Common real estate terms include "appraisal", which is valuing a property based on sales of similar properties, and "earnest money," "escrow" and "closing." Earnest money is a good-faith deposit to hold a property. Escrow refers to holding this deposit in trust prior to finalizing the sale, which is at closing.
Appraisals provide a basis for establishing a sales price or to justify a purchase price when applying for financing of a home purchase. Earnest money is usually a relatively small amount of money, which is forfeited if the buyer decides not to purchase for reasons beyond the agreed ones.
Funds or documents are in escrow until certain conditions are met. For example, earnest money is held in escrow by the real estate agent until a property inspection is completed and financing secured. Similarly, funds earmarked to pay a property's real estate taxes are held in escrow by a lender until they come due.
Closing, also known as settlement, is the meeting at which a sale of property is finalized, down payments made and sale documents signed. In some states, closing is the time at which the sale is legally recorded. Closing costs are costs associated with the sale of the property but independent of the agreed purchase price, such as the real estate agent's commission and title transfer costs.