Real Estate Terms Everyone Uses But May Not Understand

Real estate has its own language. And half the time, nobody stops to explain what any of it actually means. You just nod along and Google it later.

This is that Google search. Here are the terms that come up constantly — and what they actually mean in plain English.

Earnest Money

This is the deposit you put down when you go under contract on a home. Think of it as your way of saying “I’m serious.” In Summit County, earnest money is typically 1–3% of the purchase price.

The important thing to know: earnest money is not automatically non-refundable. Whether you get it back depends on the contingencies in your contract and when you walk away. If you walk away within your inspection or financing deadlines, you generally get it back. If you just change your mind after those windows close, you probably don’t.

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Contingency

A contingency is a condition that has to be met for the deal to move forward. If it isn’t met, you can back out without losing your earnest money (usually).

Common contingencies in Colorado:

• Inspection contingency — you have a window to review the inspection report and object, negotiate, or walk away
• Financing contingency — if your loan falls through, you can exit
• Appraisal contingency — if the home appraises below the purchase price and the seller won’t budge, you can walk

Sellers don’t love contingencies. In competitive markets, buyers sometimes waive them. That’s a risk — talk to your agent before doing it.

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Inspection Objection vs. Inspection Resolution

These are two separate deadlines in the Colorado contract and they work together.

• Inspection Objection is the deadline by which you have to raise any concerns from the inspection. If you miss it, you’ve accepted the property in its current condition.
• Inspection Resolution is the deadline by which you and the seller have to come to an agreement on those concerns. If you can’t resolve it, you can terminate.

Submitting an objection doesn’t mean the seller has to fix anything. It just opens the door to negotiation.

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Closing Costs

The purchase price is not the only thing you pay at closing. Closing costs are the additional fees and expenses that come due when the transaction finalizes.

They typically include: title insurance, lender fees, recording fees, prepaid property taxes and insurance, and HOA transfer fees if applicable. Buyers in Colorado can generally expect closing costs of 2–5% of the purchase price on top of their down payment.

Yes, they add up. No, they are not optional. Budget for them early.

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Escrow

Escrow is a neutral third party that holds money and documents during the transaction. When you wire your down payment and closing costs, they go into escrow — not directly to the seller. The title company or closing attorney handles this.

Escrow protects everyone. The seller knows funds are secured before transferring the deed. The buyer knows the deed won’t transfer before funds are confirmed.

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Title Insurance

Title insurance protects you against problems with the property’s ownership history. Things like a previous owner who didn’t fully pay off a lien, a boundary dispute, or an error in public records.

There are two types: lender’s title insurance (usually required by your lender) and owner’s title insurance (optional but strongly recommended). In Colorado, the seller typically pays for owner’s title insurance. It’s a one-time premium at closing that covers you for as long as you own the home.

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Pre-Approval vs. Pre-Qualification

Pre-qualification is a quick estimate based on what you tell a lender about your income, debts, and assets. It takes maybe 15 minutes and doesn’t involve verifying anything. It’s a starting point, not a commitment.

Pre-approval involves actually submitting documentation — pay stubs, tax returns, bank statements — and the lender reviews and verifies your finances. It carries a lot more weight.

In a competitive market like Summit County, sellers take pre-approval seriously. Pre-qualification alone may not be enough to get your offer to the top of the pile.

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Section 29 — Buyer’s Brokerage Compensation

This is the section of the Colorado contract to buy and sell where buyer’s agent compensation gets negotiated. Since August 2024, compensation is no longer advertised in the MLS — it’s handled in the contract.

What this means for you: the buyer’s agent fee is something you and your agent agree to upfront, and it gets addressed in the offer. In most cases, sellers are still covering it. But it’s negotiated, not assumed.

This is why you sign a buyer agency agreement before touring homes now. It spells out what your agent charges and how it gets paid.

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HOA — And What It Actually Means Here

HOA stands for Homeowners Association. In Summit County, nearly every condo and many townhome developments have one.

Your HOA dues cover things like exterior maintenance, snow removal, common area upkeep, trash, water/sewer, and sometimes heat or cable depending on the building. In mountain communities, those services are not optional — they’re how the building functions.

Before you buy into an HOA, review the financials. Look at the reserve fund. Find out if there are any pending special assessments (a one-time fee charged to all owners for a major repair or project). A low HOA payment with a depleted reserve fund is not a bargain.

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Non-Warrantable Condo — The Mountain-Specific One

This is the term that catches a lot of Summit County buyers off guard, so pay attention.

A non-warrantable condo is a unit in a building that doesn’t meet the guidelines for conventional financing (Fannie Mae/Freddie Mac). That means most lenders won’t offer you a standard mortgage on it.

A building can be classified as non-warrantable for several reasons:

• More than 50% of units are used as short-term rentals
• A single entity owns more than 10% of the units
• The HOA is in litigation
• The project is less than 90% sold

Why does this matter in Summit County? Because a huge percentage of our condos — especially in resort areas like Keystone, Dillon, and parts of Breckenridge — are STR-heavy buildings. Many are non-warrantable.

This doesn’t mean you can’t buy them. It means your financing options are different. You’d be looking at portfolio loans, DSCR loans, or other non-conventional products — which often come with higher interest rates and different down payment requirements.

If you’re shopping condos here, ask your lender early: is this building warrantable? It will change your numbers and your options.

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Short-Term Rental (STR) Zoning

In Summit County, not every property can be legally rented on Airbnb or VRBO — even if the previous owner was doing it.

STR licensing is done by the county and municipalities, and the rules vary by town. Some zones allow it. Some don’t. Some require a local contact. Some have caps on the number of licenses issued.

If rental income is part of your purchase decision, verify that the specific unit you’re buying is eligible for an STR license before you go under contract. Don’t assume. Ask, and ask in writing.

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Days on Market (DOM)

This is exactly what it sounds like — the number of days a property has been listed. But there’s a catch.

If a listing expires and relists, the DOM counter may reset. So a home that’s technically been on the market for 200 days might show 30 DOM because it relisted. Your agent can pull the full history.

Days on market is useful context. A home that’s been sitting for a long time usually has a story. Sometimes it’s price. Sometimes it’s condition. Sometimes it’s something else entirely. Worth asking.

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Real estate has a lot of vocabulary, and the people in it throw it around like everyone already knows what it means. You don’t have to know all of it before you start — that’s what your agent is for. But walking in with this foundation will make every conversation a lot clearer.

Questions about any of these? I’m always happy to talk through what they mean for your specific situation.

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FAQ

What is the most important term to understand as a first-time buyer?
Contingency. Understanding what your contingencies are and what your deadlines mean is the most critical piece of your contract. Miss a deadline and you could lose your earnest money or lose your ability to walk away.

What is a non-warrantable condo and why does it matter in Summit County?
A non-warrantable condo is one that doesn’t qualify for conventional financing — often because too many units are used as short-term rentals. Many Summit County condos fall into this category, which means you’ll need to use a specialized loan product. It doesn’t mean you can’t buy it, but your financing options and rates will look different.

Do I need to pay my buyer’s agent out of pocket?
Not necessarily. In most Summit County transactions, the seller is still covering the buyer’s agent fee through Section 29 of the contract. But this is negotiated, not guaranteed — which is why you discuss it with your agent before touring homes.