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:
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Appraisal: Learn about the process of determining a property’s market value.
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Architecture: Explore different styles and terminologies that define building design.
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Brokerage: Understand the role of real estate brokers and the services they provide.
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Construction: Familiarize yourself with the terms used in the building process.
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Debenture: Discover financial instruments that could impact real estate investments.
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Flood Plain: Understand the risks and regulations associated with properties in flood-prone areas.
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Negative Amortization: Get insights into loan types that increase in balance over time.
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Security Instrument: Learn about the agreements that secure a loan against a property.
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Subprime Loan: Understand the implications of loans given to borrowers with poor credit.
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Underlying Mortgage: Familiarize yourself with the financial obligations tied to a property.
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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:
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Common abbreviations used in real estate communications.
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Mathematical formulas essential for calculating mortgage payments, investment returns, and more.
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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 Affordability Index is a measurement of housing affordability compiled by the National Association of Realtors® (NAR) and other organizations. It compares median income levels to the income required to purchase a median-priced home, providing insights into regional and national housing affordability.
Affordable housing refers to various public- and private-sector initiatives aimed at helping low- and moderate-income individuals and families purchase homes. These programs often feature lower down payments, eased loan-qualifying rules, and below-market interest rates.
An after acquired clause is a provision in a mortgage loan that includes property subsequently purchased as security on the existing mortgage. This can complicate future financing and the restructuring of loans as additional acquired property becomes part of the original security.
After-tax cash flow refers to the net cash flow generated by an income-producing property after accounting for income taxes and tax savings from allowable deductions. This measurement provides a true picture of an investor's profitability from real estate holding.
The rate of return on an equity interest in real estate, taking into account financing costs and income tax implications of the investor.
After-tax income, also known as after-tax cash flow, represents the amount of earnings that remain after deductions for income taxes. It is a crucial indicator of an individual's or business's actual financial situation and their ability to invest, save, or spend.
The amount of money left for the investor after all obligations of a real estate transaction, including personal income taxes on the transaction.
The Age-Life Method of Depreciation is a technique that estimates all forms of depreciation sustained by an asset, based on the effective age of the property or component, divided by the total economic life of the property or component.
Agency refers to the legal relationship between a principal and an agent whereby the principal employs the agent to perform certain acts on their behalf. This relationship is founded on a contract that outlines the duties, responsibilities, and limits of authority delegated to the agent.
An 'Agency Coupled with an Interest' type of relationship in which the agent possesses a beneficial interest in the subject property. This interest allows the agent to control the property and protect the agency relationship against outside interference, in addition to representing the interests of the principal.
Agency Disclosure is a written explanation, to be signed by a prospective buyer or seller, explaining to the client the role that the broker plays in the transaction. This ensures clients understand to which party the broker owes loyalty.
The agents of production are the key elements required to create goods and services—typically defined as land, labor, capital, and entrepreneurship. These components are fundamental in classical economics for analyzing how production is carried out and resources are allocated.
An Agreement of Sale is a written contract where the buyer agrees to purchase and the seller agrees to sell real estate under specified terms and conditions.
The Agricultural Foreign Investment Disclosure Act (AFIDA) is a federal law requiring foreign individuals and entities to report their U.S. agricultural land holdings to the U.S. Department of Agriculture (USDA) to maintain transparency and monitor foreign investment in American farmland.
The Agricultural Foreign Investment Disclosure Act (AFIDA) of 1978 is a U.S. law requiring foreign persons who acquire, transfer, or hold interests in U.S. agricultural land to report their holdings to the Secretary of Agriculture. This law aims to monitor the impact of foreign investment in U.S. agricultural land and to provide statistical data for policymakers.
An Agricultural Use Exemption is a classification for ad valorem tax purposes applied to land utilized for agricultural activities or as open space. This exemption reduces property tax liability provided the land remains in an undeveloped state.
The AI-GRS designation is a professional credential offered by the Appraisal Institute for general review appraisers, signifying expertise in reviewing appraisals and ensuring accuracy and compliance with industry standards.
AI-RRS is a designation offered by the Appraisal Institute for residential review appraisers to enhance their qualifications and credibility in performing and overseeing residential appraisal assignments.
An 'Air Loan' is a sophisticated mortgage fraud scheme wherein a mortgage broker fabricates all the details of a loan on non-existent property and borrower, presenting false documentation to make it appear legitimate.
Air rights refer to the legal ability to use, control, or occupy the vertical space above a given piece of property. These rights can be leased, sold, or transferred to another party, often significantly impacting property development, urban planning, and real estate markets.
