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 Request for Proposal (RFP) is a document that announces a project, describes it, and solicits bids from qualified contractors to complete it. RFPs provide a structured process for acquiring services or leased space and are commonly used in various industries such as real estate, construction, IT, and more.
A Request for Proposal (RFP) is a document that solicits proposal, often through a bidding process, by an organization interested in procurement of a commodity, service, or valuable asset. The RFP process is intended to identify the best offerings and providers.
In the context of real estate investment, the resale price is the projected selling price a property might fetch at the end of the projection period or investment horizon. It plays a crucial role in profitability analysis and investment decision-making.
Resale proceeds refer to the amount a seller receives from the sale of a property after deducting transaction costs, outstanding mortgage, and applicable taxes. Measuring the net financial benefit, it is essential for homeowners and investors alike.
Rescind refers to the withdrawal or cancellation of an offer, contract, or agreement before it is fully executed. This term is notably applicable in various legal and real estate contexts, offering a means of nullifying transactions under specific conditions.
Rescission refers to the legal act of canceling or terminating a contract, most often due to issues like fraud, duress, misrepresentation, or mistake. It renders the contract void from the beginning, effectively restoring both parties to the situation they were in before the contract was made.
Reservation price refers to the highest price a buyer is willing to pay for a property while still achieving his or her primary objectives such as keeping monthly payments affordable or paying no more than market value for the property. A buyer negotiates to keep the sales price at or below this price point.
A reserve for depreciation, also known as accumulated depreciation, helps businesses account for the gradual reduction in value of their fixed assets over time due to wear and tear, obsolescence, or other factors.
A reserve fund is an account set aside to cover future building maintenance expenses, mortgage obligations, and other forthcoming financial requirements. These funds can be mandated by lenders, such as escrows, to ensure timely payments for property-related costs.
In an auction or other bidding procedure, a reserve price is the minimum amount that the seller is obligated to accept for the item. It ensures that the seller can withdraw the item from the sale if the bidding does not meet this amount.
Reserves in real estate refer to amounts of money set aside to cover potential economic setbacks or to replace worn-out assets in property management and development.
A residence refers to the place where one lives, particularly the dwelling in which one resides. It is a key concept in understanding legal, tax, and social identification of one's primary home. Examples range from personal homes to various domiciles.
A Resident Manager is a person who resides within an apartment complex or residential community and takes on the responsibility of managing aspects of the property, including maintenance, tenant relations, and other operational tasks.
Residential refers to properties intended for people to live in, which includes housing projects such as single-family homes, condominiums, apartments, and townhouses.
The Residential Accredited Appraiser (RAA) designation is awarded to state-certified residential appraisers who meet specific requirements set by the National Association of Realtors (NAR). This designation signifies advanced knowledge and higher professional standards in residential appraisal.
A Residential Accredited Appraiser (RAA) is a professional designation that signifies an appraiser's commitment to advanced residential valuation education, proficiency, and industry best practices.
A Residential Broker facilitates the buying, selling, or leasing of residential properties such as houses or condominiums, providing essential services to both buyers and sellers.
Residential properties are real estate intended for housing purposes. This term encompasses owner-occupied homes and rental properties provided they are used as dwellings, excluding transient accommodations like hotels and motels.
The Residential Sales Council, also known as the Council of Residential Specialists, is a professional organization that provides education, resources, and certification for real estate professionals specializing in residential sales.
A Residential Service Contract, also known as a home warranty, is an insurance contract generally lasting for one year, covering the plumbing, mechanical, and electrical systems of a home. This contract can be purchased by either the buyer or the seller and provides peace of mind to homeowners against unexpected repair costs.
Residual value or income refers to the remaining value or income after necessary deductions to meet fixed obligations. This term is crucial in both real estate investments and appraisals.
Residual Demand refers to the amount of product (such as houses, office space, or building sites) that a specific provider can expect to sell in a particular market. This concept involves understanding the provider's expected market share within a competitive market, influenced by factors such as the attractiveness of the provider's product compared to the competition and how well the existing market is currently served.
Residual Techniques are methods used to estimate the value of a building or land, based on the known value of the other and a specified rate of return.
The Resource Conservation and Recovery Act (RCRA) is a United States federal law that was enacted in 1976 to regulate the management of hazardous waste. It requires proper waste handling procedures covering the entire lifecycle of hazardous waste—from generation to transportation, treatment, storage, and disposal.
