Baby Boomers are individuals who were born during the years after World War II, generally defined as 1946–1964. This group represents a sizable portion of the consuming public, and their spending habits and lifestyle have a powerful influence on the economy.
Unpaid property taxes that can lead to a lien on real estate and, if not paid, may result in the property being sold by the tax authority to satisfy the debt.
The back-end ratio is one of several criteria used to qualify homebuyers or owners for mortgage loans. It takes into account existing long-term debt of the loan applicant, contrasting with the front-end ratio.
In real estate and construction, backfilling is the process of refilling a previously excavated area with soil or other materials. It is a crucial step in construction to ensure stability, proper drainage, and to support structures.
A Backup Contract is a pre-arranged agreement to purchase real estate that takes effect if a primary contract is not completed, providing a secondary buyer an opportunity under predefined conditions.
A backward loan application is a falsified loan document submitted intentionally by a borrower after selecting a property, often to fraudulently boost income and qualify for a loan.
Bad Boy Carve-Outs refer to provisions in nonrecourse loans which hold the borrower or guarantor liable for the loan under specific circumstances. These carve-outs include misappropriation of funds, environmental violations, waste, and voluntary bankruptcy.
A condition where complete real estate ownership is impaired by unsettled claims and liens, which may prevent an owner from selling the property.
A bailout is an emergency action taken by the federal government to provide financial assistance to prevent the failure of a specific private or quasi-private entity. This assistance often comes in the form of loans, grants, or government purchase of an equity position.
The remaining amount after subtracting relevant values, such as the outstanding principal on a loan or the remaining funds in an account.
A Balance Sheet is a financial statement that presents the financial position of a company at a specific point in time. It details the company's assets, liabilities, and shareholders' equity, ensuring that the assets are balanced by the sum of liabilities and equity.
In real estate appraisal, the Principle of Balance asserts that there is an optimal mix of inputs that, when combined with land, will result in the highest land value. Key inputs include labor, capital, and entrepreneurship.
A balloon mortgage is a type of loan that does not fully amortize over its term, leaving a balance due at the end of the period in a balloon payment. This large, lump-sum payment can be a surprise for borrowers who are not prepared or aware of this structure.
A balloon payment is the final and often significantly large payment on a loan, typically required after a series of smaller installment payments. It clears the remaining debt owed on the loan.
An income property appraisal technique where the overall rate of earnings is derived from weighting mortgage and equity rates. It provides insights into the true capital structure of a real estate investment and determines the overall rate of return required by investors.
A financial institution that accepts deposits, offers checking and savings account services, and loans to individuals and businesses. Banks also provide various financial services like wealth management, currency exchange, and safe deposit boxes.
The Banker's Year is a convention that standardizes the length of a month at 30 days and of a year at 360 days for ease of financial calculations, simplifying the handling of interest and other financial computations.
Bankruptcy is a legal proceeding involving a person or business that is unable to repay outstanding debts. Through bankruptcy, the debtor may seek relief from some or all debts.
Barclay's Mortgage Backed Securities Index is a comprehensive benchmark published by Barclay's Capital that tracks the performance of mortgage-backed securities issued by GNMA, Fannie Mae, and Freddie Mac, and is a component of the broader U.S. Aggregate Bond Index.
A Bargain and Sale Deed is a type of property deed where the grantor indicates an implied interest in the property without offering any warranties of title to the grantee.
A Base (Expense) Year is a lease provision whereby the landlord agrees to pay an expense amount based on the expense for a base year (typically the first year) of the lease, and the tenant pays the increase in expense for subsequent years.
Base and meridian are imaginary reference lines used by surveyors to accurately describe the location of land. These lines form part of the Government Rectangular Survey System, with the baseline running east-west and the meridian running north-south.
The base period is a fixed point in time used as a benchmark to measure and compare statistical data, such as indices, over a subsequent span of time. This concept is often employed to assess changes in economic indicators like the Consumer Price Index (CPI).
Base rent is the minimum rent due under a lease that has a percentage or participation requirement.
The base year in real estate is a starting point used to compare financial data, often related to property taxes or operating expenses, to calculate escalations or adjustments in subsequent years.
