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 Appraisal Standards Board (ASB) of the Appraisal Foundation creates, revises, and disseminates the Uniform Standards of Professional Appraisal Practice (USPAP) to ensure standardized, quality valuation practices in real estate.
The Appraisal Subcommittee (ASC) is a federal government organization responsible for overseeing state appraisal boards, ensuring compliance and uniformity in appraisal qualification requirements, and maintaining a national registry of appraisers by state.
An appraised value is an estimate of a property's worth, calculated by a licensed appraiser during the home-buying process.
An appraiser provides a professional opinion on the value of a property. Certification for real estate appraisers in the United States includes CERTIFIED GENERAL APPRAISER and CERTIFIED RESIDENTIAL APPRAISER, among others. Appraisers must fulfill educational, experiential, and examination requirements.
Appraiser pressure involves unethically requesting an appraiser to provide a valuation that is higher or lower than the property's actual worth.
The Appraiser Qualifications Board (AQB) sets the minimum education, experience, and exam standards for real property appraisers, ensuring consistency and quality within the appraisal profession.
An Appraiser Trainee is an entry-level position in the appraisal industry, designed for individuals gaining experience and working under the supervision of a licensed or certified appraiser. This role involves assisting with the research and preparation of appraisal reports.
Real estate appreciation refers to the increase in the value of a property over time. It can be influenced by a variety of factors including market demand, location, inflation, and property improvements. Appreciated value can enhance investment returns for property owners.
Appreciation refers to the increase in the value of a property over time, driven by various factors including inflation, demand pressures, physical additions, and improvements. Appreciation can significantly impact investment returns and tax obligations.
An apprentice appraiser, also known as an appraiser trainee, is an entry-level real estate professional who is in the process of gaining the experience and education necessary to become a licensed appraiser.
In real estate, the term 'Approach' often refers to the different methods or strategies used in appraising property value. Each approach considers various factors impacting the valuation of real estate.
Appropriation in real estate refers to the setting aside of land for a public use or to the allocation of funds by a budgetary authority for a specific purpose.
An appurtenance refers to anything adjacent or pertinent to a piece of property, enhancing its use and contributing to its greater enjoyment, such as easements, rights-of-way, or parking spaces.
Arable land refers to land that is suitable for cultivation and farming. This land typically has rich soil and an appropriate climate for growing crops.
Arbitrage in real estate involves buying and selling properties, or financial instruments linked to real estate, in different markets to profit from price differences. This strategy can also include leveraging financial instruments like REITs or mortgage-backed securities to exploit discrepancies in pricing.
Arbitration involves settling disputes through a neutral third party agreed upon by each side in the dispute. It is commonly used in real estate to resolve conflicts outside the public court system.
The manner in which a building is constructed, including the layout, floor plan, style and appearance, materials used, and the building technology employed.
In real estate, 'area' refers to a two-dimensional space defined by boundaries, such as floor area, the area of a lot, and market area. The concept of area is crucial in various real estate applications including property assessment, planning, and development.
ARELLO is an international association that supports regulatory agencies in managing real estate licenses, creating consistent practices, and offering guidance on policy development.
AREUEA, the American Real Estate and Urban Economics Association, facilitates the exchange of ideas and research among academics and professionals in real estate and urban economics. Established in 1964, AREUEA supports academic research and policy analysis to advance the understanding of urban development and real estate market functioning.
ARGUS is a computer program widely used by institutional investors to simulate expected property performance, including that of multitenant office buildings and shopping centers.
An arm's length transaction refers to a deal in which both parties act independently and in their own self-interest, ensuring that the transaction reflects true market value.
Arrears in real estate refer to payments that are overdue or are scheduled to be made at the end of a specific period.
An arterial highway is a major transportation route commonly found in an urbanized area, designed to deliver substantial traffic volumes efficiently, enabling connectivity between different parts of a city and its suburbs.
An artesian well is a deep-drilled shaft that reaches groundwater that rises to the surface due to natural underground pressure, without the need for pumping.
Artificial Intelligence (AI) is the ability of computer programs to evaluate information and make decisions according to pre-established criteria. In real estate, AI is used in applications such as automated mortgage underwriting, property management, valuation, and customer service.
AS IS refers to a condition under which a property is sold or leased indicating that it will be accepted in its current state with no guarantees or warranties regarding its condition. Buyers or tenants agree to accept the property with all visible and latent defects.