Respondeat Superior is a legal doctrine in agency law that holds a principal liable for the acts of its agent carried out within the scope of the agency relationship.
RESTORE refers to the process of returning a building to its original quality and appearance. While modern materials are often used, the primary focus is on faithfully reproducing the original style and elements.
Restraints on alienation refer to conditions placed on property ownership that limit the owner's ability to transfer or sell the property. Such restraints are generally scrutinized under laws governing property rights and public policy considerations.
A Restricted Appraisal Report is a type of valuation report containing minimal detail, intended solely for the client's use, and not for any other party. It stands in contrast to a more comprehensive Appraisal Report.
A restricted license allows a real estate licensee to continue to practice in a limited capacity while on probation, following a violation of state real estate laws or regulations.
Restrictions are limitations placed upon the use of property, typically contained in the deed, other written instruments in the chain of title, or in local ordinances pertaining to land use.
A restrictive covenant is a binding legal obligation written into the deed of a property by the seller that restricts the way the property can be used by the buyer. It usually aims to uphold specific standards or maintain the character of a community.
Retail gravitation refers to the ability of a shopping center to attract customers from distant areas, with larger centers having a greater drawing power.
A retail property is a classification designated through zoning ordinances, allowing for various types of businesses such as stores or shopping centers, enhancing the commercial use of an area.
In a construction contract, retainage is money earned by a contractor but not paid until the completion of the construction or another agreed-upon date.
A retaining wall is a structure designed to restrain soil to a slope that it would not naturally keep to (typically a steep, near-vertical, or vertical slope). They are frequently used in landscaping, construction, and flood prevention to prevent the erosion of soil and manage water runoff.
Retaliatory eviction occurs when a landlord seeks to evict a tenant as a response to the tenant exercising their legal rights, commonly in relation to complaints about housing conditions. Such actions are prohibited in many jurisdictions to protect tenants from unfair and punitive treatment.
A retention pond is a reservoir designed to hold a specific amount of water indefinitely. Typically, the pond will drain to another location when the water level exceeds the desired level. This term is often used in contrast to a detention pond.
To retire a debt means to pay off the principal on a loan, thereby fulfilling the obligation under the loan contract, which can be done through regular payments or a lump sum. It is a significant financial milestone indicating that the borrower has met the terms laid out by the lender.
A retrospective appraisal estimates the value of a property at a specific point in the past, often for purposes such as tax assessments, legal disputes, or historical analysis.
Return on Equity (ROE) is a measure of the profitability and financial performance of a business, indicating how much net income is generated as a percentage of shareholders' equity.
Return on Investment (ROI) measures the gain or loss generated on an investment relative to the amount of money invested. ROI is often expressed as a percentage and is commonly used to evaluate the efficiency or profitability of an investment.
Return on Investment (ROI) measures the financial return on an investment as a percentage of the investment's cost, providing an indicator of profitability.
A revaluation clause, often seen in reappraisal leases, allows for periodic reassessment of a property’s value during the lease term, enabling adjustments to rent reflective of current market conditions.
Revaluation or re-evaluation, also known as reassessment, is an updated appraisal process conducted to determine the current value of property for taxation and other purposes.
Revenue refers to the total income generated from normal business operations and includes discounts and deductions for returned merchandise. It is a crucial metric indicating the financial performance of an organization.
Revenue stamps are affixed to deeds and other real estate documents to indicate the payment of a state’s deed transfer tax or other applicable transfer taxes.
A Reverse (Annuity) Mortgage is a type of mortgage designed primarily for elderly homeowners with substantial equity in their homes. The lender periodically pays an amount to the borrower, with the loan balance increasing over time due to interest and periodic payments, ultimately resulting in negative amortization. The nonrecourse loan is repaid from the proceeds of a future sale of the home.
A Reverse Annuity Mortgage (RAM) is a type of home equity loan that allows homeowners, typically retirees, to convert part of the equity in their homes into cash without having to sell the property or make monthly mortgage payments.
A reverse exchange is a strategic real estate transaction where the buyer acquires a new property before relinquishing their old property, often to meet IRS Section 1031 requirements.
A situation in real estate where financial benefits from ownership accrue at a lower rate than the mortgage interest rate, leading to negative financial implications for the property owner.
A reverse radius clause in a shopping center tenant’s lease prevents the shopping center owner from buying or developing a competing mall nearby, ensuring exclusive market access for the tenant.