In the Rectangular Survey or Government Rectangular Survey method of land description, the baseline is the principal east-west line to which all north-south measurements are referred.
A basement suite, also known as an accessory apartment, is a separate living area typically located in the basement of a single-family home. It usually includes sleeping, cooking, and bathroom facilities.
A Basic Industry refers to a sector that exports products or services outside the local economy and generates a large inflow of revenue, thereby driving economic growth for the region.
In economic base analysis, the Basic Industry Multiplier is the ratio of the total population in a local area to the employment in basic industry. Basic industries attract income from outside the local area and foster local service jobs.
Basic Rate, often used in the context of capitalization rates, represents the foundational return rate required by investors for a particular investment, before additional considerations are factored in.
Basic rent refers to the minimum rent that a tenant must pay under a HUD-subsidized housing program such as Section 236. This rental rate is often influenced by the tenant's income level and family size.
Basis (Tax) represents the starting point from which gains, losses, and depreciation deductions are computed. It is generally the original cost or purchase price of an asset.
A basis point (bps) represents one hundredth of one percent or 0.01%, and it is commonly used in the financial and real estate sectors to denote changes in interest rates and other percentages.
A Bearer Instrument is a type of security that does not record the owner's name on the instrument itself, making it payable to whoever physically holds the instrument.
A bearing wall, also known as a load-bearing wall, is a crucial structural element in construction that supports the weight of the objects above it, providing stability to the building.
A bedroom community, also known as a commuter town or suburb, is primarily residential in nature, located close to a city or employment center. These communities typically lack substantial employment opportunities themselves and are inhabited largely by workers who commute to urban areas for work.
The Before and After the Taking provision is found in many states' condemnation laws and provides compensation to property owners based on the difference in property market value before and after the taking.
Before-tax cash flow refers to the amount of cash that a property generates before income taxes are deducted. This figure is critical for evaluating the performance of real estate investments and comparing different investment properties.
The funds returned to the equity investor after the sale of a property, exclusive of income taxes.
The term Beginning of the Year (BOY) refers to events that occur at the start of a financial year. In the context of real estate, BOY often includes the due dates for rent payments, financial projections, budget implementations, or financial assessments.
Below-Market Interest Rate (BMIR) is a government-driven program where property owners are charged a reduced interest rate with the stipulation that the savings from the reduced rate are passed on to tenants through lower rents.
A beltway is a highway that encircles a metropolitan area, providing access to surrounding suburban areas while also serving as a bypass to alleviate congestion in the central urban area. It is also known as a loop, perimeter, or circumferential highway.
A benchmark in real estate serves as a reference point for measuring site elevations and comparing performance standards. It is critical for surveyors and institutional real estate performance assessments.
Beneficial interest refers to the right to enjoy the benefits of ownership of a property or asset without necessarily holding the legal title. This can arise in various contexts, such as trusts, real estate investment trusts (REITs), and financial securities.
In real estate and other facets of financial planning, a 'Beneficiary' is a person or entity designated to receive benefits or assets, such as proceeds from a life insurance policy, trusts, or estates.
Bequeath refers to the act of leaving personal property to beneficiaries through a will. Unlike 'devise,' which typically refers to the transfer of real property, 'bequeath' is used exclusively for personal property.
A bequest is the act of giving personal property or financial assets to an individual or organization through the provisions of a will.
A berm is a raised barrier, typically made of earth, used to control water runoff, reduce erosion, or serve as a visual or sound barrier. Berms are common in landscaping, construction, and environmental protection.
Betterment refers to an improvement made to a property that enhances its value, utility, or physical condition. This term is commonly used in the context of real estate to describe upgrades or modifications that increase the overall quality of the property.
A bi-level house, also known as a split-level home, features two floors, with the main entrance located between the two levels, giving unique architectural and functional advantages.
Biannual refers to events or actions that occur twice within a single year, similar to the term 'semiannual.' It is important not to confuse it with biennial, which means occurring every two years.
A BID is the amount someone is willing to pay for a property. It is a proposal by a potential buyer in response to a seller's ASKING PRICE. It sets the stage for negotiating the purchase agreement.
