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!
A Mineral Lease is an agreement that grants the lessee the right to excavate and sell minerals or remove and sell petroleum and natural gas from the lessor's property in return for royalty payments.
Mineral rights are the privileges granted to individuals or entities regarding the extraction and sale of minerals found on or beneath a piece of land. These rights are separate from surface and air rights.
Mini-warehouses consist of small lockable individual units, often with garage-door-style openings, providing short-term storage solutions for personal or business use.
The smallest cash contribution required to obtain a loan, usually expressed as a percentage of the loan amount.
Minimum lot area refers to the smallest building lot area allowed within a subdivision, usually determined by a zoning ordinance. This requirement helps to establish the maximum building density for the subdivision.
Minimum lot size or minimum lot area refers to the smallest parcel of land allowed for development as per zoning regulations. This concept ensures proper land use and community planning.
Minimum Property Standards (MPS) are basic structural and safety requirements established for residential buildings constructed or financed under programs administered by the Department of Housing and Urban Development (HUD). These standards ensure that homes are safe, sanitary, and secure for occupants.
Minimum Rent (also known as Base Rent) is the fundamental rental amount agreed upon in a lease agreement, ensuring a consistent and predictable source of income for landlords.
In real estate, a minor is an individual who has not yet reached the age of majority, which varies by state but is typically between 18 and 21 years old. Contracts involving minors, such as those for the sale or use of real estate, are subject to special legal considerations.
A minority discount is a reduction from the market value of an asset, reflecting the lack of control and influence that a minority interest owner has over the business operations. This discount adjusts the perceived value of ownership stakes that do not confer control.
Minority interest represents ownership or stake in an entity that is less than 50%. This type of interest does not grant controlling power but can offer significant financial interests or gains.
Miscellaneous income in real estate refers to revenue generated from operating a property, excluding rental income. This additional income can come from various ancillary services and fees associated with the property.
Misrepresentation in real estate involves an untrue statement, whether unintentional or deliberate, affecting material facts about a property. This can lead to legal actions such as damages or rescission of the contract.
A Mission House is a type of residence inspired by the architectural style of nineteenth-century Spanish mission churches and houses found in Southern California. This style is characterized by arched doorways and windows, as well as stucco or adobe textures.
An unintentional error made in preparing a contract; may be corrected by mutual consent of all parties without voiding the contract.
To alleviate, reduce, or abate a penalty, punishment, or damage in a real estate context. Often involves actions such as mitigating financial obligations or physical damage to property.
A Mitigation Land Bank is a program designed to preserve environmentally sensitive natural land areas, including wetlands. The program is overseen mainly by the U.S. Army Corps of Engineers and the U.S. Environmental Protection Agency (EPA). Owners are required to set aside key portions of sensitive land, either on the development site or nearby, and they can sell credits to developers needing to offset the environmental impact of their projects.
A mixed-use property combines different types of land uses, such as residential, commercial, and industrial, into one cohesive development. This approach aims to create synergies between the various uses to enhance the overall functionality and convenience of the site.
MLS (Multiple Listing Service) is a database used by real estate agents and brokers to share information about properties for sale. It is designed to facilitate the buying and selling process by providing detailed listings accessible to all members.
A mobile home is a dwelling unit manufactured in a factory, designed for transport to a site, and semi-permanently attached. Upgraded standards in the 1980s rebranded them as manufactured homes.
A Mobile Home Park is a subdivision of plots designed for the siting of mobile homes. Plots are typically leased to mobile home owners and include utilities, parking space, and access to utility roads. Many parks also offer amenities such as swimming pools and clubhouses.
In real estate, a model often refers to a prototype or example property that is used to simulate potential outcomes of a real estate project. Utilizing models helps developers, investors, and other stakeholders visualize and anticipate project results.
A model unit is a representative home, apartment, or office space created to demonstrate the design, structure, and overall appearance of units within a development, primarily used as part of a sales or leasing campaign.
Modernization refers to the process of updating a property by incorporating advanced equipment, implementing contemporary aesthetic improvements, and removing outdated facilities. It can vary in degree and may be described as remodeling, renovating, rehabilitating, or redeveloping.
Modification refers to a change or alteration made to a clause within a contract agreement to accommodate the preferences or needs of the involved parties. This change must be agreed upon and initialed by all parties to become legally binding.
The Modified Accelerated Cost Recovery System (MACRS) is a method of depreciation used for income tax purposes in the United States. It allows for the accelerated depreciation of property over specified recovery periods.