Reversion refers to the right of a lessor to possess leased property upon the termination of a lease. It is a critical concept in real estate, as it dictates the future interest in rental properties and land transactions.
Reversionary Factor is the mathematical factor that indicates the present worth of one dollar to be received in the future. It is often used in financial calculations related to real estate investments and valuations.
Reversionary Interest is the interest a person retains in property after the termination of the preceding estate. Typically, it applies when the original owner grants an estate but retains a future interest.
Reversionary value is the estimated value of a property at the end of a specific time period, often related to the expiry of a lease or a pre-determined holding period. It directly impacts investment decisions and property valuation models.
A Review Appraiser is a professional who specializes in conducting thorough assessments of appraisal reports to ensure accuracy, adherence to standards, and quality compliance. They play a crucial role in the real estate appraisal process by validating the work of the original appraiser.
Revocation is the act of recalling or withdrawing a power of authority previously conferred, such as a power of attorney, license, agency, or other similar agreements. It is a fundamental legal concept that has considerable implications in real estate transactions and credentials.
Rezoning is the legal process of changing the designated use of a specific parcel or group of parcels on a zoning map, altering the previous permitted activities to suit new needs or goals. This can involve changing residential areas to commercial, industrial to residential, and more.
A rider is an amendment or attachment to an existing contract, often used to customize and modify the original terms of agreements in various domains, including insurance and real estate.
The Right of First Refusal (ROFR) grants a party the opportunity to match the terms of a proposed contract before it is executed with an outside party.
The right of redemption is a legal provision allowing a mortgagor to reclaim their property once they've satisfied debts before foreclosure is completed, thereby preventing loss of property ownership.
The Right of Survivorship is a legal provision whereby property co-owners hold the right to automatically inherit the interest of a deceased co-owner. This provision is prominently featured in Joint Tenancy and Tenancy by the Entirety arrangements, facilitating smoother transfer of property ownership upon death without the need for probate.
The right-of-way is a legal right granting passage over another person's property. This term is often associated with easements and is crucial in the context of property development, infrastructure projects, and urban planning.
The right-of-way (R/W) in real estate terms refers to the legal right, established by usage or grant, to pass along a specific route through grounds or property belonging to another.
A riparian owner is an individual or entity that holds ownership of land that is adjacent to a river, stream, or other body of water. Riparian rights are often a significant aspect of property ownership and can influence land use, access, and water resources.
Riparian rights pertain to the use of water on, under, or adjacent to one's land. These rights may be qualified to avoid nuisance and pollution and are typically recognized in most eastern states, unlike in western regions, which often acknowledge usufructuary rights.
In real estate, risk refers to the potential for an investment to achieve lower or higher returns than expected. Effective risk management strategies, such as diversification and insurance, can mitigate associated uncertainties.
Risk Analysis is a critical evaluation designed to indicate how sensitive an investment is to changes in underlying future conditions. This process may include assessing the volatility of the investment and simulating potential outcomes based on different economic scenarios.
The risk premium is the difference between the required interest rate on an investment and the rate on risk-free investments such as U.S. Treasury securities. It compensates investors for taking on higher risk compared to risk-free assets.
Risk vs. Reward is a financial concept that attempts to compare the potential fluctuations, especially the downside, with potential benefits of an investment or financial decision.
The Risk-Based Capital Requirement is a regulatory standard that determines the minimum amount of capital that federally chartered lending institutions must hold, based on the risk profile of their employed assets. The requirement ensures that institutions maintain sufficient capital to manage potential losses and maintain financial stability.
The risk-free rate is the interest rate on the safest investments, typically represented by short-term government securities like U.S. Treasury bills. It is a crucial component in finance for calculating other metrics and making investment decisions.
A Robo-Signer is an individual employed by financial institutions to sign hundreds of foreclosure documents daily without verifying the information, often leading to wrongful foreclosures.
A 'rod' is a linear unit of measurement in real estate that is equal to 16½ feet. It is often used for describing land dimensions and road frontage.
Rollback refers to the retroactive claim by a taxing authority of a higher tax rate when property is sold after being taxed at a special use rate or when the land is put to a more valuable use.
A Rolling Option provides the right to extend the term of a purchase option by offering some form of compensation. The option holder can delay purchasing the property under specified terms.