As-Is Value refers to the estimated or appraised value of a property in its current condition, considering any repairs, disrepair, or improvements necessary.
ASA (American Society of Appraisers) is a professional organization that offers designations for appraisers who meet rigorous criteria in various fields, including real estate, business valuation, machinery and equipment, fine arts, and more.
Asbestos is a mineral fiber that was once commonly used in a variety of building construction materials for insulation and as a fire-retardant. While its use has declined since the late 20th century due to health concerns, the presence of asbestos in older buildings remains a significant issue due to its potential health risks.
Asbestos-Containing Material (ACM) refers to products that include asbestos, a mineral fiber that has been widely used in building materials due to its durability and resistance to heat. However, the use of asbestos has generally been prohibited since the early 1980s due to health risks.
The Asian American Hotel Owners Association (AAHOA) is a leading organization primarily composed of hotel owners of Asian American descent. The association offers professional development programs, networking opportunities, and educational services.
ASKED refers to the amount a property owner sets as the selling price for their property. This figure might differ from its appraised, market, or assessed value.
The asking price is the price a property seller lists when trying to attract potential buyers. It is the starting point for negotiations and is typically determined based on market conditions, property value, and other factors.
Asking rent is the initial list price set by a landlord for leasing a property. It can be subject to negotiations leading to concessions such as reduced rent or additional incentives.
Assemblage is the process of combining two or more adjoining parcels of land to create a larger, more valuable piece of property. The new, larger tract may have a higher collective value due to its potential for enhanced usability or development.
Assessed value or valuation is the value against which a property tax is imposed. The assessed value is often lower than the market value because of state law, conservative tax district appraisals, and infrequent reassessment.
In the context of real estate, an assessment refers to the amount of tax or special payment due to a municipality or association, or an owner’s or lessee’s proportionate share of a common expense.
The assessment base, also known as the tax base when applied to property taxes, is the total value of the property within a jurisdiction that is subject to taxation. This term is crucial in understanding how municipalities calculate property taxes and fund essential services.
The Assessment Ratio is the ratio of a property's assessed value to its market value. It is used by tax authorities to determine the amount of property tax due by property owners.
An Assessment Roll is a public record of the assessed value of property within a taxing jurisdiction. It is certified for completeness and accuracy by the tax assessor annually.
An assessor is a government official responsible for determining the value of a property for the purpose of ad valorem taxation. They evaluate real estate to assign tax values based upon current market conditions.
An Assessor Parcel Number (APN) is a unique identifier assigned to tracts of land and properties by a tax assessor, which is pivotal for property record-keeping and taxation purposes. It enables quick access to detailed information about the property.
An Assessor's Parcel Number (APN) is a unique numerical identifier assigned to each piece of real estate by a tax assessor for purposes of identification and record-keeping.
Understanding what constitutes an asset is crucial for evaluating one's financial health. Assets are things of value owned by an individual or organization that can provide future economic benefits.
The Asset Conservation, Lender Liability, and Deposit Insurance Protection Act of 1996 (ALDA) is a federal statute aimed at providing certain protections to lenders from liability for the environmental cleanup of properties serving as collateral, alongside mechanisms for asset conservation and deposit insurance in the banking sector.
An Asset-Backed Security (ABS) is a financial instrument that is backed by a pool of assets such as mortgages, loans, or receivables. These securities are often enhanced through credit enhancements like bank letters of credit or insurance, which improve their credit quality.
The term 'assign' in real estate refers to the transfer of one's property rights or contract rights to another party. This can apply to leases, mortgages, deeds of trust, and other contractual agreements. It's important to note that assigning a contract does not typically relieve the initial party of their contractual obligations unless a novation, or the substitution of one party for another with the consent of all parties involved, occurs.
An assignee is the person or entity to whom an agreement, contract, or property is sold, transferred, or assigned, assuming the rights and obligations originally held by the assignor.
Assignment is the method by which a right or contract is transferred from one person to another, typically involving leases, mortgages, and deeds of trust. It enables the assignee to sustain the interest in the property originally held by the assignor.
Assignment of Lease involves the transfer of rights to use a leased property. The new tenant, or assignee, acquires all the rights and privileges of the original lessee (assignor), who remains responsible to the landlord unless formally released.
