Welcome to the Lexicon of Real Estate Terms
Navigating the world of real estate can be daunting, especially with the myriad of terminology that pervades the industry. Our Lexicon of Real Estate Terms is here to simplify your experience, providing you with more than 3,300 terms and definitions and 33,000 Quizes to help you feel comfortable using modern real estate language.
This comprehensive guide serves as a quick reference for various audiences, whether you are a home buyer or seller, a real estate professional, a business student, an investor, or an attorney. We understand that mastery of the language is crucial in making informed decisions in the real estate market, and our lexicon is designed to empower you.
What You’ll Find in Our Lexicon:
Our lexicon includes detailed definitions for real estate topics from A to Z. Whether you’re looking to understand key concepts for personal knowledge or to enhance your professional repertoire, you’ll find terms related to:
-
Appraisal: Learn about the process of determining a property’s market value.
-
Architecture: Explore different styles and terminologies that define building design.
-
Brokerage: Understand the role of real estate brokers and the services they provide.
-
Construction: Familiarize yourself with the terms used in the building process.
-
Debenture: Discover financial instruments that could impact real estate investments.
-
Flood Plain: Understand the risks and regulations associated with properties in flood-prone areas.
-
Negative Amortization: Get insights into loan types that increase in balance over time.
-
Security Instrument: Learn about the agreements that secure a loan against a property.
-
Subprime Loan: Understand the implications of loans given to borrowers with poor credit.
-
Underlying Mortgage: Familiarize yourself with the financial obligations tied to a property.
-
Zoning: Get to grips with laws that define how land can be used.
In addition to these definitions, our lexicon provides a wealth of resources, including:
-
Common abbreviations used in real estate communications.
-
Mathematical formulas essential for calculating mortgage payments, investment returns, and more.
-
Charts and diagrams to visually represent complex concepts and processes.
Why Use Our Lexicon?
By utilizing this resource, you’ll gain confidence in your understanding of real estate terminology. Whether you’re conducting research, preparing for a transaction, or simply looking to expand your knowledge base, our lexicon ensures you have access to the information you need at your fingertips.
Join us in diving into the intricate world of real estate language, and empower yourself with the terminology that shapes the industry. Feel free to explore and reference frequently; your journey into mastering real estate has just begun!
The Local Housing Authority (LHA) is a government entity that develops and manages public housing projects intended for qualified low-income residents.
The phrase 'Location, Location, Location' emphasizes that the location of a property is one of the primary factors influencing its value. The statement underscores that the geographical location outweighs almost all other variables in determining real estate prices.
Locational Obsolescence, also known as Economic Obsolescence, refers to the depreciation or loss in property value due to external factors related to its location, which are beyond the control of property owners.
A lockbox is a secure device placed near the door of a house for sale; it can be opened with a key or combination code given only to members of a Multiple Listing Service (MLS). The lockbox contains a key to the house, providing MLS members access to show the property to clients.
The locked-in interest rate is a promise from the lender to provide a specific interest rate for a mortgage or loan, valid for a predefined period, regardless of market rate fluctuations during that period.
A loft apartment is a residential unit that has been converted from an industrial or warehouse space, often featuring exposed brick, high ceilings, and an open floor plan. These types of apartments are popular in urban areas undergoing gentrification and are favored by artists and creative professionals for their spacious layouts and unique character.
A log cabin is an early-American-style house constructed from unfinished logs. It leverages the simple yet sturdy nature of timber to provide shelter and is often associated with rustic settings.
Long-term capital gain refers to the profit earned from the sale of a capital asset that has been held for longer than a specified holding period, allowing it to qualify for favorable tax rates.
Long-term financing, also known as permanent mortgage, involves a loan with a long repayment period, typically extending over several years or decades. This form of financing is commonly used for purchasing real estate or significant capital investments, and provides borrowers with stability and predictable payment schedules.
A long-term lease typically refers to a commercial lease agreement that spans five years or more or a residential lease agreement lasting over one year. Long-term leases offer stability and predictability for both landlords and tenants, coming with distinct advantages and potential drawbacks for each party.
LoopNet is an internet site providing comprehensive listings and crucial data regarding the leases, sales, and listings of commercial real estate properties. It serves as a pivotal platform for investors, brokers, and businesses in search of commercial properties for sale or rent.
A lot is an individual parcel of land within a subdivision's plat. This land unit must have the appropriate zoning designation to be considered buildable and suitable for construction.
The lot and block survey system is commonly used in urban and suburban areas where parcels of land are divided into subdivisions. This system helps in the precise identification and location of property within a subdivision, facilitating land sales, property taxes, and real estate transactions.
In real estate, a lot line is a demarcated boundary that defines the perimeter of a property described in a property survey. These lines are crucial for determining the exact dimensions and legal boundaries of the land.
