Today’s real estate market is one of the most competitive in recent memory. And in order to successfully purchase a home, buyers are having to be strategic and well-informed, and that includes understanding the real estate terminology that’s most relevant to this hot seller’s market.

So what, exactly, is that terminology?

recent article from realtor.com defined some of the most relevant, must-know real estate terms for aspiring homeowners looking to purchase a property in this market, including:

  • Appraisal contingency. In today’s market, in order to make their offers more appealing to sellers, many buyers are waiving their appraisal contingency—but before you decide to waive this contingency, it’s important to understand what it is. An appraisal contingency states that you’ll only purchase a home if it’s appraised at or above the sales price.
  • Best and final offer. Bidding wars are common in today’s market and, in an effort to avoid the time and hassle of a bidding war, many sellers ask buyers to submit their “best and final offer.” This just means that the sellers will only be reviewing one round of offers and will choose the most competitive offer from that batch. So, for buyers, it just means that you want to put your best foot forward and make the most competitive offer you’re willing to make.
  • Escalation clause. An escalation clause is a clause added to offers that outlines the highest amount you’re willing to pay for a property, and if there are any offers below that price, it will automatically up your offer in certain increments up until you hit your top price. (For example, you might have an escalation clause that says you’ll pay $1000 more than the highest verified offer up to $500,000.) For buyers in a competitive market, this can be a helpful way to beat out other offers without going over your budget.