Real Estate Terms Every Home Buyer Should Know
Buying a home involves a lot of moving parts, and even more unfamiliar terms. Understanding the language used in real estate can help you make better decisions, spot red flags early, and feel more confident throughout the process.
Below is a list of general terms every home buyer should know before jumping into the market.
Core Real Estate Terms
Pre-Approval
A written statement from a lender that shows how much you’re approved to borrow based on income, credit, and financial info. Often required before making an offer.
Down Payment
The amount of money you pay upfront toward the purchase price of the home. Typically ranges from 5% to 20% depending on your loan type.
Escrow
A neutral third party that holds funds and documents during the transaction to ensure both buyer and seller meet their obligations.
Appraisal
An evaluation of a property's market value performed by a licensed appraiser, typically ordered by the lender to make sure the price supports the loan amount.
Closing Costs
Fees and expenses paid at settlement, including lender fees, title insurance, legal services, transfer taxes, and more. Often 2% to 5% of the purchase price.
Earnest Money Deposit (EMD)
A good-faith deposit submitted with your offer to show you’re serious. Applied toward your down payment or closing costs at settlement.
Contingency
A clause in the contract that allows you to back out under specific conditions — such as a failed home inspection, financing issues, or an appraisal shortfall.
Title Search
A legal check of the property’s history to confirm the seller has the right to transfer ownership and there are no liens or claims against it.
Inspection Period
A set number of days where the buyer can perform inspections and request repairs or credits. This is your opportunity to fully evaluate the home.
Buyer’s Agent
A real estate agent who represents the buyer’s interests in the transaction, negotiates on your behalf, and helps guide you through every step of the process.
Offer & Contract
Once you make an offer and the seller accepts, you enter into a binding purchase agreement that outlines price, terms, contingencies, and timelines.
Closing
The final step in the home-buying process where all documents are signed, funds are transferred, and you get the keys to your new home.
LBI Home Buyer Terms You Should Know
Buying a home on Long Beach Island involves unique considerations like flood zones, elevation certificates, rental licenses, and more. Whether you're a first-time buyer or an investor, knowing the terms commonly used in the local market can help you make smarter, more confident decisions.
Below is a breakdown of the most important real estate and LBI-specific terms to know before buying.
Key Terms for LBI Buyers
Elevated Construction
Homes built on pilings or piers to meet flood zone regulations. Often required in V zones and parts of the AE zone to reduce flood risk and insurance costs.
BFE (Base Flood Elevation)
The minimum elevation a home must be built above sea level in flood-prone areas. Determined by FEMA and varies block by block on LBI.
FEMA Flood Zones
Designations like AE, VE, and X that define the flood risk in a specific location. These zones impact insurance rates, building requirements, and future appreciation.
Flood Elevation Certificate
A document prepared by a surveyor that shows the elevation of your home relative to BFE. Required by insurance companies and helpful for understanding your risk.
Rental License
A permit required to rent out your home on a short-term basis. Each town on LBI has its own application process, fees, and inspection requirements.
Turnover Day
Typically Saturday during peak summer. The day rental guests check out and new guests check in — key to scheduling cleaners and maintenance.
Lot Size and Frontage
Lot dimensions directly affect rebuild potential, setback requirements, and home design. On LBI, even small variances in lot size can impact value.
Bulkhead
A retaining wall on bayfront or lagoon lots to prevent erosion. The material (vinyl, pressure-treated, or creosote) and condition can impact value and insurance.
Mansion Tax
A one percent state tax applied to properties sold for $1 million or more. Some changes have been proposed — check current status if you're in this price range.
The REAL Initiative
A recent state proposal that could change elevation requirements, insurance costs, and environmental protections. Still evolving but important to watch.
1031 Exchange
A tax-deferral strategy some sellers use when trading investment properties. Occasionally presents off-market opportunities for buyers.
Need Help Navigating These Terms?
Whether you're actively house hunting or just starting to explore LBI, understanding the language of coastal real estate gives you an edge.
Have questions about a term you saw in a listing or inspection report?
Reach out and I’ll walk you through it.