A low-ball offer is a substantially lower bid for a property than its asking price, often indicating the buyer's belief that the property is overpriced or that a bargain can be had.
Low-income housing that meets specific criteria and regulations, making it eligible for special tax credits. Stringent guidelines govern tenant qualification, certification, and project financing to ensure compliance with federal and state laws.
A Low-Income Housing Limited Partnership (LIHLP) is a partnership formed to fund and manage housing for low-income tenants. It offers investors potential returns primarily through tax deductions and credits rather than significant annual cash distributions.
Loan-to-Value Ratio (LTV) is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. The LTV ratio is crucial in assessing the risk of a loan.
Lucas v. South Carolina Coastal Council is a landmark U.S. Supreme Court decision that established a 'total taking' test to determine whether a government regulatory action constitutes a taking that requires compensation under eminent domain.
The Modified Accelerated Cost Recovery System (MACRS) is the current tax depreciation system in the United States permitting a faster write-off of the capital expenses of tangible personal and real property. Enacted by the Tax Reform Act of 1986, MACRS allows for greater accelerated depreciation, with the intention of encouraging investment in business assets by offering a larger depreciation deduction in the early years of an asset’s life and lower deductions later on.
MAI is a professional appraisal designation conferred by the Appraisal Institute, indicating a high level of expertise and competency in appraising a broad range of real estate types.
An MAI Appraisal is an appraisal conducted by an individual holding the MAI designation from the Appraisal Institute, indicating that the appraiser has met rigorous education, experience, and ethical standards.
Maintenance involves the activities carried out to ensure the upkeep, repair, and efficient operation of a property, compensating for wear and tear over time.
A maintenance fee is an assessment by a Homeowners' Association (HOA) or a Condominium Owners' Association (COA) to cover the costs associated with maintaining and operating common elements and areas.
A maintenance reserve is a fund allocated by property owners or a property management entity specifically for maintaining and repairing a property. This financial reserve is crucial to ensure that a property remains functional, safe, and visually appealing over time.
In legal terms, majority refers to the age at which an individual is no longer considered a minor and is fully able to conduct their own affairs. It can also refer to more than half of a group when making collective decisions.
A large indoor shopping complex typically comprising multiple individual stores connected by enclosed walkways offering a variety of retail, dining, and entertainment options, often accompanied by ample parking facilities.
Mall stores are retail outlets located within a shopping mall, excluding the anchor tenant. These stores benefit from the general foot traffic generated by the anchor tenants, often leading to lesser advertising needs despite higher rent.
A management agreement is a contract between a property owner and a manager, detailing responsibilities for leasing, operating, and managing the property. It often includes a fee structure ranging from 2-6% of the rental income.
The management fee is the cost charged by a professional property management company for overseeing and managing rental properties. It is typically a fixed percentage of the total rental income generated by the managed property.
A Managing Broker License is a specific credential required for individuals who oversee offices with real estate brokers and salespersons. This license ensures that a knowledgeable and licensed professional manages and supervises real estate operations, maintaining compliance with state regulations.
A Mansard roof, also known as a French roof or curb roof, is a type of architectural design that features two slopes on all four sides of the roof, with the lower slope being significantly steeper than the upper.
A type of prefabricated housing that is largely assembled in factories and then transported to sites of use. Manufactured homes are built to the standards of the HUD-code.
Manufactured housing refers to homes that are built in factories and then transported to a specific site for use. These homes must pass federal inspections in contrast to mobile homes, which often have fewer regulatory requirements. Manufactured homes often include modular housing options.
The Manufactured Housing Institute (MHI) is a national trade organization representing all segments of the manufactured housing industry, providing comprehensive support through research, promotion, education, and government relations programs.
A Maquiladora is a manufacturing operation where factories import certain material and equipment on a duty-free and tariff-free basis for assembly, processing, or manufacturing and then export the assembled, processed, or manufactured products, often back to the originating country.
Maquiladora, often referred to as twin plants, are manufacturing operations in Mexico, usually near the U.S.-Mexico border, where factories import material and equipment on a duty-free and tariff-free basis for assembly, processing, or manufacturing and then re-export the assembled product to the United States.
In real estate and finance, a margin refers to the constant amount added to the value of the index to adjust the interest rate on an adjustable-rate mortgage (ARM). It is a critical component in determining the overall interest rate that a borrower will pay.
Marginal property refers to real estate that is barely profitable to use, indicating that the costs of operation, development, or purchase nearly equal or surpass the potential revenue or gains from the property.
The marginal tax bracket represents the amount of income tax that an investor would pay on the next dollar of income. Generally, the marginal rate that one pays is higher than the average rate because of the progressive tax rate structure.
The tax-free amount transferred to one’s spouse upon death, allowing unlimited transfers without federal estate tax.
