, you can communicate better with your Realtor near me, ask informed questions, and make smart decisions that protect your investment.
Whether it’s understanding contingencies, navigating escrow, or negotiating offers, being familiar with these terms gives you confidence at every stage of your real estate journey. For expert guidance and personalized service, connect with Sharlot Arabshahi, your trusted Realtor in Beverly Hills, who’s dedicated to helping you find the perfect home with clarity and confidence
