Real Estate Terms Explained

Appraisal

An appraisal is a licensed appraiser's independent opinion of a home's market value, ordered by the lender to confirm the home is worth the amount being borrowed. In Hendricks County, appraisals typically take 7–14 days to return.

Earnest Money

Earnest money is a good-faith deposit a buyer submits with an accepted offer, usually 1%–2% of the purchase price in central Indiana. It is held in escrow and credited toward the buyer's closing costs or down payment.

Pre-Approval

A pre-approval is a lender's written commitment, based on verified income, assets and credit, stating how much you can borrow. Sellers in the Indianapolis suburbs generally will not consider an offer without one.

Contingency

A contingency is a condition in a purchase agreement that must be satisfied before closing, such as inspection, appraisal, financing or sale of the buyer's current home. Contingencies give you a defined way to exit a contract and keep your earnest money.

Closing Costs

Closing costs are the fees paid at settlement — lender charges, title insurance, recording fees, prorated taxes and escrow deposits. Indiana buyers typically pay 2%–4% of the purchase price; sellers pay commission plus their share of taxes.

Comparative Market Analysis (CMA)

A CMA is an agent's pricing analysis using recent nearby sales, active competition and expired listings to establish a realistic list price range for a specific home.

Days on Market (DOM)

Days on market counts how long a listing has been actively for sale. In Hendricks County, well-priced homes commonly go under contract in under three weeks; longer DOM usually signals a pricing or condition issue.

Escrow

Escrow is a neutral third-party account that holds funds and documents during a transaction. It can also refer to the monthly account a lender uses to pay your property taxes and homeowners insurance.

FSBO (For Sale By Owner)

FSBO (For Sale By Owner) means the owner is selling without listing agent representation. FSBO sellers are responsible for pricing, marketing, disclosures, negotiation and coordinating title and closing themselves.

IDX

IDX (Internet Data Exchange) is the framework that allows a brokerage website to display current MLS listings from participating brokerages, which is why you can search nearly every for-sale home here.

PMI (Private Mortgage Insurance)

PMI is insurance a conventional lender requires when a buyer puts down less than 20%. It typically costs 0.3%–1.5% of the loan annually and can be removed once you reach roughly 20% equity. VA loans never require PMI.

Title Insurance

Title insurance protects the buyer and lender against ownership claims, liens or recording errors discovered after closing. The owner's policy is a one-time premium paid at settlement.

VA Funding Fee

The VA funding fee is a one-time charge that sustains the VA loan program, generally 2.15% of the loan for a first-time use with no down payment. Veterans with a service-connected disability rating are usually exempt.

Homestead Exemption

Indiana's homestead standard deduction lowers the assessed value of your primary residence, reducing your property tax bill. File with the county auditor after closing on a new primary residence.

Working through the process now? Start with the buyer's guide, the seller's guide or first-time buyer programs.