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!
An occupancy report provides a comprehensive summary of a building's occupancy status, detailing pertinent information about tenants, vacant spaces, and leasing terms. This report is essential for property managers, owners, and investors to assess the property’s performance and make informed decisions.
Expenditures related to construction that are spent away from the place of construction. Off-site costs can include expenses associated with extending utilities and infrastructure needed to service a development project.
Off-site improvements refer to the various infrastructural developments made to areas surrounding a specific land development or subdivision, necessary for its functional integration. These improvements can range from access streets and utilities to sewers and drainage systems.
Offer and acceptance is a fundamental concept in contract law that requires a clear and unequivocal offer by one party and an unambiguous acceptance by the other party, forming a legally binding agreement once acceptance is communicated.
An offer in real estate signifies a formal proposal from a buyer to a seller, showcasing a buyer's willingness to purchase property at a specified price or terms.
An offeree is the individual or entity that receives an offer or proposal in the context of a contract negotiation. In real estate, this typically refers to the party that receives a purchase or sale offer.
The 'Offering Price' refers to the amount a prospective buyer offers for a property on the market. This crucial figure determines the start of a negotiation process and can heavily influence the final transaction.
An offeror is an individual or entity that presents or extends an offer to another party in a real estate transaction. This term is crucial in contract law as it denotes the party who initiates the contractual agreement.
An office building is a structure primarily used for conducting business activities such as administration, clerical services, and client consultations. These buildings can vary in size and may house one or multiple business concerns.
The Office of Fair Housing and Equal Opportunity (FHEO) is an agency within the U.S. Department of Housing and Urban Development (HUD) tasked with eliminating housing discrimination, promoting economic opportunity, and fostering diverse, inclusive communities. FHEO protects people from discrimination based on race, color, religion, sex, national origin, disability, or familial status.
The Office of Federal Housing Enterprise Oversight (OFHEO) was an independent entity within the Department of Housing and Urban Development (HUD) responsible for ensuring the financial safety and soundness of Fannie Mae and Freddie Mac until it was replaced by the Federal Housing Finance Agency (FHFA) in 2008.
The Office of Interstate Land Sales Registration (OILSR) is a division of the U.S. Department of Housing and Urban Development that regulates the offering of land for sale across state lines, ensuring transparency and protecting consumers.
An office park is a planned development specifically designed to accommodate office buildings and their supportive facilities, such as restaurants and gyms. These parks may be tailored to attract particular types of tenants, including research or medical services.
In real estate, the term 'OFFSET' can refer to various contexts, including a reduction or counterbalance in value resulting from condemnation. It's often intertwined with terms like 'SETOFF' or 'SPECIAL BENEFITS,' relevant to compensation in property takings.
An Oil and Gas Lease is a legal agreement that grants the right to explore, extract, and produce oil, gas, and sometimes other minerals from the land. The lease outlines terms such as the subsurface and surface rights, duration, extension terms, royalties, surface damages, assignments, and warranties.
The Office of Interstate Land Sales Registration (OILSR) supervises the regulation and oversight of interstate land sales, ensuring compliance with body legal requirements and protecting consumers from fraudulent practices. The OILSR helps maintain transparency and accountability in interstate land transactions.
On-site refers to operations or services performed directly at the location, often related to property management, development, or various other activities.
One-Hundred Percent Location refers to a premium commercial real estate zone with the highest foot traffic and visibility, making it the most desirable for retail businesses.
The one-hundred-percent location refers to the specific spot in an urban area where land values and rents are the highest, often considered the 'best' or most prime location.
An OPCO/PROPCO Deal is a financial arrangement where a parent company creates a subsidiary property company to manage real estate assets. This deal structure allows the operating company to reduce debt exposure, improve credit ratings, and potentially avoid double taxation when the property company is set up as a REIT.
An open house is a method of showing a home for sale where the property is available for inspection by interested parties. During this event, potential buyers have the chance to explore the home without the need for a prior appointment.
Open housing refers to a condition where housing units can be purchased or leased irrespective of the buyer's or tenant's racial, ethnic, color, national origin, familial status, sex, or religious characteristics. This ensures equal housing opportunities for all and is supported by federal fair housing laws.
