Real estate has a language all its own, and nothing makes a first offer feel scarier than a contract full of terms nobody explained. Here are the ones New Mexico buyers and sellers ask me about most — in plain English, no jargon.
Earnest Money
Earnest money is a good-faith deposit you put down with your offer to show the seller you’re serious. In New Mexico it’s typically 1–2% of the purchase price, held in escrow — not handed to the seller. When you close, it’s credited toward your down payment or closing costs. If you back out for a reason your contract allows (a failed inspection, say), you usually get it back.
Escrow
Escrow is a neutral third party — often a title company here — that holds the money and documents until every box on the contract is checked. It protects both sides: the seller knows the funds are real, and you know your deposit isn’t going anywhere until the deal is done right.
Contingencies
Contingencies are the “only if” conditions in your offer — the sale goes through only if certain things check out. The common ones are inspection, appraisal, and financing. Think of them as your off-ramps: if the inspection turns up a big problem or the loan falls through, you can renegotiate or walk without losing your earnest money.
Appraisal Gap
When a home appraises for less than your offer, that difference is an appraisal gap. Your lender will only finance up to the appraised value, so you either renegotiate the price, cover the difference in cash, or walk (if you kept your appraisal contingency). In competitive stretches, knowing your gap strategy before you offer is half the battle.
“Under Contract” vs. “Pending”
“Under contract” means an offer has been accepted but contingencies are still being worked through. “Pending” usually means those conditions are cleared and the sale is cruising toward closing. Neither means “sold” until the keys actually change hands — so if you love a home that’s under contract, it’s still worth a call.
The best way to feel confident is to have someone in your corner who translates all of this as you go — that’s the whole job. Browse the full glossary in Real Estate Terms, Decoded, grab my free Buyer’s Guide, or just reach out with a question — no pressure, ever.