Modular housing refers to homes that are built in sections (modules) in a factory setting and then transported to a building site where they are assembled and installed on permanent foundations, complying with local and regional building codes and regulations.
A moisture barrier is a layer of material such as foil, plastic, or paper used in the construction of exterior walls, ceilings, and foundations to prevent moisture penetration into wooden members or insulation, helping to protect the structural integrity and energy efficiency of buildings.
Mold is a type of fungi that thrives in moist environments and can pose significant health risks if not properly managed. Specific varieties, such as Stachybotrys chartarum, can lead to severe health problems, especially in individuals with existing respiratory conditions.
Molding refers to ornamental strips of material, such as wood, used to cover joints between walls and ceilings, and to trim door and window frames. It adds a decorative touch to interiors and can significantly enhance the aesthetic appeal of a space.
Monetary policy refers to the actions of a central bank or other regulatory authorities that determine the size and rate of growth of the money supply, which in turn affects interest rates. It is a crucial tool for achieving economic objectives such as controlling inflation, managing employment levels, and maintaining financial market stability.
The money market involves the interaction of buyers and sellers of short-term (one year or less) debt instruments, providing liquidity for major financial institutions and companies. Examples include Treasury bills, commercial paper, and certificates of deposit.
Monitoring facilities are essential equipment used for measuring the extent of contamination, often found in groundwater, ensuring effective environmental management and safety compliance.
Monterey Architecture is a distinctive nineteenth-century style characterized by its 2-story structure and a prominent balcony spanning across the front of the second floor.
A Month-to-Month Tenancy Lease is a rental agreement that can be extended or terminated each month by either party, providing flexibility for both landlords and tenants.
A fixed object and point established by surveyors to determine land locations and boundaries. Monuments serve as crucial reference points in the legal description of a property.
In real estate, a moratorium is a temporary prohibition or suspension on specific activities, often put in place to allow for further planning, analysis, or policy formulation.
A mortgage is a legal agreement in which a lender provides a borrower with funds to purchase real estate. The property serves as collateral for the loan.
A process whereby a specific mortgage lender certifies that a prospective borrower is financially qualified and creditworthy for a specific type of loan with specified terms for an amount up to a specified maximum. Actual advancement of the loan will depend on the suitability and value of the collateral property, which is unspecified at the time of pre-approval. Contrast PREQUALIFY.
Mortgage assumption is the process by which a homebuyer takes over the seller's existing mortgage, continuing to make payments under the original terms. This can potentially offer favorable interest rates and terms compared to current market rates.
A mortgage banker originates, sells, and services mortgage loans, playing a crucial role in the real estate financing landscape by facilitating access to home loans and managing mortgage-backed securities.
The Mortgage Bankers Association (MBA) is a national association that represents the real estate finance industry. It provides a range of services including educational programs, professional certifications, advocacy, and research for mortgage bankers.
Tax-exempt securities issued by municipal and state authorities to support low-interest rate mortgage loans for qualified individuals, typically first-time home buyers.
A mortgage broker acts as an intermediary between borrowers and lenders. For a fee, typically paid by the lender, a mortgage broker connects borrowers to loan products without servicing the loans themselves.
A mortgage commitment is an agreement between a lender and a borrower to lend money at a future date, subject to the conditions described in the agreement. It is a critical step in the home-buying or construction process, which signifies the lender's intention to offer financing upon meeting specific requirements.
The Mortgage Constant is derived by dividing the total annual mortgage debt service, including both principal and interest, by the initial loan amount. It provides a useful way of calculating the annual cost of a loan as a percentage, making it easy to compare different mortgage options.
The mortgage constant is the percentage ratio between the annual debt service and the outstanding loan principal. It reflects both the interest and the amortization components of a loan and is used extensively in real estate to determine the annual loan payment.
A mortgage correspondent services loans for a fee, managing various aspects such as collecting payments, paying real estate taxes, ensuring property insurance, and others.
A Mortgage Credit Certificate (MCC) enables a borrower to claim a portion of the mortgage interest paid as a credit against federal income tax, helping first-time home buyers by reducing their overall tax liability.
A mortgage discount refers to an initial amount deducted by lenders from the principal of a loan, often represented in terms of 'points.'
MERS is a corporation created by financial institutions to serve as a private alternative to public registration systems for mortgages, aimed at reducing recording fees and providing efficient management of loan information.