Mark to (the) Market refers to the practice of valuing a security or portfolio in accordance with its current market value rather than its historical cost. This practice ensures that margin accounts comply with necessary maintenance requirements and provides accurate, up-to-date valuations for mutual funds.
Market analysis involves studying supply and demand conditions in a specific area for a specific type of property or service. It aids developers in deciding project types and securing financing for proposed developments.
The Market Approach, also known as the Sales Comparison Approach, is a real estate valuation method that compares a property with similar recently sold properties in the same area. This approach is commonly used for residential real estate and helps to determine the fair market value by looking at comparable sales (comps).
Market Area refers to the geographic region from which one can expect to draw the primary demand for a specific product or service offered at a fixed location. It helps businesses and developers comprehend and delineate their potential customer base.
Market Capture, also known as Capture Rate, is a vital real estate metric that measures the share of a particular property or set of properties in relation to the overall market demand.
The Market Comparison Approach, also known as the Sales Comparison Approach, is a valuation method used primarily in real estate to estimate the value of a property by comparing it to similar properties recently sold in the same area.
Market Delineation is the process of defining the geographic extent of the demand for a specific property, which helps in understanding where potential customers come from and how far they are willing to travel.
Market indicators are statistical data points that reflect patterns in construction, sales, and leasing activities within the real estate market. These indicators are closely monitored for insights into economic trends and performance.
A market participant interview is a discussion conducted to elicit opinions from individuals who actively buy, sell, or rent a specific product. This process typically involves a smaller, more knowledgeable sample compared to a random sample or survey.
Market penetration, synonymous with capture rate in real estate, measures the share of a market that a particular company or project has secured. This data point is critical for assessing the success of marketing strategies and the competitive positioning of a real estate venture.
Market price is the actual price paid in a market transaction for an asset, in contrast to the market value. It reflects the monetary amount a buyer is willing to pay and a seller is willing to accept under normal market conditions.
Market rent refers to the rental income a property can be expected to earn in the open market under typical conditions. It is contrasted with contract rent, which is the actual rent agreed upon by both parties.
Market research is the process of gathering, analyzing, and interpreting data concerning market conditions. It plays a crucial role in understanding market trends, identifying customer needs, and evaluating competitive landscapes.
Market segmentation is the process of defining the socioeconomic characteristics of the demand for a specific property or properties. It helps in identifying and targeting the right audience for real estate projects and listings.
A systematic analysis conducted to understand and evaluate the market conditions for a particular product, service, or strategic business decision, focusing primarily on supply and demand, competition, and economic indicators.
A market survey involves collecting primary information on neighbouring properties to assess their characteristics, rent levels, and tenant occupancy, helping stakeholders make informed decisions.
The concept of Market Value in real estate refers to the most probable price at which a property would sell in a fair, open, and competitive market, with both buyer and seller acting prudently and knowledgeably, without compulsion.
Marketability refers to the speed or ease with which a property can be sold at or near its market value. It encompasses the property’s expected appeal in the market.
A marketability study is an analysis conducted for a specific client to determine the likely sales of a specific type of real estate product. It seeks to establish the market price and rate of sales for a particular product without considering its financial feasibility or profitability.
A marketable title is defined as a title free from significant defects, ensuring that a court will enforce the title's acceptance by a purchaser. This concept contrasts with a 'cloud on the title,' which indicates a defect or potential issue that could limit marketability.
A marketing plan is a formal strategy used to sell a property, which includes an advertising strategy, identification of a target market, and a pricing scheme.
In real estate appraisal terminology, 'Marketing Time' refers to the estimated duration a property would need to be on the market to sell, following the date of the appraised value.
Marshall & Swift provides construction cost data that helps in estimating building costs across various types, quality levels, and geographic areas. This information is crucial for appraisers, insurers, and real estate professionals.
Masonry is a durable and versatile method of exterior construction involving the use of materials such as brick, concrete block, or stone to create robust structural and aesthetic components of a building.
Mass appraising involves assessing groups of properties to estimate their values using sophisticated statistical methods, often employed by tax authorities for property tax assessments.
A Master Deed, used by condominium developers or converters, is a legal document that records the division of a property into individually owned units, includes restrictions on their use, and outlines ownership of common areas.
A Master Lease is a primary leasing agreement under which the tenant, who leases the entire property, has the right to sublease portions of it to other sub-tenants. It serves as the foundation lease agreement in situations where the property may be divided for subleasing.
A Master Limited Partnership (MLP) is an ownership vehicle commonly used for real estate or oil and gas ventures. It typically consolidates existing limited partnerships into a single, larger entity, offering more marketable ownership interests than individual limited partnerships.
A master mortgage loan refers to the collective mortgage debt secured on a building used for cooperative housing. Each co-op tenant-shareholder's obligation is separate from any individual loans used to purchase the respective co-op shares.
