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 National Apartment Association (NAA) is a trusted organization that advocates for the rental housing industry, providing services, education, and standards for industry professionals.
The National Apartment Association (NAA) serves as an advocate, resource, and essential figure in the multifamily housing industry, providing industry-specific education, best practices, and valuable resources for apartment rental stakeholders.
The National Association of Building Inspection Engineers (NABIE) is a professional society in the United States that represents engineers and architects who specialize in building inspection and consultation services. NABIE sets standards for building inspection professionals, provides educational resources, and promotes ethical practice in the field.
The National Association of Building Inspection Engineers (NABIE) is a professional organization associated with the National Society of Professional Engineers (NSPE), focusing on the enhancement and qualification of licensed engineers and architects in the field of building inspection.
The National Association of Environmental Professionals (NAEP) is a multidisciplinary association dedicated to the advancement of environmental professions through education, networking, and certification programs. It serves as a forum for state-of-the-art information on environmental planning, research, and management, and provides a network of professional contacts across various sectors.
The National Association of Home Builders (NAHB) is an organization of home builders that provides educational resources, political information, and research services. It also publishes a monthly magazine called Builder.
The National Association of Housing and Redevelopment Officials (NAHRO) advocates for adequate and affordable housing, contributing to strong and viable communities, especially for low and moderate-income Americans.
The National Association of Independent Fee Appraisers (NAIFA) is an organization that includes real estate appraisers who pursue various professional designations to certify their expertise and competence in the field.
The National Association of Industrial and Office Properties (NAIOP) is a leading trade association established in 1967, encompassing over 7,000 members who are developers, owners, investors, and related professionals in the industrial and office real estate sectors.
The National Association of Real Estate Appraisers (NAREA) is a professional organization dedicated to maintaining high standards in the practice of real estate appraisal. NAREA provides education, certification, and professional support to individuals in the appraisal industry.
The National Association of Real Estate Appraisers (NAREA) is a professional organization dedicated to standardizing and enhancing the practice of real estate appraisals through education, certification, and advocacy.
The National Association of Real Estate Brokers (NAREB) is an organization dedicated to enhancing the professional and business interests of minority real estate brokers and advocating for the rights of underserved communities.
The National Association of Real Estate Brokers (NAREB) is an organization mainly comprised of minority real estate salespersons and brokers who are referred to as 'REALTISTS'. The association seeks to enhance the real estate business with a focus on fairness and equal opportunity.
The National Association of Real Estate Editors (NAREE) is a prestigious organization that brings together journalists, editors, and communicators covering various aspects of the real estate industry including residential, commercial, and green building sectors.
The National Association of Real Estate Editors (NAREE) is a professional association for writers, editors, columnists, authors, and communication professionals covering both residential and commercial real estate.
NAREIM is an organization of professional real estate investment managers dedicated to advancing the values and practices of the real estate investment management industry.
The National Association of Real Estate Investment Trusts (NAREIT) is a trade association that represents the interests of real estate investment trusts (REITs) and publicly traded real estate companies. NAREIT provides data on REIT performance, industry definitions, and serves as an advocate for the real estate investment industry.
The National Association of REALTORS® (NAR) is a professional association dedicated to promoting professionalism, ethics, and standards in real estate activities. With over 1.3 million members, the NAR is a prominent organization within the real estate industry.
An organization that awards the Certified Review Appraiser (CRA) designation.
The National Council of Real Estate Investment Fiduciaries (NCREIF) is an organization that collects historical data on various institutional-grade property types, sorted by geographic areas. It publishes data on income and value changes, and its index, often cited as the benchmark for institutional real estate performance, is known as the Russell-NCREIF Real Estate Performance Report.
National Decision Systems (NDS), now known as Claritas, is a data company that provides demographic and psychographic information used for geographic segmentation and market analysis.
The National Flood Insurance Program (NFIP) is a program created by the U.S. Congress in 1968 through the National Flood Insurance Act of 1968. The NFIP's aims are to reduce the impact of flooding on private and public structures by providing affordable insurance to property owners and by encouraging communities to adopt and enforce floodplain management regulations.
An organization that provides leadership for the apartment industry on legislative and regulatory matters, advances research and the exchange of strategic business information, and promotes the desirability of apartment living.
The National Real Estate Investors Association (NaREIA) provides a nationwide network for real estate investors, offering resources such as educational tools, networking opportunities, and advocacy for investor-friendly legislation.
