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 recession is characterized by a significant decline in economic activity across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.
A Reciprocal Easement Agreement (REA) is a legal contract between owners of adjacent parcels of land, allowing the mutual use of both parcels for specified purposes such as access, parking, and utilities. REAs are commonly used in commercial developments to ensure seamless operation and movement between different parts of a property.
Reciprocity in real estate refers to a mutual agreement between states to recognize and validate the real estate license an individual has earned in another state, simplifying the process for real estate professionals to work across state lines.
Reclamation refers to the process of converting land from an unusable or undevelopable state into a usable or developable state. It contrasts with Mitigation Land Bank.
Recognized gain is the portion of a realized gain that is subject to taxation in a so-called tax-free exchange, such as under the IRS Section 1031 rule.
Reconciliation in appraisal involves analyzing values from different valuation approaches to arrive at a final estimate of a property's market value.
Reconfiguration in real estate involves altering the physical shape or layout of a property to better suit new requirements, tenant needs, or functional uses.
A tally of annual operating expenses for a Subject Property revised specifically for appraisal purposes. It considers stabilized annual figures and makes necessary adjustments to items to reflect accurate property operations and value.
Reconveyance is the process through which the lender transfers the title of the property back to the borrower once the mortgage loan is paid off in full. This legal instrument removes the lender's claim and gives the property owner clear title.
The record owner is the individual or entity whose name is listed on the public records as the current legal owner of a property or asset.
A Recorder is the public official responsible for maintaining records of documents pertaining to real property, including deeds, mortgages, and liens. This vital role ensures the documentation is publicly accessible.
Recording is the process of formally documenting instruments affecting the title to real property in a public registry, thus giving legal notice of the recorded facts to the world.
Recording fee closing costs are charges incurred during the real estate transaction to record documents, such as the deed or mortgage, in public records. These fees are mandatory and generally paid to local government offices to ensure the transaction is officially noted and legally recognized.
Recourse refers to the legal right of a lender to claim money from a borrower in the event of default, in addition to repossessing the property pledged as collateral.
The Recovery Fund is generally administered by Real Estate Commissions and requires licensees to contribute. It reimburses aggrieved persons who are unable to collect from brokers for wrongdoings.
The Rectangular Survey System, also known as the Government Rectangular Survey System, is a method used in the United States to divide and describe land using a grid system based on principal meridians and baselines. This system was established by the Land Ordinance of 1785 to simplify and standardize land descriptions.
A red herring is a preliminary prospectus filed by a company with the Securities and Exchange Commission (SEC), typically used in the process of going public. It provides potential investors with information about the company but is subject to change.
The act of curing a default by paying off all overdue loan payments and applicable penalties before a lender can initiate foreclosure proceedings.
Redeemable rent refers to a lease arrangement where the rent paid can be applied toward the purchase price of the property. This type of arrangement is often seen in lease-to-own agreements, offering tenants the possibility of becoming property owners.
The redemption period is the time during which a former owner can reclaim their foreclosed property by paying off the debt and any associated legal fees.
Redevelopment involves the demolition of existing improvements and the construction of new improvements on a site. The new improvements often differ from the old ones in various aspects...
Redfin is a popular real estate brokerage and listings service that provides detailed information on residential properties for sale, including photos, pricing, and factual details. It also connects users with brokers who are Redfin agents.
The rediscount rate is the interest rate charged to commercial banks and other financial institutions for borrowing funds from the Federal Reserve's discount window. It plays a crucial role in monetary policy and financial regulation.
Redlining is an illegal discriminatory practice in which lenders refuse to offer mortgages or other financial services to individuals based on the location of their property, often predominantly affecting communities of color. It can cause significant economic harm and contribute to the deterioration of neighborhoods.
A Reduction Certificate is a document issued by a mortgage lender, acknowledging the sum due on the mortgage loan, and is crucial when mortgaged property is being sold and the buyer assumes the existing debt.
Reentry is the legal right of a landlord to take back possession of the property once the tenant's lease term has expired.
The act of suggesting the use of a certain broker, which can be both a business strategy and a relationship-building exercise in the real estate industry.
Refinancing replaces an old loan(s) with a new loan(s), potentially securing better terms, reduced payments, or accessing cash.