An open listing is a non-exclusive property listing arrangement where any number of brokers can participate, but only the broker who successfully secures a buyer receives a commission.
An open mortgage is a mortgage that has matured or is past its due date and hence remains open to foreclosure or repayment without any prepayment penaltiesat any time. It allows for flexibility for both the borrower and the lender.
Open Space refers to land within a developed area that remains undeveloped and serves as an amenity to surrounding occupants.
The Open Standards Consortium for Real Estate (OSCRE) is a not-for-profit, membership-funded, neutral consortium that facilitates collaboration on standardized data exchange in the real estate industry.
An open-end mortgage is a type of loan that allows the borrower to secure additional funds from the lender, with a ceiling amount set on the maximum borrowing limit typically based on a percentage of the property's appraised value.
An operating budget outlines a reasonable expectation of future income and expenses from property operations, playing a crucial role in financial planning and management within real estate investments and enterprises.
Operating Capital refers to the funds required to finance the day-to-day activities of a business. It is otherwise known as working capital and is essential for maintaining the operational liquidity necessary for running regular business operations.
Operating covenants in shopping center retail store leases are requirements that lessors and retail store lessees must observe to provide uniformity in the shopping center’s operations.
The Operating Expense Ratio (OER) is a key metric used in real estate to measure the efficiency of a property's management by comparing its operating expenses to its potential gross income. A lower OER indicates a more efficiently managed property.
Operating expenses in real estate refer to the costs incurred to operate and maintain a property. These include expenses like property taxes, utilities, hazard insurance, and maintenance, while excluding financing expenses and depreciation.
Operating income, also known as Net Operating Income (NOI), is a key financial metric used to assess the profitability of a real estate investment or business by calculating earnings before interest and tax deductions.
An operating lease is an agreement where the lessee leases an asset from the lessor for a certain period but does not assume risks and rewards of ownership.
Operating leverage refers to the automatic increases in net operating income (NOI) or cash flow of income-producing real estate when income and expenses increase at the same rate; this effect is further enhanced when expenses are fixed.
Operating Statements are comprehensive financial reports that provide detailed insight into the cash flow generated by a property, offering a snapshot of its financial health.
An Opinion of Title is a certificate, often provided by an attorney, that attests to the validity of the title to a property being sold. This document plays a crucial role in real estate transactions.
Opportunity cost represents the potential benefits an individual, investor, or business misses out on when choosing one alternative over another. It mainly concerns the analysis of trade-offs and ensuring that the benefits of a pursued action or investment outweigh its associated costs.
An option in real estate refers to the right to purchase or lease a property upon specified terms within a specified period.
An Option ARM (Adjustable-Rate Mortgage) is a type of mortgage loan that allows borrowers to select from multiple payment options each month, enabling flexibility based on financial circumstances. These payment options typically include fully amortizing payments, interest-only payments, and minimum payments that can lead to negative amortization.
An option to purchase is a contract granting the holder the right, but not the obligation, to buy a property at a specified price within a set timeframe, subject to pre-defined conditions.
An optionee is the individual or entity that receives an option to purchase property at a future date for a predetermined price. This provides the optionee the right but not the obligation to complete the transaction. Options are commonly used in real estate and financial markets.
An optionor is the party that grants or sells an option contract, giving the buyer the right, but not the obligation, to purchase or sell an asset at a specified price within a set period.
An unwritten agreement concerning the sale, rental, or use of real estate, often unenforceable under the Statute of Frauds, with few exceptions such as short-term verbal leases.
Municipal rules governing the use of land that provide specific regulations and guidelines for various land-related practices.
A tax term that allows a current deduction for business expenses, contrasting with capital expenditures and unreasonable expenses.
An Ordinary Annuity is a series of equal payments made at the end of consecutive periods, commonly used in financial planning, loan repayments, and retirement accounts.
Ordinary income refers to any type of income that is taxed according to the standard income tax rates established by taxing authorities. This category includes wages, salaries, commissions, interest, and other types of income that do not receive special tax treatment like long-term capital gains.
An ordinary loss is a loss that is deductible against ordinary income for income tax purposes and is generally more beneficial to a taxpayer than a capital loss, which has limitations on deductibility.