The National Real Estate Investors Association (NaREIA) is an organization that works with local investor groups to share resources and exchange information.
The National Society of Real Estate Appraisers (NSREA) is an affiliate of the National Association of Real Estate Brokers that offers professional designations such as RA, CRA, and MREA. The organization is dedicated to maintaining a high standard of professionalism and ethics in the field of real estate appraisals.
A national tenant is a lessee with a presence across many or most of the United States. These entities are typically well-known and have better credit compared to local tenants, making them desirable for commercial property owners and lenders.
Natural Attenuation is a passive method of remediating contaminated property through natural processes such as biological degradation, chemical stabilization, dilution, evaporation, and natural sorption.
The Natural Vacancy Rate is the average vacancy rate for a rental property market that balances supply and demand, serving as a long-term benchmark to evaluate whether current vacancy rates are high or low.
The National Council of Real Estate Investment Fiduciaries (NCREIF) is an association that provides performance and analytics information for real estate investment markets, aiming to enhance fiduciary standards in real estate investments.
Necessity, often referred to as Public Purpose, encompasses the concept that certain conditions justify governmental actions, such as expropriations, to serve the broader needs of the community.
Negative amortization refers to an increase in a loan's outstanding balance due to periodic debt service payments being insufficient to cover the required interest charges. This generally occurs with indexed loans where the interest rate can be adjusted without altering the monthly payment amount.
Negative cash flow occurs when an income-generating property allows more expenses than revenue within a given period, causing the property owner to cover the shortfall from other investments or personal savings.
Negative leverage, also known as reverse leverage, occurs when the cost of borrowing exceeds the income generated by an investment, resulting in a lower overall return.
A negotiable instrument is a signed document containing a promise to pay a specified sum of money to a designated person or assignee, transferable from one person to another.
Negotiation in real estate refers to the process of bargaining between two or more parties, typically a buyer and seller, aiming to reach a mutually agreeable contract. The successful negotiation results in the formation of a legally binding contract detailing the terms and conditions under which the sale or purchase will proceed.
A neighborhood is a district or locality characterized by similar or compatible land uses. They often have identifiable place names and boundaries composed of major streets, barriers, or abrupt changes in land use.
The neighborhood life cycle represents the generalized pattern of physical and social changes that residential areas undergo over time. This cycle can be influenced by various factors including economic conditions, demographic shifts, and policy interventions.
A neighborhood shopping center is a type of retail property designed to provide convenience shopping for the day-to-day needs of consumers in the neighborhood. It typically offers a mix of convenience-oriented stores and services.
Net Absorption measures the amount of newly occupied space in a given period minus the space vacated or put back on the market during that same period, providing key insights into market demand and occupancy trends.
In accounting, the term 'Net Income' refers to the amount remaining after all expenses have been deducted from total revenue. It is a key measure of profitability and is also known as the bottom line. In appraisal, net income can often be termed as net operating income, and in personal finance, it refers to an individual's take-home pay after all taxes and deductions have been subtracted.
Net Income Before Recapture, also referred to as Net Operating Income (NOI), represents a real estate property's revenue minus all operating expenses, excluding income taxes and financing costs. It provides a useful metric for real estate investors to gauge a property’s profitability and investment potential before tax considerations and possible recapture of depreciation.
The Net Income Multiplier (NIM) is a valuation metric used to estimate a property's market value based on its Net Operating Income (NOI). It provides investors with a quick method to gauge the return on investment and compare property values within a specific market or region.
Net Land refers to the usable land area remaining after accounting for non-usable portions, such as floodplains, wetlands, or other environmentally restricted zones. This concept is crucial for property valuation and development planning.
Net Leasable Area (NLA) refers to the total floor space within a building that is available for rent to tenants, excluding common areas such as hallways, elevators, and mechanical rooms. NLA is a crucial metric for property owners and investors to determine the rentable value of a commercial real estate property.
Net Leasable Area (NLA) represents the precise space within a commercial property that can be rented to tenants. It is a critical metric for landlords and investors when estimating potential rental income.
A Net Lease is a type of lease agreement where the tenant agrees to pay not only the base rent but also additional costs associated with the property, such as taxes, insurance, and maintenance. This arrangement ensures that the landlord's rent receipt is 'net' of these expenses.
A net listing is a type of real estate agreement where the broker's commission is the surplus amount over an agreed-upon net price to the seller. This arrangement is illegal in some states due to potential conflicts of interest.