Refinancing refers to the process of replacing an existing mortgage with a new one, typically to secure better loan terms such as a lower interest rate or a different type of loan structure. Often abbreviated as 'refi,' this process involves paying off an old loan with a new loan, typically to take advantage of lower interest rates, different loan terms, or to switch from a variable-rate mortgage to a fixed-rate mortgage.
The Regency House is an English-style 2- or 3-story symmetrical house characterized by a hip roof and often featuring a small octagonal window over the front door. This architectural style emphasizes balance and proportion, typical of early 19th-century Regency architecture.
A regional shopping center is a type of retail development designed to service a larger geographic area, offering a wide variety of goods and services through numerous tenants, including at least one major department store as an anchor tenant.
A Registered Trainee Appraiser, often referred to as an 'apprentice' or 'trainee,' is a designation in the appraisal industry requiring 75 hours of precertification education, including training in the Uniform Standards of Professional Appraisal Practice (USPAP), but does not require an exam or prior experience.
A registrar is responsible for maintaining accurate official records, including deeds, mortgages, and other important documents in real estate transactions.
Regression is a statistical technique used to estimate the relationships among variables. It is especially useful in real estate to predict property values based on factors like location, size, and age of a home.
Regressive taxation refers to a tax system where the tax burden falls more heavily on those with lower incomes compared to those with higher incomes. This is in direct contrast to progressive and proportional taxation systems.
Regulation D is a regulation of the Securities and Exchange Commission (SEC) that sets forth specific conditions under which a private offering is exempt from the registration requirements for a public offering.
Regulation Z, also known as the Truth in Lending Act (TILA), requires creditors to provide full disclosure of the terms of a loan, including the interest rate as an Annual Percentage Rate (APR). This regulation is compulsory for anyone who arranges credit for more than five sales of residential real estate in a year.
Regulatory taking occurs when government regulation limits the use of private property to such an extent that it effectively takes the property without direct compensation to the owner.
Rehab, short for rehabilitation, refers to the process of restoring or improving a property to a better condition, often for resale or rental purposes. It typically involves fixing structural issues, upgrading systems, and enhancing aesthetics.
Rehabilitating a property involves restoring a structure to a condition of good repair, making it functional and habitable again, and potentially increasing its value.
A rehabilitation mortgage is a unique kind of loan designed to cover both the purchase price of a property and the costs associated with its repair or improvement. The FHA’s 203(k) loan is a popular example of this type of financing.
Rehabilitation Tax Credit provides a tax incentive for property owners to invest in the preservation of historic and other qualifying buildings.
Reilly's Law of Retail Gravitation posits that larger shopping centers attract more customers compared to smaller retail spaces.
The reinstatement period is a phase in the foreclosure process during which the homeowner has an opportunity to stop the foreclosure by paying the money that is owed to the lender.
Reinsurance is the practice where insurance companies transfer portions of their risk portfolios to other parties to reduce the likelihood of paying a large obligation resulting from an individual claim. This process helps insurance companies stay solvent by mitigating the impact of significant or catastrophic losses.
The reinvestment rate is the interest rate an investor is assumed to be able to earn on intermediate cash flows in the projection of a terminal value.
REIS is a large data bank that includes historical rental rates on more than 100,000 properties. It is widely utilized by professionals in the real estate industry for market research, analysis, and forecasting.
A REIT ETF (Real Estate Investment Trust Exchange-Traded Fund) is an ETF that focuses on investing in equity REITs or mortgage REITs. These funds are traded on stock exchanges like regular stocks and typically have lower fees and provide greater diversification compared to traditional real estate mutual funds.
A Release Clause in a mortgage is a provision that allows the borrower to pay off a portion of the mortgage debt, thereby freeing a corresponding portion of the property from the mortgage lien. This is especially useful for subdivided properties or developments where individual parcels are intended to be sold separately.
A formal process that frees real estate from a mortgage or other lien, indicating that the debt has been fully paid off. This is crucial in ensuring that the property is clear of legal claims and can be sold or transferred without encumbrances.
A Release of Lien is a document that indicates that a lien holder officially relinquishes their claim on a property after the debt the lien secures is fully paid off.