Air space refers to the portion of real estate located above ground level. Owners of property with vertical structures often have rights to the air space above their tangible property, up to a certain elevation regulated either by local laws or agreements.
The ALDA Act, also known as the Asset Conservation, Lender Liability, and Deposit Insurance Protection Act of 1996, outlines specific regulations for asset conservation, lender liability, and deposit insurance protection to ensure financial stability and protect lender interests during property transactions.
Alienation refers to the conveyance or transfer of title and possession of property. This can be voluntary, i.e., carried out by the owner, or involuntary, without the owner's consent, such as in the event of condemnation.
An All-Inclusive Deed of Trust (AITD), also known as a Wraparound Mortgage, is a financial arrangement in real estate where a new mortgage includes the balance of an existing mortgage. This type of arrangement is utilized as a creative financing option to facilitate the sale or refinancing of property, particularly in environments where traditional financing methods are less accessible or less advantageous.
An alley serves as a narrow lane, pathway, or passageway often situated between buildings or behind a building. It is commonly utilized for deliveries, garbage collection, or as a secondary access route.
The allodial system is a legal framework that grants individuals full property ownership rights. It is one of the foundational principles underlying property rights in the United States.
An allowance in real estate is an accounting term used to designate funds or provisions reserved to address expected expenses, occurrences, or losses.
Alluvium refers to soil or sediment that is deposited by the process of accretion, generally considered to belong to the owner of the land to which the material is added.
Alt-A Mortgages are residential property-backed loans which are given to borrowers who have credit scores better than subprime borrowers but provide less documentation than typically required for standard loan applications.
Alterations are physical changes to a building or plans for a building. They generally do not physically expand the property, are permanent, and go beyond mere decoration.
The Alternative Minimum Tax (AMT) is a parallel tax system designed to ensure that taxpayers who claim certain deductions and credits still pay a minimum amount of tax.
Any mortgage other than a fixed-interest-rate, level-payment amortizing loan. AMIs provide unique approaches to mortgage lending, often accommodating borrowers with non-traditional income streams or financial situations.
Alternative Mortgage Instrument (AMI) refers to a range of non-traditional mortgage products that offer flexible terms and varied payment structures to borrowers, often catering to those who need alternatives to standard fixed-rate or adjustable-rate mortgages.
An amendment refers to a change, correction, or extension of an agreement that does not modify the basic thrust of the agreement.
Amenities refer to the nonmonetary benefits derived from property ownership that contribute to its desirability. This can include both tangible and intangible features such as pride of ownership, modern appliances, and fixtures.
The American Bankers Association (ABA) is a trade organization representing officers of commercial banks in the United States. It provides a range of services, advocacy, and publications to support the banking industry.
The American Council of Life Insurers (ACLI) is a trade association representing life insurance companies in the United States. It provides historical data on interest rates, loan terms for commercial property mortgages, and advocates for legislative and regulatory actions favorable to the life insurance industry.
A professional organization of architects, designers, and developers dedicated to advancing the practice of architecture.
The American Land Title Association (ALTA) is a national trade association representing the interests of the land title industry, which includes title insurance agents, title insurance companies, abstracters, and real estate attorneys. ALTA provides support, education, and advocacy to its members, aiming to protect property owners by securing their property rights through industry standards and practices.
The American Land Title Association (ALTA) is a national trade association representing the title insurance industry, including title agents, abstractors, and real estate attorneys. Established to promote uniformity and high standards in title insurance policies and practices, ALTA creates best practices, advocates for public policy positions, and provides educational resources.
A nineteenth-century-style house whose main and distinguishing characteristic is its unique roof design, featuring a gently sloping mansard roof topped with an invisible hip roof section and multiple dormers.
An association for real estate brokers specializing in the sale of hotels and motels, offering resources and networking opportunities for professionals in this niche market.
The American Planning Association (APA) is a professional organization that caters to the needs of regional and urban planners, promoting professional standards, research, and education within the field of planning.
The American Planning Association (APA) is a professional organization that provides leadership in the development of vital communities through advocacy, education and the provision of resources for planners and engaged stakeholders.
The American Real Estate and Urban Economics Association (AREUEA) is an organization of scholars, researchers, and practitioners dedicated to the economic analysis of real estate-related problems. AREUEA publishes the Real Estate Economics quarterly journal.
The American Real Estate Society (ARES) is a professional body comprising scholars, researchers, and practitioners focused on solving business problems related to real estate. It publishes significant journals in the field, such as the Journal of Real Estate Research, Journal of Real Estate Literature, and Journal of Real Estate Portfolio Management.