Net Operating Income (NOI) is a crucial metric in real estate investment that measures the profitability of a property or business after subtracting operating expenses but before interest and tax deductions. It serves as an indicator of the financial health and performance of income-generating real estate.
Net Operating Income (NOI) is a key performance metric used to evaluate the profitability of income-generating real estate assets. It represents the income produced by a property after deducting all operating expenses but before accounting for taxes, interest, depreciation, and amortization.
Net Present Value (NPV) is a method of determining whether the expected performance of a proposed investment promises to be adequate by calculating the present value of expected future cash flows minus the initial investment cost.
Net Present Value (NPV) is a crucial financial metric used to evaluate the profitability of an investment. By assessing the present value of expected future cash flows, NPV helps investors and businesses make informed decisions.
Net proceeds from resale refer to the amount a seller receives from the sale of a property after all costs and expenses associated with the sale have been deducted. It is important to calculate these net proceeds as they determine the actual financial benefit the seller gains from the property sale.
Net Realizable Value (NRV) is the estimated selling price of a property in the ordinary course of business, less reasonably predictable costs of completion and selling expenses. It is a crucial concept particularly in inventory and financial accounting, where it's used to ensure assets are not overstated in financial statements.
Net Rentable Area (NRA) refers to the usable space available for lease to tenants in a commercial property, excluding certain areas such as common areas, elevator shafts, and emergency stairwells. This metric is essential for determining the true income potential of a property.
Net Spendable Income, also known as After-Tax Cash Flow, refers to the actual cash flow available to an investor after accounting for all operating expenses, debt service, and taxes.
Net worth is a financial metric that provides a snapshot of an individual's financial health at a specific point in time. It represents the difference between total assets and total liabilities.
Net Yield refers to the return on an investment after subtracting all expenses associated with the investment.
New England Colonial refers to an early-American-style, 2½-story boxlike house that is generally symmetrical, square, or rectangular with side or rear wings. These homes typically use narrow clapboard siding and feature gable roofs covered with shingles.
An early-American-style house that is simple and box-shaped. The traditional material for the exterior siding is white clapboard. A steep pitched roof is used to shed heavy snow.
A landmark 5–4 Supreme Court decision in 2005 affirming the constitutionality of a condemnation of land for the economic development of the town. The case, known as Kelo v. City of New London, sparked significant changes in eminent domain laws across various states.
A New Town is a large mixed-use development designed to provide residences, general shopping, services, and employment, with the basic concept being to construct a community in a previously undeveloped area under a central plan to avoid unplanned development.
A NINJA loan is a type of secured loan given to borrowers with no income, no job, and no assets. These loans carry high risk for lenders and were popular during the mid-2000s credit bubble, partly because lenders anticipated rising real estate values.
A decision by the Department of Veterans Affairs (VA) to pay the guaranteed amount to the lender rather than acquiring the property in foreclosure when a guaranteed loan goes into default. This typically occurs when the property's value has declined significantly.
A real estate acquisition strategy where buyers use minimal or no cash down payments, often relying on seller financing, existing loan assumption, or other creative financing methods to achieve maximum leverage.
A No-Documentation (No-Doc) loan is a mortgage loan wherein the borrower is not required to provide standard forms of documentation, such as proof of income, employment, or assets to secure approval.
The nominal loan rate, also known as the face interest rate, is the percentage of interest charged by the lender on the loan's outstanding principal balance. It does not account for inflation or other complex variables such as fees or compounding.
A nominee is an individual or entity acting on behalf of another person for specific purposes, generally to hold property rights temporarily.
A nominee loan is a fraudulent loan obtained by concealing the real borrower's identity and substituting it with another person's name and credit rating.
A Non-Traded Real Estate Investment Trust (REIT) is an investment vehicle that offers the tax benefits of a REIT while maintaining privately-held features similar to a limited partnership.
A nonassumption clause, also known as a due-on-sale clause, is a clause in a mortgage contract that prevents the transfer of the mortgage terms to another borrower in the event of a sale. This clause is used to protect lenders from the potential risks of new borrowers who might be less creditworthy than the original borrower.
Nonconforming land use refers to a property use that does not comply with current zoning laws but is allowed to continue because its use began before the zoning restrictions were enacted or changed.
A nonconforming loan is a loan that does not meet the standards of, or is too large to be purchased by, Fannie Mae (FNMA) or Freddie Mac (FHLMC).