An assignment of rents is a legal agreement transferring the right to collect rent or income generated by a property from the borrower to the lender in the event of a default on the mortgage.
An assignor is a party who assigns or transfers an agreement or contract to another. This transfer effectively assigns rights or responsibilities from one party to another, creating a new contractual relationship.
An associate broker is a licensed real estate professional who has met the education and experience requirements of a broker but operates under the supervision of another broker. They typically handle transactions, client interactions, and other duties similar to salespersons but with a greater depth of knowledge and capability.
Associated Builders and Contractors (ABC) is a national trade association that represents more than 21,000 contractors, subcontractors, material suppliers, and related firms across the United States from all construction industry specialties.
The Association of Equipment Manufacturers (AEM) is a United States-based international trade group that serves the business needs of construction equipment manufacturers and construction service providers. It was formerly known as the Construction Industry Manufacturers Association.
The Association of Real Estate License Law Officials (ARELLO) is a global organization that brings together regulatory authorities from the real estate sector. The primary members include commissioners and officials from various state and national real estate licensing agencies. The organization assists in establishing, regulating, and enforcing licensing standards to protect the public interest. Formerly known as the National Association of Real Estate License Law Officials (NARELLO), ARELLO plays a crucial role in policy development and ethical standards within the real estate industry.
An informal, unincorporated organization of educational institutions established in 1983 to advance common interests in real estate administration, including management, leasing, investment, development, acquisition, and disposition.
An Assumable Loan is a type of mortgage loan that allows a new purchaser to undertake the existing loan's obligation without changing its terms. This process bypasses the need for obtaining a new mortgage arrangement.
An assumed mortgage, also known as an assumption of mortgage, occurs when a homebuyer takes over the seller’s existing mortgage, maintaining the original terms and conditions of the loan.
An assumption fee is a charge levied by a lender on a buyer who assumes the existing loan on the subject property.
Assumption of mortgage is a real estate transaction where the buyer accepts liability for the existing mortgage debt on the property, often facilitating a smoother and potentially cheaper transfer of ownership compared to obtaining a new loan.
Assumptions and limiting conditions are specific stipulations and constraints under which an appraisal is conducted. These conditions provide a framework within which the valuation can be understood and accepted.
Tax laws that limit the amount of deductible tax losses an investor can claim based on their tangible financial risk in an investment. These rules were specifically extended to real estate investments by the 1986 Tax Reform Act.
An atrium is a large open space located within a building, often featuring a glass roof or large windows to allow natural light to enter. It can serve as a central gathering space and often includes greenery or other aesthetic elements.
Attached housing refers to dwelling units that are connected to each other on at least one side, often separated by firewalls or other physical partitions. This stands in contrast to detached housing, where structures are standalone.
An attachment is a legal seizure of property to force payment of a debt. It occurs when a court issues an order allowing a creditor to take possession of a debtor's property as a means to secure payment of a monetary judgment.
In the context of real estate, to attest means to witness or certify by observation and signature that an event, action, or document is accurate or true. This often involves verification by a third party, such as notarizing a document or witnessing the signing of a contract.
The term 'attorn' refers to the legal act of transferring or turning over money or property to another party, often used to describe a tenant recognizing a new property owner as their landlord. This can occur during the sale or transfer of leased commercial or residential properties.
An attorney-in-fact is an individual authorized to act on behalf of another person under a power of attorney, which can be either general or limited in scope.
An Attorney's Opinion of Title is a legal document in which an attorney provides their judgment regarding the validity and marketability of a property title after conducting a thorough examination of public records and property title abstracts.
Attornment is the formal agreement by a tenant to recognize a new owner of the property as their landlord, typically due to a sale or foreclosure.
An appealing but potentially hazardous feature or characteristic of a piece of real estate that may lure trespassers who could suffer harm; in law, the owner of an attractive nuisance must take extraordinary precautions to avoid liability for harm to trespassers.
An auction is a method of selling property to the highest bidder. This process is utilized for a variety of real estate transactions and can involve different bidding procedures. The property is ultimately sold to the highest bidder.
An auctioneer is a professional who conducts auctions, manages bidding processes, and finalizes sales or transfers of property through public competition.
Automated mortgage underwriting involves processing mortgage applications primarily or entirely through computerized systems which evaluate eligibility and creditworthiness based on predefined criteria.