Reliction is the gradual subsidence of water levels that exposes previously submerged land, creating dry land.
Relocation benefits refer to payments made by the government to occupants who are forced to move due to a condemnation action. Condemnation is the legal process by which the government takes private property for public use through eminent domain. These benefits are designed to cover the costs associated with moving to a new location and are provided to anyone affected, including property owners, tenants, and other non-owner occupants.
A Relocation Clause is a lease stipulation that allows a landlord to move a tenant to another location within the same building or complex. This clause provides flexibility for the landlord to maximize space utilization and cater to new tenants seeking specific floor plans.
A geographically diversified group of independent real estate brokerage companies, generally not members of a franchise, that share information with one another concerning potential customers.
Relocation service refers to specialized companies that arrange and manage the relocation of employees from one city to another. These companies typically take charge of selling the employee's existing home, purchasing a new home, and may include services like furniture moving.
In real estate, a remainder refers to the portion of an estate that takes effect after the termination of a prior estate, such as a life estate. It can also denote the part of a property retained by the owner after a partial acquisition by the government through eminent domain.
A Remainderman is the individual who is designated to inherit or receive possession of a property after the termination of the preceding estate, typically after the death of a life tenant.
The remaining balance, also referred to as the outstanding balance, is the amount of loan principal that has not yet been repaid, plus any accrued interest or fees.
Remaining economic life refers to the likely future period during which an asset is expected to generate a positive contribution to its value. It measures how long an asset will continue to be economically useful, considering various factors like wear, functional obsolescence, and market conditions.
The Remaining Term refers to the amount of time left before a loan or mortgage reaches its maturity date. It represents the period remaining for the borrower to fulfill the debt obligation according to the contractual agreement.
Remediation involves corrective actions aimed at cleaning up environmentally contaminated sites. The goal is to either eliminate or reduce contamination to acceptable levels using various methods such as containment, excavation, and physical, chemical, or biological treatments.
A Real Estate Mortgage Investment Conduit (REMIC) is an entity used to pool mortgage loans and issue mortgage-backed securities, offering benefits such as tax advantages and liquidity to the mortgage market.
A remnant parcel is an uneconomic remainder of land left after a larger parcel has been sold or developed. Typically, this piece of land is too small or oddly shaped to be of significant commercial value on its own.
Remodeling refers to changes made to the appearance and functional utility of a building, which could include painting, repairing, and replacing of fixtures and equipment.
Rendering refers to a drawing, usually in watercolor or oil painting, that provides a perspective view of a proposed building or development. It serves to visually present how a structure will appear once completed, including landscaping. Compared to technical elevation drawings, renderings are more artistic representations.
In real estate, a rendition refers to the offering of an estimate of property value to the tax assessor. It is also known as rendering.
Renegotiate refers to the process of formally revising the terms of an existing contract between parties, typically to address changes in circumstances, mutual agreement, or to achieve more favorable conditions. This often involves adjustments in areas such as payment terms, interest rates, deadlines, and scope of work.
A Renegotiated-Rate Mortgage (RRM) is a unique type of mortgage loan where the interest rate is revised at predetermined intervals. It is distinctive because it does not rely on economic indices for its rate adjustments.
A Renewal Option in a lease agreement gives the tenant the right, but not the obligation, to extend the lease for an additional term under specified conditions.
Renovate refers to the process of upgrading or improving an existing structure, aiming to either restore it to its original condition or modernize it while preserving its general appearance. This process typically involves more extensive changes than remodeling but less than rehabilitating.
Rent refers to the payment made by a tenant for the use of a landlord's property, which can be residential, commercial, or industrial. It is a fundamental concept in real estate, encompassing various types and factors that determine its amount and structure.
Rent acceleration is a provision in a lease agreement that allows a landlord to demand the entire remaining rent due if the tenant defaults on the lease.
Rent bid models are conceptual tools used to explain how land is allocated in competitive markets. The model is based on the assumption that the space is controlled by the activity that offers the highest bid for the site.
Rent concession refers to a temporary reduction or discount on the rent payable by a tenant to attract or retain tenants in rental properties. These concessions can take various forms, such as free rent periods, reduced rent, or landlord-paid improvements.