Mortgage fraud occurs when a potential borrower or a financial institution makes false representations that distort true financial outcomes, often leading to fraudulent gains or losses.
Mortgage Guarantee Insurance Company (MGIC) is a private institution that provides insurance to lenders, ensuring loan repayment in case of default or foreclosure by the borrower.
Mortgage Guaranty Insurance Corporation (MGIC) is a company that provides mortgage insurance, which protects lenders from losses when a borrower defaults on a mortgage loan. MGIC ensures that lenders can recover the money if a borrower does not fulfill their loan obligation.
Mortgage insurance is a protection for the lender in the event of borrower default, covering a portion of the amount borrowed to mitigate risk.
Mortgage Insurance Premium (MIP) is a fee paid by a borrower to obtain mortgage insurance on a mortgage loan, which protects lenders against losses if the borrower defaults. This fee can be paid as a lump sum at the time of loan closing or as a periodic amount included in the monthly payments, or both.
The Mortgage Interest Deduction is a tax incentive for homeowners which allows them to deduct interest paid on a mortgage of their primary residence or secondary residence from their taxable income.
A mortgage lien is an encumbrance on a property that is used to secure a loan. The holder of the lien has a claim to the property in case of loan default, making it a critical aspect of real estate financing.
Mortgage life insurance is a type of financial product that ensures mortgage repayment in the event of the borrower's death or disability, safeguarding the homeowner's family and the lender.
A mortgage loan is a type of loan secured by real estate property that the borrower is obliged to pay back with a predetermined set of payments. It allows individuals and businesses to purchase real estate without paying the full value upfront.
Mortgage modification refers to the process of making permanent changes to the terms of an existing loan agreement between a borrower and a lender. This is intended to make the loan more affordable for the borrower to avoid foreclosure.
A mortgage note is a legal document that outlines the terms of a loan agreement secured by real estate property. It details the borrower's obligation to repay the lender, the loan amount, interest rate, repayment terms, and other provisions.
Mortgage origination refers to the process by which a borrower applies for a new home loan, and a lender processes that loan. This process includes assessment, documentation, approval, and the issuance of the mortgage.
Mortgage Out refers to the practice of obtaining financing in excess of the cost to construct a project. During periods of relaxed monetary policy, developers could mortgage out by securing a permanent loan commitment based on a higher percentage of a project's completed value, allowing them to borrow more than the development costs.
A collection of similar loans that are sold as a unit in the secondary market or used to back a security, ultimately sold in the capital markets.
A Mortgage Real Estate Investment Trust (mREIT) is a company that specializes in investing in mortgage obligations, typically providing financing for income-producing real estate by purchasing or originating mortgage loans and mortgage-backed securities.
Mortgage relief involves the alleviation or settlement of mortgage debt. This can occur through the assumption of mortgage by another party or the repayment of debt. In tax-free exchanges, mortgage relief can be considered as boot received and could have tax implications.
Mortgage servicing involves the management of a mortgage loan, from collecting payments to ensuring that taxes and insurance are paid. It includes administrative tasks completed by a mortgage banker or a third-party servicer.
Mortgage-Backed Bonds (MBBs) are a type of bond that is secured by a pool of mortgage loans, providing investors with regular interest payments derived from the underlying mortgage payments.
A Mortgage-Backed Security (MBS) is a type of asset-backed security that represents a claim on the cash flows from mortgage loans, primarily on residential property. These securities are created by pooling together various mortgage loans and then selling the subsequent payment streams to investors.
A mortgage-backed security (MBS) is a type of financial instrument that is secured by a pool of mortgage loans, offering investors income streams derived from these mortgages.
The Mortgage-Equity Technique, also known as the Ellwood Technique, is used in real estate financial analysis to value income-producing properties. It incorporates both mortgage financing terms and investor equity expectations.
Mortgaged Property refers to real or personal property that has been pledged as security for the repayment of a loan. This secured asset is usually real estate property, where the borrower retains ownership while the lender holds a legal claim until the debt is repaid in full.
A mortgagee is an entity or individual who lends money to a borrower to purchase real estate and holds a lien on the property or title as security for the debt.
A 'Mortgagee in Possession' situation arises when a lender takes possession and control of a mortgaged property following the foreclosure of a loan secured by the mortgage. The lender holds the property, collecting any income produced, until it is sold at the foreclosure sale.