The American Real Estate Society (ARES) is a professional organization dedicated to advancing real estate thought and practice through academic research, educational programs, and practical insights.
The American Society of Appraisers (ASA) is a professional organization for appraisers across various disciplines, providing education, certifications, and resources to enhance appraisal practices.
The American Society of Farm Managers and Rural Appraisers (ASFMRA) is a professional association whose members are experts in the appraisal or management of farms and rural properties. The organization focuses on the professional development of members through education, advocacy, and ethical standards.
The American Society of Home Inspectors (ASHI) is a professional organization of home inspectors in the U.S. and Canada, committed to raising the standards of the home inspection practice and building public awareness about the industry.
The Americans with Disabilities Act (ADA) is a comprehensive civil rights law that prohibits discrimination based on disability and requires improvements to provide equal access and opportunities for individuals with disabilities in places of public accommodation.
The Americans with Disabilities Act (ADA) is a civil rights law that prohibits discrimination based on disability and mandates reasonable accommodations in public facilities, employment, transportation, and communications.
An AML Adjustable Mortgage Loan is a type of mortgage that allows the interest rate to adjust periodically based on changes in a corresponding financial index that's associated with the loan. This type of mortgage is often chosen for its initial lower interest rates.
Amortization is the process of gradually paying off a debt over time through regular payments, which include both principal and interest. This structured repayment schedule is commonly used in loans such as mortgages, car loans, and personal loans.
Amortization refers to the process of paying off debt over a specific period of time through regular payments of principal and interest, ultimately resulting in the full repayment of the loan by the end of the term.
Amortization of Deferred Charges refers to the procedure that allocates the cost of intangible assets to accounting periods, similar to how depreciation handles tangible assets. This concept is especially relevant for costs incurred to arrange loans and leases, which are typically written off over the term of the agreement.
An amortization schedule is a detailed table laying out the periodic payments on a loan, breaking them down into interest and principal components, as well as showing the remaining balance after each payment. It is vital for understanding how a loan is paid off and the interest incurred over time.
Amortization Term refers to the period over which a loan or debt is scheduled to be paid off through periodic payments. The full amortization term dictates the timeline within which the principal and interest are settled.
An amortized loan is a type of loan where the borrower makes regular, scheduled payments that include both principal and interest, gradually reducing the balance over the loan's term.
The 'Amount of One', also known as the 'Compound Amount of One', refers to the future value of a single unit of currency invested today at a specific interest rate over a given period.
The Amount of One per Period, also known as the Compound Amount of One per Period, is a financial concept used to determine the future value of a series of regular investments or payments. It allows investors and financial planners to project the growth of periodic contributions over time, considering the effect of compounded interest.
An anchor pad refers to the land underneath the building of an anchor store in a shopping center. This land may be owned by the retail store or controlled through a ground lease.
An anchor parcel refers to the land under and around an anchor tenant in a shopping center that includes the tenant’s building, parking, and landscaping. This property may be owned by the anchor tenant or controlled through a ground lease.
An anchor tenant is a principal or main tenant in a shopping center, whose presence draws a significant number of customers to the retail establishment, benefiting smaller stores and positively influencing the center’s overall performance.
Ancillary charges refer to additional rents incurred under a Triple-Net Lease to cover expenses such as Common Area Maintenance (CAM), real estate taxes, and insurance.
An ancillary tenant is a smaller, often specialty tenant within a shopping center, which contributes to the diversity and convenience of services available but does not generate as much foot traffic as an anchor tenant.
An animal unit is a unit of measure indicating the ability of land to support range animals. Generally, a 1,000-pound animal is equal to 1 unit; a 250-pound animal is ¼ unit.
Annexation is the process by which an incorporated city extends its boundary to include additional territory, often requiring legal procedures and public votes. In real estate context, it also refers to the permanent attachment of personal property to a property.
Annual cap is a limitation on the amount by which the interest rate on an adjustable-rate mortgage (ARM) can increase or decrease over a one-year period, protecting borrowers from significant fluctuations in their monthly mortgage payments.
Annual Debt Service refers to the total annual amount of principal and interest payments required to repay a loan.
The Annual Mortgage Constant is a ratio that quantifies the total annual mortgage payments, including both principal and interest, compared to the initial loan principal. It is used by lenders and borrowers to determine the yearly cost of a mortgage and assess its affordability.
The Annual Percentage Rate (APR) is the effective annual rate of interest for a loan, taking into account fees and other associated costs, disclosed as required by the Truth-in-Lending Act.
The Annual Percentage Rate (APR) represents the yearly cost of borrowing, expressed as a percentage. It includes both the interest rate and any additional fees or costs associated with the loan. APR provides a comprehensive measure to compare different loan products.