Biennial refers to events or processes that occur every two years. In real estate, this can relate to property assessments, contract renewals, or other cyclical activities.
A Big Box Retailer is a physically large store typically part of a chain, occupying a substantial area (25,000–200,000 square feet) on a single floor, selling either general merchandise or specialty products. They operate both nationally and internationally and are prevalent in Power Centers.
A contract under which each party to the agreement promises to perform a certain act or duty. Bilateral contracts are binding promises where both parties require performance—a cooperative and mutual engagement. It contrasts with unilateral contracts, which involve only one party making a promise or taking action.
A Bill of Assurance is a legal document containing a collection of restrictive covenants that apply to a group of contiguous lots, ensuring specific standards and regulations for development and property use.
A Bill of Sale is a written instrument that serves as a legal document transferring ownership of personal property from a seller to a buyer. It is commonly used for transactions involving items such as furniture and portable appliances.
A binder is an initial agreement, often coupled with a deposit, that indicates the purchaser's good faith in buying a piece of real estate. It is typically used to show the intent to buy and precedes a formal contract of sale.
A biweekly loan is a mortgage that requires principal and interest payments at two-week intervals, leading to faster amortization and potentially significant interest savings compared to traditional monthly payments.
Black mold, scientifically known as Stachybotrys Chartarum, is a hazardous, toxic fungus that can grow indoors on wet and damp surfaces. Its presence can pose serious health risks to inhabitants and requires proper remediation to ensure a safe living environment.
A blacklist in real estate refers to a list maintained by lenders that contains names of individuals or entities flagged for mortgage application fraud or possessing poor credit history, aimed at avoiding issuance of loans to untrustworthy borrowers.
A blanket mortgage is a single mortgage that covers more than one parcel of real estate, often used by developers to finance multiple properties under a single loan.
A blanket mortgage is a type of financing that covers multiple properties under a single mortgage, making it a useful tool for real estate investors and developers.
Bleeding a project refers to the unethical practices in real estate development or management where expenses and fees are overstated to increase profits or where routine maintenance is neglected to maximize current income at the expense of property value.
A blended rate is an interest rate applied to a refinanced loan that is higher than the rate on the old loan but lower than the rate offered on new loans. It is generally offered by the lender to induce homebuyers to refinance existing low-interest rate loans as an alternative to assuming the existing loan.
A blighted area refers to a section of a city primarily characterized by deteriorating, dilapidated, or unsafe structures. It often necessitates significant urban renewal and rehabilitation to revitalize and redevelop the area.
A Blind Pool is an investment fund where the investors do not know the specific assets that will be purchased at the time of their investment. It is typically managed by a syndicator who makes purchasing decisions after collecting the capital.
A 'Block' in real estate is typically defined as an area of land enclosed by streets or delineated by street intersections. Blocks form the basic units of city layouts and are crucial in urban planning and design.
Blockbusting is a racially discriminatory and illegal practice involving coercing a homeowner to sell their property at a depressed price and causing others in the neighborhood to sell by using scare tactics.
BlockShopper.com is a website that provides comprehensive information on housing sales in selected cities and suburban towns, allowing users to input community names to retrieve relevant real estate data.
A Blue Top Lot refers to a parcel of land that has achieved specific legal and physical readiness for development, typically including entitlements, grading, and close proximity to utilities. Variations exist in definitions regarding the presence and status of street improvements.
State securities laws designed to protect investors from fraudulent sales practices and activities.
A blueprint is a detailed set of plans used as the guide for the construction of a building. It encompasses architectural, structural, mechanical, and electrical drawings necessary to visualize the final construction.
A board foot is a unit of measurement for lumber, defined as one foot wide, one foot long, and one inch thick, or 144 cubic inches. Notably, the dimensions refer to the nominal width and thickness of lumber, which are initially measured before drying and planing processes.
A Board of Directors consists of individuals elected by the stockholders to oversee the management and policies of a corporation or organization, ensuring it adheres to established goals and legal requirements.
The Board of Equalization (BOE) is a government entity responsible for ensuring uniform property tax assessments within its jurisdiction. This entity operates at both local and state levels to maintain equity and fairness in property taxation.