Mortgagee’s Title Insurance is a policy that protects the lender from future claims to ownership of the mortgaged property. Generally, this is required by the lender as a condition of issuing a mortgage loan.
A mortgagor is the owner of real estate who provides their property as security for a mortgage loan.
A Mortgagor’s Title Insurance policy protects the buyer or owner of real property from legitimate claims of ownership interest on the property, offering important supplemental coverage beyond the Mortgagee’s Title Insurance policy. Typically, the buyer covers the premium cost for additional security in property transactions.
A move-up home refers to a property that is larger, more expensive, or better equipped than a starter home, often acquired by individuals or families who have increasing financial stability and changing needs.
A mudroom is an area within a house near an entrance that provides space and facilities for cleaning shoes and other outerwear. Usually equipped with a lavatory or laundry sink and storage for coats and boots. Also called a transition room, especially in upscale homes.
Multifamily housing represents residential structures containing more than one dwelling unit within the same building, designed to accommodate multiple households. These types of properties range from smaller multi-unit buildings like duplexes to larger apartment complexes.
In multifamily residential properties, a 'unit' refers to a self-contained suite of rooms designed to be occupied by one tenant or family. Each unit typically features a private entrance and may be personalized to maintain a level of individuality separate from other units in the same building or complex.
A multiple exchange is a tax-free exchange in which more than one property or more than two parties are involved. This type of exchange allows for a series of transactions that enable parties to swap properties or interests to achieve their desired outcomes without generating a taxable event.
An arrangement among a group of real estate brokers to share information on properties, ensuring commissions from sales are split between listing and selling brokers.
A Multiple Listing Service (MLS) is a regional database used by real estate brokers to share property listings, facilitating the process of buying and selling homes by providing a centralized and up-to-date source of information.
Multiple regression is a statistical technique used to predict the value of one dependent variable based on the values of two or more independent variables. This method is commonly used in real estate for property valuation and mass appraising.
The multiplier is a factor used to extrapolate or derive a significant financial or economic value by applying it through multiplication. It is frequently used in real estate to determine property valuations and project population or economic growth based on certain key inputs.
A Municipality Utility District (MUD) is a special purpose district designed to provide utility services such as water, sewage, drainage, and sometimes other services to a limited geographic area. Established as a municipality rather than a private entity, MUDs can leverage lower interest rates available to municipal bonds to finance infrastructure development.
Muniments of Title are documents that serve as evidence of ownership, facilitating the transfer of property rights by clearly demonstrating the chain of ownership.
Mostly in the northeastern U.S., these state-chartered banks are owned by the depositors and operated for their benefit. Most of these banks hold a large portion of their assets in home mortgage loans.
The National Association of Environmental Professionals (NAEP) is a professional association dedicated to advancing the field of environmental protection by promoting a community of environmental professionals who maintain high standards of practice.
The NAHB is a trade association that represents the interests and concerns of home builders, developers, contractors, and related professionals within the residential construction industry in the United States.
NAHRO is a professional membership organization that represents public housing agencies, redevelopment agencies, and housing authorities in the United States.
The National Association of Independent Fee Appraisers (NAIFA) is a professional organization that represents fee appraisers in the real estate industry. It aims to promote the highest standards of professionalism, ethics, and competency among its members.
NAIOP, the National Association of Industrial and Office Properties, is a commercial real estate development association that provides advocacy, networking, and education to its members.
The National Association of Realtors (NAR) is a prominent trade association in the United States that represents real estate practitioners involved in all aspects of the residential and commercial real estate industries.
The National Association of Review Appraisers and Mortgage Underwriters (NARA/MU) is a professional organization that provides certification, training, and support for individuals involved in property appraisal and mortgage underwriting. Membership in NARA/MU signifies a dedication to the highest standards of professional practice and ethics in the real estate appraisal and mortgage underwriting industries.
NAREIM provides members the opportunity to exchange best practices, share strategic insights, and address challenges in managing real estate investments. The organization focuses on enhancing the expertise and professionalism of its members through various forums, research, and networking opportunities.
NAREIT is the preeminent organization that represents and advocates for real estate investment trusts (REITs) and publicly traded real estate companies in the United States. It plays a crucial role in education, advocacy, and research to promote the growth and understanding of REITs.
A Narrative Report Appraisal provides a comprehensive and detailed examination of property value using expository and descriptive paragraphs, unlike more structured formats such as forms, letters, or tables.