ORE, or OREO, specifically refers to real estate assets that lending institutions hold due to foreclosures. These are properties not used for bank operations but retained as a consequence of loan defaults.
Orientation refers to the positioning of a structure within a site concerning sunlight angles and prevailing winds, which influences energy efficiency, lighting, heating, cooling, and overall comfort.
Oriented Strand Board (OSB) is a building material composed of rectangular-shaped wood strands arranged in layers at right angles to one another, forming a strong and stiff panel bonded with waterproof adhesives.
Oriented Strand Board (OSB) is a type of engineered wood used extensively in construction and home improvement projects. Known for its strength and versatility, OSB consists of compressed layers of wood strands bonded together with adhesives.
The original cost represents the total purchase price initially incurred for acquiring an asset, including any associated acquisition expenses. This figure is essential for various financial calculations and reporting, forming the baseline for depreciation, amortization, or gain and loss assessments.
Original Equity refers to the initial amount of cash invested by the underlying real estate owner. It is distinct from concepts like sweat equity and capital calls, forming the base for calculating the owner's financial stake in the property.
The principal amount owed on a mortgage at the time of its origination or closing.
Originate refers to the process by which a lender creates and funds a loan. Loan origination encompasses assessing and approving an applicant's creditworthiness, as well as disbursing funds to initiate the lending transaction.
Origination, specifically loan origination, refers to the process in which a borrower applies for a new loan and a lender processes that application. This includes various steps such as evaluating the borrower's creditworthiness, completing the application, underwriting, and funding the loan.
Origination fees are charges to a borrower to cover the costs of issuing the loan, such as credit checks, appraisals, and title expenses.
The origination process encompasses all the steps required to fund a loan, including due diligence, financial planning, and necessary lender approvals, aiming at assessing and mitigating risk while optimizing financial outcomes.
Other People’s Money refers to borrowed funds that are invested in a money-making venture. This strategy uses debt to maximize investment profits or minimize the risk of personal loss. The underlying principle is financial leverage, which can significantly affect the return on investment.
An outparcel, also known as a pad site, refers to a piece of property on the perimeter of a larger development, such as a shopping center, that is designated for singular commercial use.
Outstanding balance is the amount currently owed on a debt after accounting for payments already made toward the principal and interest. It is a key figure in managing financing and understanding one’s debt obligations.
Overage in leases for retail stores is the additional amount to be paid based on gross sales that exceed a predetermined threshold in addition to the base rent, often seen in percentage leases.
Overage Rent, also known as Percentage Rent, is an additional rent payment that tenant retailers pay to their landlords based on a percentage of their sales over a specified base amount. Often used in shopping centers or retail spaces, it helps landlords share in the tenant’s success.
The Overall Capitalization Rate (Cap Rate) is a metric used to evaluate the return on investment of a real estate property, usually expressed as a percentage. It helps investors determine the potential profitability of a property by comparing the annual net operating income (NOI) to the property's current market value or acquisition cost.
The Overall Rate of Capitalization, often referred to as the Overall Rate of Return (ORR), is a key financial metric used in real estate to evaluate the income-generating potential of an investment property relative to its purchase price or market value.
The Overall Rate of Return (OAR) is a metric that calculates the percentage yield of a property based on its Net Operating Income (NOI) divided by the property’s purchase price. This metric helps investors evaluate the profitability of real estate investments and compare different properties.
Overbuilding occurs when there is more real estate construction in a specific area than the market can absorb within a reasonable amount of time. This imbalance between supply and demand often leads to vacant properties and lower rental rates.
Overimprovement occurs when a property is improved to a level that it exceeds the optimal economic use for that particular property, resulting in a value that is not supported by the surrounding community or comparable properties.
Override refers to a fee paid to someone higher in the organization, or a percentage paid from earnings for additional expertise or management oversight.
Owner financing, also known as seller financing, is a real estate arrangement where the seller provides a loan to the buyer to purchase the property, bypassing traditional mortgage lenders.
An owner occupant is a resident of a property who also owns the property. This term differentiates from absentee owners and rental tenants and has significant implications for real estate, including financing and tax benefits.