An Automated Valuation Model (AVM) is a computerized system that uses mathematical modeling to value properties. AVMs incorporate data from public property records and commonly utilize proprietary algorithms to deliver a property valuation. These models are often used for mass property appraisals, such as for property tax assessments and securing the preliminary values for mortgage lending.
An Automated Valuation Model (AVM) is a computer-driven program that utilizes mathematical modeling, incorporating data from multiple sources, such as property sales histories, public records, and other real estate databases, to estimate the market value of a property.
The Average Rate of Return (ARR) is a metric used to evaluate the profitability of an investment, calculated by dividing the total net earnings by the number of years the investment was held, and then dividing by the initial acquisition cost.
An avigation easement is a property right granted typically near an airport, allowing for overflight and related ancillary activities such as the emission of noise and dust, the restriction or prohibition of certain activities, and the guarantee of unobstructed airspace.
Avulsion refers to the sudden and often dramatic removal of land from one parcel to another due to the abrupt change in the course of a body of water, such as a river. This natural phenomenon can significantly impact property boundaries and ownership rights.
Baby Boomers are individuals who were born during the years after World War II, generally defined as 1946–1964. This group represents a sizable portion of the consuming public, and their spending habits and lifestyle have a powerful influence on the economy.
Unpaid property taxes that can lead to a lien on real estate and, if not paid, may result in the property being sold by the tax authority to satisfy the debt.
The back-end ratio is one of several criteria used to qualify homebuyers or owners for mortgage loans. It takes into account existing long-term debt of the loan applicant, contrasting with the front-end ratio.
In real estate and construction, backfilling is the process of refilling a previously excavated area with soil or other materials. It is a crucial step in construction to ensure stability, proper drainage, and to support structures.
A Backup Contract is a pre-arranged agreement to purchase real estate that takes effect if a primary contract is not completed, providing a secondary buyer an opportunity under predefined conditions.
A backward loan application is a falsified loan document submitted intentionally by a borrower after selecting a property, often to fraudulently boost income and qualify for a loan.
Bad Boy Carve-Outs refer to provisions in nonrecourse loans which hold the borrower or guarantor liable for the loan under specific circumstances. These carve-outs include misappropriation of funds, environmental violations, waste, and voluntary bankruptcy.
A condition where complete real estate ownership is impaired by unsettled claims and liens, which may prevent an owner from selling the property.
A bailout is an emergency action taken by the federal government to provide financial assistance to prevent the failure of a specific private or quasi-private entity. This assistance often comes in the form of loans, grants, or government purchase of an equity position.
The remaining amount after subtracting relevant values, such as the outstanding principal on a loan or the remaining funds in an account.
A Balance Sheet is a financial statement that presents the financial position of a company at a specific point in time. It details the company's assets, liabilities, and shareholders' equity, ensuring that the assets are balanced by the sum of liabilities and equity.
In real estate appraisal, the Principle of Balance asserts that there is an optimal mix of inputs that, when combined with land, will result in the highest land value. Key inputs include labor, capital, and entrepreneurship.
A balloon mortgage is a type of loan that does not fully amortize over its term, leaving a balance due at the end of the period in a balloon payment. This large, lump-sum payment can be a surprise for borrowers who are not prepared or aware of this structure.
A balloon payment is the final and often significantly large payment on a loan, typically required after a series of smaller installment payments. It clears the remaining debt owed on the loan.
An income property appraisal technique where the overall rate of earnings is derived from weighting mortgage and equity rates. It provides insights into the true capital structure of a real estate investment and determines the overall rate of return required by investors.
A financial institution that accepts deposits, offers checking and savings account services, and loans to individuals and businesses. Banks also provide various financial services like wealth management, currency exchange, and safe deposit boxes.
The Banker's Year is a convention that standardizes the length of a month at 30 days and of a year at 360 days for ease of financial calculations, simplifying the handling of interest and other financial computations.
Bankruptcy is a legal proceeding involving a person or business that is unable to repay outstanding debts. Through bankruptcy, the debtor may seek relief from some or all debts.
Barclay's Mortgage Backed Securities Index is a comprehensive benchmark published by Barclay's Capital that tracks the performance of mortgage-backed securities issued by GNMA, Fannie Mae, and Freddie Mac, and is a component of the broader U.S. Aggregate Bond Index.
