Glossary of Cash Offer Terms

Advance: The cash paid to the seller at first close, usually expressed as a percentage of appraised value.
All-in fee: The total cost of a program as a percentage of home value, including service fee, commission, carry, and repair deductions.
Appraisal adjustment: A post-inspection reduction in appraised value, usually triggered by condition issues.
Appraised value: The valuation the program assigns to the home. Anchor for every downstream number. May be done by third-party appraiser, automated model, or hybrid.
AVM: Automated Valuation Model. Computer-generated home value estimate, often used as a first pass before human review.
Bridge: A short-term loan secured by the equity in a departing home, sized to fund a down payment on a new home.
Buyer concession: Credit given by the seller at closing to cover buyer repairs, closing costs, or rate buydowns. Reduces net proceeds.
Carry: Interest, holding costs, or rent charged on an advance or bridge during the period between first close and second close.
Cash Offer Plus: Product category where seller receives a cash advance at first close and a waterfall share of sale overage at second close.
Closing costs (seller): Title, transfer tax, HOA transfer fees, and seller-side escrow. Typically 1–2% of sale price.
Commission: Percentage paid to real estate agents on sale. Traditional total is 5–6%. Post-August 2024 NAR settlement, buyer-agent compensation is separately negotiated and no longer advertised on MLS; the 5–6% combined figure is still typical but increasingly variable.
Contingent offer: Offer on a new home whose closing depends on sale of the buyer's existing home. Weaker than a non-contingent offer.
Days on market (DOM): Number of days between listing and accepting an offer. Affects carry and reflects local market liquidity.
Days to close: Number of days between accepting an offer and closing. Programs commit to specific ranges (10–21 days typical).
Earnest money: Deposit made by buyer at contract signing, forfeited if buyer backs out without cause.
First close: Initial closing where the program pays the seller the advance and takes title or a lien.
Home prep: Paint, cleaning, staging, landscaping, and minor repairs done to prepare a home for listing. Range: $3k–15k typical.
iBuyer: Program that buys the home outright at a below-market price and resells it at a margin. Seller has no share in eventual sale price.
Line of credit: Flexible loan facility tied to a percentage of departing-home equity. Structure used in some bridge products.
Listing commission: Portion of commission going to the listing agent (seller's representative). Typically 2.5–3%.
Margin: Program's expected profit on a transaction. For iBuyers, typically 4–7% of sale price.
Net proceeds: Dollars remaining to the seller after all fees, deductions, commissions, carry, and repair credits.
Overage: Amount by which sale price exceeds appraised value. Definition varies by PSA; some programs net deductions before calculating.
Partner agent: Licensed real estate agent affiliated with a cash offer program's referral network, often required for retail-leg listing.
Power buyer: Program category combining a cash offer on the buyer side with bridge financing against the departing home. Homeward is a current example. Knock's original Home Swap is more accurately classified as trade-up / buy-before-sell and now operates as Knock Bridge Loan through partner lenders and agents.
Prime rate: Benchmark interest rate banks charge their most creditworthy customers. Many carry rates are quoted as prime plus a margin.
PSA: Purchase-Sale Agreement. The contract between seller and program governing the entire transaction.
Repair credit: Dollar reduction applied to offer price to account for needed repairs, based on inspection.
Retail leg: The open-market listing phase of a Cash Offer Plus transaction, where the program attempts to sell the home for above appraised value.
Second close: Final closing after retail sale, where waterfall proceeds are distributed and any remaining obligations settled.
Service fee: Explicit fee charged by the program, usually 1–5% of sale or appraised value. Sometimes called “program fee.”
Trade-up: Product category that lets sellers buy a new home before selling their current one, using bridge financing.
Transfer tax: State or local tax on property transfers. Varies dramatically: 0% in some states, 2%+ in others.
True-up: Settlement calculation at second close reconciling advance paid vs. actual proceeds from retail sale.
Walk-through: Pre-close program inspection, usually within the first 5–10 days after PSA signing.
Waterfall: Priority order in which second-close proceeds are distributed: typically senior debt, then carry, then service fee, then seller/program overage share.
Waterfall share: Percentage of overage the seller receives. Ranges from 0% (pure iBuyer) to 100% (Zoom Casa's standard structure).
Appraisal contingency: Buyer's right to walk away (or renegotiate) if the home's appraisal comes in below contract price. Waived in many cash-offer and iBuyer transactions.
Back-up offer: A secondary written offer accepted by the seller that becomes primary only if the first contract falls through. Common when a primary buyer has weak financing or a contingency.
Escalation clause: Buyer-side contract provision that automatically raises the offer in fixed increments above competing offers, up to a stated cap. Used in multiple-offer situations.
Seller leaseback: Post-close arrangement where the seller rents the home back from the new owner for a defined period, typically at market rent or a fixed daily rate. Common with iBuyers and Cash Offer Plus programs to give sellers move-out flexibility.
Zip footprint: Set of ZIP codes where a program is actively quoting. Usually narrower than stated state availability.

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