Rollover Home Sale refers to the tax-deferred sale of a principal residence before May 6, 1997, which allowed homeowners to defer gains if they purchased a replacement home. It is governed by Section 121 for principal residence sales after this date.
A type of mortgage loan commonly used in Canada, where the amortization term for principal repayment extends over a long period, but the interest rate is set for a much shorter term. The interest rate is renegotiated, or the loan 'rolls over,' at the end of this shorter term based on current market conditions.
Rough-In in construction refers to the initial phase of fitting the crucial systems of a building. This includes plumbing, electrical, and HVAC installations within the un-finished walls, flooring, and ceilings, setting the groundwork for the final installations. It prepares the building for final connections.
A row house is a type of residential structure featuring single-family dwelling units that are attached to one another by common walls and typically have a uniform appearance from the front. Row houses are often found in urban areas and offer economical use of land while maintaining some of the privacy and freedom of a detached house.
Royalty refers to the payment made to a property owner for the extraction of valuable resources from their land. Common in resource extraction industries like mining, oil, and gas, these payments are typically a percentage of the revenue generated from the resource.
A Renegotiated Rate Mortgage (RRM) allows borrowers to renegotiate the interest rate of their existing mortgage, often providing an opportunity to lower monthly payments and overall interest costs.
The Rule of 72 is a simple formula used to estimate the number of years required to double the principal amount of money invested at a given annual rate of compound interest. By dividing the number 72 by the annual interest rate, investors can quickly gauge the growth period needed for their investment to double without using complex calculations.
The Rule of 78 is a method for calculating the amount of interest to be refunded if an installment loan with add-on interest is paid off early. It takes its name from the sum of the digits from 1 to 12, totaling 78.
Run with the Land is a legal term referring to rights or restrictions that extend to all current and future owners of a piece of property. These rights or restrictions are usually referenced in the property's deed.
Rural areas pertain to regions outside of larger and moderate-sized cities, characterized by farms, ranches, small towns, and unpopulated regions. These areas often have lower population densities and are primarily focused on agriculture and natural resources.
The Rural Housing Service (RHS) is a department within the U.S. Department of Agriculture that administers loans, loan guarantees, and grants to help provide housing in rural areas and small towns to those who need assistance. Many of the programs operated by the RHS previously fell under the Farmers Home Administration.
Rurban areas are located on the fringe of urban development, transitioning from rural characteristics to being developed for urban uses. These areas often showcase a mix of rural and urban features.
The S&P/Case-Shiller Index, also known as the Case-Shiller/S&P Home Price Index, is a collection of indices that tracks changes in the value of residential real estate in the United States. It is one of the most trusted measures for house price fluctuations across various metropolitan regions.
Safe harbor refers to regulations or provisions designed to shield companies or individuals from legal repercussions, provided they adhere to specified guidelines or practices. These rules offer clarity and a guarantee of compliance, thus minimizing legal risk and ambiguity.
The safe rate is an interest rate offered by relatively low-risk investments such as high-grade bonds or well-secured first mortgages. It is often used as a benchmark for other rates of return to compare the risk and safety of various investment options.
Sale pending is a term used in real estate to describe a property for which a contract has been signed but the transaction has not yet closed. These transactions are not officially counted as sales until the closing process is completed.
A sale-leaseback allows the owner of a property to sell it and simultaneously lease it back from the buyer, converting from owner to tenant while freeing up capital for other uses.
A sales agreement, also known as a sales contract, is a legally binding document that outlines the terms and conditions of a transaction between a buyer and a seller.
A licensed real estate agent employed by a designated or employing broker who conducts daily sales activities and facilitates property transactions.
The Sales Comparison Approach is one of the three primary appraisal approaches used to estimate the market value of a property by comparing it to similar properties that have recently sold in the same area.
A Sales Contract is a legally binding agreement between a buyer and seller that outlines the terms and conditions of the sale of property, including the price, closing date, type of deed, and other necessary details to complete the transaction.
The sales price is the amount of money required to be paid for real estate according to a contract, or previously paid. It can include cash payments and assumptions of existing mortgages.
A real estate salesperson is a licensed individual who performs real estate-related activities under the supervision of a licensed broker, as stipulated by state real estate laws.
Saltbox Colonial, also known as Catslide in the Southern United States, is an early-American-style architectural home characterized by a two or two-and-a-half story structure with a steeply sloped gable roof extending down to the first floor in the rear.