Rent control refers to a set of laws and regulations that limit the rate at which rents can increase over time.
Rent escalation refers to a provision in a lease agreement that allows for periodic increases in the rental rate.
Rent Interruption Insurance, also known as Rental Income Insurance, provides compensation to rental property owners for the loss of rental income that occurs if the property becomes uninhabitable due to a covered peril like fire, storm, or vandalism.
A Rent Roll is a detailed list of individual tenants within a property, typically including information such as unit numbers, lease agreements, monthly rents, and lease expiration dates. It serves as a critical document for property management, providing an overview of rental income and tenant occupancy status.
A rent spike refers to a sudden and temporary rise in market rents that significantly outpaces the general inflation rate, often driven by changes in demand or external factors impacting the housing market.
The Rent-Free Period is a portion of the term of a lease during which no rent is required. It is typically offered by a landlord as a rental concession to attract tenants.
The rent-up period refers to the span of time it takes for newly constructed properties or newly vacated buildings to achieve full occupancy through tenant leasing. This phase is crucial for property owners and developers as it significantly impacts potential revenue and return on investment.
Rentable Area, often referred to as Net Leasable Area (NLA), is the total space for which rent is charged to tenants, including private areas occupied by tenants and a share of common areas.
A rental agreement, often referred to as a lease, is a legal contract between a landlord and a tenant that outlines the terms under which the tenant agrees to rent a property owned by the landlord.
Rental income represents the actual amounts collected from tenants for the use of space. It does not include miscellaneous income such as laundry income or special fees. Understanding rental income is crucial for real estate investors and property managers to gauge the profitability of a property.
Rental Income Insurance provides financial protection for property owners by covering the loss of rental income when the property becomes uninhabitable or unusable due to covered perils, ensuring continued payment of essential expenses.
The rental rate is the periodic charge per unit for the use of a property. The period may be a month, quarter, or year, and the unit may be a dwelling unit, square foot, or other unit of measurement.
Real Estate Owned (REO) refers to properties that have reverted to the lender, typically a bank, after an unsuccessful foreclosure auction. These properties are then listed for sale as part of the lender’s inventory.
Reorientation refers to the strategic process of changing the market appeal of a property to attract a different target audience, often to enhance its occupancy and profitability.
Repairs refer to work performed to restore a property to its original condition without extending its useful life. This term is distinct from capital improvements, which add value or extend the life of the property. In the context of income property, repairs are considered an operating expense for accounting and tax purposes.
A repayment plan is an agreement between a lender and a delinquent borrower in which the borrower agrees to make additional payments to pay down past due amounts while continuing to make regular scheduled payments.
The Repeat Sales Price Index (Home Price Index) is constructed using sales data for homes that have sold more than once over the time period covered by the database. It aims to provide an accurate measurement of home price appreciation by analyzing price changes for the same properties over time.
Replacement cost refers to the expense associated with reconstructing or replicating a building to perform the same function as the original structure. This concept is pivotal in insurance and real estate investment.
Replacement reserve is a specific fund set aside from the net operating income to cover the eventual wear and tear of short-lived assets, such as carpeting, appliances, and other items that have a defined useful life.
Replacement Value Protection is an insurance policy feature that provides for the reimbursement of the full cost of lost or damaged property, less the policy’s deductible amount, without deduction for depreciation.
REPO stands for reposition, and in the real estate context, it refers to the repossession of properties. It may also relate to the repurchase of notes, generally focusing on distressed assets.
The Report Date is the date an appraisal report was prepared, typically reflecting the date the transmittal letter was assembled. It contrasts with the Appraisal Date, which is often the effective date of the valuation.
Repossession refers to the forced retrieval of property by a lender or lessor when a borrower or lessee defaults on contractual obligations, such as missing payments. This legal process primarily involves reclaiming collateral used to secure a loan or leased items and is often juxtaposed with the term foreclosure.
Representation in real estate refers to the professional assistance or fiduciary advocacy provided in a transaction or negotiation. It ensures that parties are guided and protected in complex real estate dealings.
Reproduction cost is the expense involved in duplicating a property exactly, denoting the total amount required to construct a replica of the structure using the same materials, design, and workmanship as the original.