An annuity is a series of equal, or nearly equal, periodic payments or receipts. These payments could be for loans, investments, or pensions, providing a predictable stream of income over a specified period.
An Annuity Due is a financial product in which payments are made at the beginning of each period, offering specific advantages and distinctive planning opportunities as compared to ordinary annuities.
An annuity factor is a mathematical figure that shows the present value of an income stream that generates one dollar of income each period for a specified number of periods.
An annuity in advance refers to a series of equal or nearly equal payments made at the beginning of each period, commonly used in financial products like rent and leases.
An annuity in arrears, also referred to as an ordinary annuity, is a financial product where payments are made at the end of each period. This type of payment structure impacts the present value and future value calculations of the annuity.
A fundamental real estate concept that asserts the value of a property today is the present value of the sum of anticipated future benefits.
Anticipatory breach, also known as anticipatory repudiation, occurs when one party to a contract declares that they have no intention of fulfilling their obligations defined in the contract. This declaration relieves the other parties from any contractual obligations and may allow them to seek remedies.
Federal and state regulations aimed at maintaining fair competition by preventing monopolies, anti-competitive practices, and unreasonable restraints on commerce.
An apartment (building) is a residential structure containing multiple dwelling units, generally intended as rental housing, featuring common entrances and hallways.
An Appeals Board is a body empowered with the ability to overturn decisions made by local government permitting and code enforcement agencies, based on an appeal by an aggrieved petitioner.
An application fee is a charge levied by a lender to a potential borrower for the time and effort required to accept and begin processing a loan application. This fee often covers the cost of an appraisal and a credit report.
Apportion refers to the allocation of property taxes paid by a company, such as a utility or railroad, within a state based on various factors like the value and location of the property.
Apportionment involves the division and allocation of expenses, property, or assets. It is commonly used in real estate transactions to prorate property expenses between buyers and sellers, distribute inherited properties, or allocate unit values for taxation purposes.
An appraisal is a professional opinion or estimate of the value of a property, which is conducted by a trained and certified appraiser.
Appraisal Approach refers to one of the three primary methods used to estimate the value of a property. The three key appraisal methods include the Cost Approach, Income Approach, and Sales Comparison Approach. Each methodology evaluates different aspects of the property to determine its fair market value.
Appraisal by Comparison, also known as the Sales Comparison Approach, is a real estate valuation method that estimates a property's value based on the sale prices of similar properties in the same area.
Appraisal by Summation, also known as the Cost Approach, is a real estate valuation method that determines the value of a property by adding the land value to the depreciated value of any improvements (such as buildings) made on it.
The Appraisal Date, or Effective Date of Appraisal, is the specific date on which the appraised value of a property is based. This date can impact the value derived in the context of historical price trends, market conditions, and other relevant factors.
An appraisal fee is a payment made to an appraiser for evaluating the value of a property and producing an official appraisal report.
The Appraisal Foundation is an organization formed to establish uniform requirements for appraiser qualifications and reporting standards. It is governed by a Board of Trustees and includes three independent boards.
The Appraisal Institute is a professional organization for real estate appraisers, known for its high standards in education, experience, and professionalism. It offers various prestigious designations such as MAI, SRA, AI-GRS, and AI-RRS.
The Appraisal Institute of Canada (AIC) is the Canadian national society of professional real estate appraisers, founded in 1938, dedicated to serving the public interest through advancing high standards for the appraisal profession. The AIC grants the CRA (Canadian Residential Appraiser) and AACI (Accredited Appraiser Canadian Institute) designations.
An Appraisal Management Company (AMC) acts as an intermediary between certified or licensed real estate appraisers and clients, often mortgage lenders, seeking appraisal services. These companies ensure compliance and standardization in the appraisal process to prevent undue influence and maintain objectivity.
The Appraisal Practices Board (APB) is a board within The Appraisal Foundation, established to identify and offer commentary on appraisal methods and techniques. Their guidance aims to promote clarity and consistency in appraisal practices, but adherence to their recommendations is voluntary.
The appraisal process, also known as the valuation process, is a systematic method used to estimate the market value of a property. This process involves a detailed analysis of various factors including property condition, location, and comparable sales.
An Appraisal Report is a comprehensive document that explains a property's value, including the data and methodologies used to determine that value. It provides detailed insights and is foundational in real estate transactions.
An appraisal review is a report that comments on the completeness and apparent accuracy of an appraisal report. The primary purpose of some reviews is to ensure compliance with technical rules such as USPAP; other reviews focus on validating the value estimate. The review may be presented as a narrative or a checklist.