A nondisturbance clause in a real estate contract ensures that a tenant's lease will continue even if the property owner faces foreclosure, or that surface development will not be impeded by subsurface mineral rights.
A nonexclusive listing allows multiple real estate agents to market a property simultaneously. This gives the property owner the flexibility to sell through any agent and pays commission only to the agent who successfully sells the property.
In the context of real estate and building materials, nonfriable typically refers to materials, specifically asbestos-containing materials (ACMs), that are in good condition and do not easily crumble to release fibers when handled.
Nonjudicial foreclosure is a process used in certain states that allows lenders to sell a property directly without court involvement. This method is typically faster and less expensive.
A nonperforming loan (NPL) is a loan for which the borrower is not making interest payments or repaying any principal. This typically occurs when payments are more than 90 days past due or the maturity date has already passed without full repayment.
Nonrecourse financing refers to loans secured by collateral, typically real estate, where the lender's ability to recover the debt is limited to the proceeds from the sale of that collateral alone, with no further recourse to the borrower's other assets.
Normal wear and tear physical depreciation refers to the gradual loss of a property's value due to usage and aging, which includes minor damages, material degradation, and obsolescence occurring under normal usage conditions.
Notarize refers to the act of a notary public witnessing the signing of a document and attesting to the authenticity of the signature. This process provides legal assurances that the signature is legitimate.
A notary public is an official, authorized to perform certain legal formalities, including witnessing signatures on documents, to deter fraud and ensure proper execution of important paperwork.
A Note is a financial instrument that acknowledges a debt and provides a promise to pay. It often accompanies a mortgage, pledging property as security for the debt.
Notice in real estate refers to the official communication of a legal action or one’s intent to take an action. It serves to inform individuals or parties of important legal actions or changes regarding property and tenancy.
A legal notice filed after the completion of construction that signals the time frame during which an unpaid contractor can legally file a mechanic’s lien.
A Notice of Default is a formal notification sent to a borrower or a tenant indicating that they have failed to make the required payments or comply with the terms of a loan or lease agreement. It often includes details on the grace period provided to cure the default and the penalties that will be applied if the default is not resolved.
A Notice to Quit is a formal, written notification issued to a tenant to vacate rented property by a specified date. It is commonly used by landlords when the lease expires or the tenant violates the rental agreement.
Notorious Possession is the open, obvious, and well-known occupation or use of property, which one of the criteria required for establishing adverse possession. This kind of possession is typically one where the possessor's use of the property is visible to onlookers and could be perceived by neighbors and passersby as ownership of the property.
Novation is a three-party agreement that releases one party from a contract and substitutes another party. It is also the substitution of one contract for another, with acceptance by all parties.
The NPI, or National Property Index, is a property performance index maintained by the National Council of Real Estate Investment Fiduciaries (NCREIF).
A nuisance refers to a land use or activity that is incompatible with surrounding land uses, potentially affecting the enjoyment or value of nearby properties. Zoning laws and private deed restrictions are utilized to control and prevent such nuisances.
Null and void refers to a term applied to contracts or provisions within contracts that cannot be legally enforced due to non-conformance with the law.
An obligee is the person or entity in whose favor an obligation is entered into and who has the right to demand the fulfillment of that obligation from the obligor.
An Obligor is an individual or entity that is legally or contractually bound to provide payment or fulfill an obligation to another party, known as the Obligee.
Obsolescence in real estate refers to a loss in property value due to reduced desirability and usefulness of a structure because its design and construction are outdated. This can result from various factors such as changes in design preferences, technological advancements, or geographic shifts.
An occupancy agreement, limited, allows a prospective buyer to obtain possession of a property under a temporary arrangement, typically before the official closing of the sale.
An Occupancy Certificate (OC) is an essential document that certifies that a building is suitable for occupancy and has been constructed according to approved plans and specifications, complying with relevant regulations and safety standards.
Occupancy Costs (Total) refers to a tenant's cumulative rent expense, generally including base rent, percentage rent, and additional charges. This key metric is pivotal for retail businesses in assessing the affordability and profitability of a given commercial space.
An occupancy permit, also known as a certificate of occupancy, is an essential document that certifies a building's compliance with local building codes and laws, permitting its use for commercial or residential purposes.
The occupancy rate is a key performance indicator in the real estate industry, representing the percentage of currently rented or occupied units in a building, neighborhood, or complex. A high occupancy rate generally indicates strong demand for the property.