A master plan is a comprehensive document encompassing the development concept for an area or project. This document includes narrative and maps that detail the current and future use of the land. It is often prepared by local governments to guide overall development or by developers for specific projects.
A material fact is information that is critical to understanding a situation or making an informed decision. In the context of real estate, it refers to details about a property that can influence a buyer's or seller's actions, such as structural problems, zoning changes, or environmental hazards.
Material participation is a tax term referring to the substantial, continuous, and regular involvement in business operations necessary to qualify for certain tax deductions related to real estate losses.
A Materialman is an individual or business entity that supplies materials utilized in the construction or repair of buildings and other types of property.
Maturity refers to the due date of a loan, bond, lease, or insurance policy when the principal amount or full sum is to be repaid or the agreement expires. It establishes the timeline over which periodic payments or interest accrues and is eventually repaid.
The Maximum Contaminant Level (MCL) represents the highest level of a contaminant allowed in drinking water, as set by the United States Environmental Protection Agency (EPA) under the Safe Drinking Water Act (SDWA).
In the context of Real Estate, the term MBA can refer to the Mortgage Bankers Association (MBA) of America, a national association representing the real estate finance industry, or the Master of Business Administration degree, often pursued by professionals aspiring to leadership roles in real estate and other sectors.
A mechanic’s lien is a legal claim against a property as security for unpaid labor and materials supplied for the property's improvement.
Median price is the house price that falls right in the middle of the total number of homes sold in a particular area, offering a better representation of the market compared to average prices.
The mutual agreement and understanding between parties regarding the terms and conditions of a contract, ensuring all involved parties share a common interpretation and consensus.
A megalopolis is a large, sprawling urban area that consists of several metropolitan regions merging into an unbroken stretch of urban development.
Megan's Law is a federal law mandating that states establish programs to inform communities when convicted sex offenders are released into their neighborhood. Typically, this involves maintaining a public registry to highlight the presence of an offender within the community. Officially known as the Child Protection Act of 1996.
A Memorandum of Lease is a concise document prepared for public recording that includes the key terms of a lease agreement without disclosing the full details of the lease.
Merchandise mix refers to the combination and variety of stores and types of merchandise offered in a shopping center, aiming to meet consumer needs and drive foot traffic.
A merchantable title, also known as a marketable title, is a legal concept indicating that a property title is free from significant encumbrances or defects, providing clear ownership and the right to transfer the property.
A merger is the fusion of two or more interests, such as businesses or investments, resulting in a single, larger entity.
A meridian is a longitudinal reference line that traverses the earth in a north-south direction. All meridians circle the earth through the equator and converge at the north and south poles. They are used by surveyors in describing property under the government rectangular survey method.
Metes and bounds is a legal method used to describe the boundaries of a piece of land using physical features, directions, and distances. It is often employed before land has been subdivided or platted.
A Metropolitan Division is a county or group of counties within a large Metropolitan Statistical Area (MSA) that functions as a distinct economic area. These divisions are essential in understanding the economic dynamics within larger urbanized regions.
A Metropolitan Statistical Area (MSA) includes one or more counties with a central urban area having a population of at least 50,000 inhabitants. The U.S. Census Bureau uses MSAs for the purposes of aggregating and reporting population, housing, and economic statistics.
Mezzanine generally refers to an intermediate floor in a building that is smaller than the other floors, and it is often set back from the outer walls of the building, giving it a partially open view of the floors below.
Mezzanine financing is a hybrid form of funding positioned between senior debt and equity, offering higher returns to lenders due to its subordinate status in the capital structure.
MGIC is a provider of private mortgage insurance in the United States. Private mortgage insurance (PMI) protects lenders by covering mortgage payments in the event the borrower defaults, particularly when the borrower puts down less than 20% as a down payment.
A Micropolitan Statistical Area is a designation used by the U.S. Census Bureau to identify urban areas that have significant population centers with at least 10,000 but fewer than 50,000 inhabitants, often functioning as significant economic hubs within their region.
A Military Clause is an option included in residential leases that allows a tenant currently serving in the military or reserves to break the lease without forfeiture of the security deposit in the event of a transfer or call-up to duty.
Milking a project, also known as bleeding a project, refers to the extraction of financial resources or benefits from a real estate project without reinvesting or contributing towards its development and sustainability.
In real estate, a mill represents one-tenth of a cent. It is often used to express tax rates on a per-dollar basis of assessed valuation.
The millage rate is a tax rate applied to property, where each mill represents $1 of tax assessment per $1,000 of assessed property value.
A comprehensive guide to understanding the impact and behavior of Millennials in the real estate market.
A Mineral Deed is a legal document used to transfer mineral rights from one party to another. This can include the right to explore, extract, and sell the minerals found beneath the surface of a property. Mineral Deeds can significantly impact property rights, land value, and taxation.