A local organization comprised of licensed real estate professionals who are members of the state and National Association of REALTORS®.
A Board of Zoning Appeals is an appointed administrative body that hears and decides appeals on land use and zoning decisions made by local government officials.
BOMA, also known as the Building Owners and Managers Association, is a professional association that represents the interests of the commercial real estate industry through a range of services, advocacy, standards, and educational programs.
BOMA Measurements refer to the standards offered by the Building Owners and Managers Association for accurately measuring the leasable square footage of commercial buildings.
The term 'Bona Fide' refers to actions, transactions, or situations conducted in good faith, without intent to deceive or defraud. It signifies genuine sincerity and authenticity in legal and financial contexts.
A bond in real estate refers to a certificate representing a debt obligation that specifies the repayment terms and conditions under which the debt is undertaken.
A bond-type lease is a type of net lease requiring the tenant to pay rent for the entire lease term, providing a near-guaranteed income stream to the landlord and often resulting in favorable rental rates for the tenant. This lease arrangement continues regardless of any damage to the leased property.
Bonus depreciation refers to an additional deduction that allows businesses to depreciate a larger portion of the cost of qualifying property in the first year it is placed in service. This is in addition to Section 179 expensing and the standard first-year depreciation.
Book cost refers to the acquisition cost of property as recorded on accounting statements. It typically includes the purchase price, installation costs, and indirect costs such as interest during construction.
Book depreciation refers to the method that accountants and businesses use to systematically allocate the cost of tangible assets over their useful lives.
Book value represents the carrying amount of an asset as recorded on the company's balance sheet. It is generally the purchase price of the asset plus any capital improvements minus accumulated depreciation.
Boot, in a real estate context, refers to any non-like-kind property that is included in a property exchange to balance the value. It can comprise cash, personal property, or other liabilities.
A borrower is a person or entity that has received a loan and is obligated to repay the amount borrowed, often with interest and other fees, according to the loan terms. The term is commonly used interchangeably with 'debtor.'
Borrowing capacity, also referred to as loan eligibility or credit capacity, determines the maximum amount of funds that an individual or entity can borrow from a lender. It is calculated based on factors such as monthly income, existing liabilities, credit score, and financial assets. Understanding borrowing capacity is critical for making informed financial decisions and optimizing loan approvals.
Bottomland refers to the low land adjacent to rivers, lakes, or streams that are prone to periodic flooding. It is often characterized by rich, fertile soil, and is typically found in valleys or dales.
A boundary, often referred to as a property line, defines the physical extent of a parcel of land, delineating ownership and legal rights. They are crucial for determining land use, development, and resolving disputes.
A branch office is an auxiliary site of a business, often housing a subsidiary of the main real estate firm. While it operates separately from the main office, it is owned by the firm but managed by a licensed broker often referred to as an 'associate broker' or 'broker associate,' and may have other agents operating out of it.
Breach of Contract refers to the violation of the terms agreed upon in a legal contract, enabling the affected party to seek legal remedies such as rescission of the contract, damages, or specific performance.
The Break-Even Point in real estate is the rental income or occupancy level necessary to cover all operating expenses and debt service, ensuring that the property does not operate at a loss.
In real estate appraisal, the Breakdown Method is a comprehensive approach used to divide accrued depreciation into distinct categories: physical depreciation, functional obsolescence, and economic obsolescence. This method contrasts with the age-life method of depreciation.
A term used to describe the physical property and infrastructure of a business or organization, as opposed to its intangible assets or online presence.
A Bridal Registry Mortgage is a unique financial tool, sponsored by the Federal Housing Administration (FHA), enabling soon-to-be-married couples to establish a registry where friends and family can contribute funds. These contributions can be used toward the down payment for an FHA-insured mortgage.
A bridge loan is a short-term financing solution used to bridge the gap between the termination of one loan and the commencement of another loan. Typically employed in real estate, bridge loans allow borrowers to meet liquidity requirements while awaiting long-term financing.
A British Thermal Unit (BTU) is a unit of heat energy, defined as the quantity of heat required to raise the temperature of one pound of water by one degree Fahrenheit.