The term 'Owner of Record' refers to the person or entity listed in public records as the legal owner of a property. While the owner of record is the recognized owner in official documents, beneficial ownership may differ.
An Owner's Title Policy, also known as Mortgagor's Title Insurance, provides protection to property owners against potential losses due to title defects, liens, or other legal encumbrances on the property that may arise after purchase.
A data series produced by the Bureau of Labor Statistics, Owners' Equivalent Rent (of Primary Residence) is used in compiling the Consumer Price Index (CPI) to track the rental value that the average owner-occupied home would command in the market.
Ownership form methods influence various aspects of real estate management including income tax, estate tax, continuity, liability, survivorship, transferability, disposition at death, and bankruptcy.
Ownership in severalty, also known as tenancy in severalty, is a form of real estate ownership where a single entity holds sole title to a property. This arrangement provides the owner with exclusive rights and control over the property, without interference from others.
Ownership rights to realty possession encompass the legal rights to control, enjoy, use, lease, and dispose of real property. These rights are fundamental to property ownership and are guided by state and federal laws.
P&I, or Principal and Interest, payments refer to the periodic payments made on a mortgage or loan that include both the loan principal and the interest accrued. These payments are common in various types of loans, including mortgages, auto loans, and personal loans.
A P&L statement, also known as a profit and loss statement, is a financial document that provides a summary of a company's revenues, expenses, and profits/losses over a specific period.
A package mortgage is a type of mortgage arrangement where the principal amount loaned is increased by including both personalty (e.g., appliances) and realty (real estate) as collateral.
Packed deals are mortgage loans that include excessive fees in the balance owed, which might be potentially illegal due to regulations in certain jurisdictions.
A pad site is an individual freestanding retail space that typically encompasses ¾ to 1½ acres, often located near larger shopping centers or commercial developments.
In the context of condominium or cooperative housing, 'paint-to-paint' defines the boundaries of exclusive unit ownership. The ownership typically extends to the interior walls, floors, and ceilings, described as being from 'paint to paint,' with the housing complex retaining ownership and responsibility for common structural elements like walls separating the units.
The paired sales method is a real estate appraisal approach that involves comparing sales of properties that have similar characteristics to determine the impact of specific property features on market value.
Paired Sales Appraisal is a comparative method used to determine the value of a specific property attribute by comparing similar properties that differ in just that one attribute.
Panic selling refers to the sudden, widespread urgency to dump properties on the market, typically incited by fear of a rapid decline in property values, often due to perceived detrimental changes in neighborhood conditions.
Paper credit is a term used in real estate to describe a written obligation given or received instead of cash. It often includes negotiable instruments such as promissory notes or bonds.
A concept map for showing how a parcel of land might be divided for residential or commercial development without the detailed surveying or official approvals from planning or zoning departments.
Paper profit refers to the unrealized gain in value of a property which would be realized if the property were sold at its current market value. As long as the property remains unsold, the profit remains a 'paper' valuation and is not actual profit.
A parcel is a defined piece of property under one ownership. It can be a standalone lot or part of a larger subdivision.
A Parcel Identification Number (PIN), also known as an Assessor Parcel Number (APN), is a unique numerical identifier assigned by local tax assessors to uniquely identify a parcel of real estate.
Parking ratio refers to the number of parking spaces provided per 1,000 square feet of gross leasable area (GLA) in a property, ensuring adequate parking for tenants and visitors.
Parol Evidence concerns the use of oral agreements made prior to or at the time of writing a contract. The Parol Evidence Rule states that such oral agreements are generally inadmissible in court to contradict written agreements, except in cases of mistake or fraud.
Partial eviction occurs when a tenant is deprived of a portion of the leased property, often resulting in a reduced rent or relocated space within the property.
Partial Interest refers to the ownership of a part of the ownership rights in a parcel of real estate, which can include rights like mineral rights or easements. It can also describe an undivided interest in a property shared with several other owners.
Partial Payment is a payment that is less than the required monthly mortgage payment. Normally, lenders do not accept partial payments, but a lender may make exceptions during times of difficulty.
A provision in a mortgage that allows some of the property pledged to be freed from serving as collateral.
Partial taking refers to the acquisition by condemnation of only a portion of a property or specific property rights, rather than the entire property.
