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 Bargain and Sale Deed is a type of property deed where the grantor indicates an implied interest in the property without offering any warranties of title to the grantee.
A Base (Expense) Year is a lease provision whereby the landlord agrees to pay an expense amount based on the expense for a base year (typically the first year) of the lease, and the tenant pays the increase in expense for subsequent years.
Base and meridian are imaginary reference lines used by surveyors to accurately describe the location of land. These lines form part of the Government Rectangular Survey System, with the baseline running east-west and the meridian running north-south.
The base period is a fixed point in time used as a benchmark to measure and compare statistical data, such as indices, over a subsequent span of time. This concept is often employed to assess changes in economic indicators like the Consumer Price Index (CPI).
Base rent is the minimum rent due under a lease that has a percentage or participation requirement.
The base year in real estate is a starting point used to compare financial data, often related to property taxes or operating expenses, to calculate escalations or adjustments in subsequent years.
In the Rectangular Survey or Government Rectangular Survey method of land description, the baseline is the principal east-west line to which all north-south measurements are referred.
A basement suite, also known as an accessory apartment, is a separate living area typically located in the basement of a single-family home. It usually includes sleeping, cooking, and bathroom facilities.
A Basic Industry refers to a sector that exports products or services outside the local economy and generates a large inflow of revenue, thereby driving economic growth for the region.
In economic base analysis, the Basic Industry Multiplier is the ratio of the total population in a local area to the employment in basic industry. Basic industries attract income from outside the local area and foster local service jobs.
Basic Rate, often used in the context of capitalization rates, represents the foundational return rate required by investors for a particular investment, before additional considerations are factored in.
Basic rent refers to the minimum rent that a tenant must pay under a HUD-subsidized housing program such as Section 236. This rental rate is often influenced by the tenant's income level and family size.
Basis (Tax) represents the starting point from which gains, losses, and depreciation deductions are computed. It is generally the original cost or purchase price of an asset.
A basis point (bps) represents one hundredth of one percent or 0.01%, and it is commonly used in the financial and real estate sectors to denote changes in interest rates and other percentages.
A Bearer Instrument is a type of security that does not record the owner's name on the instrument itself, making it payable to whoever physically holds the instrument.
A bearing wall, also known as a load-bearing wall, is a crucial structural element in construction that supports the weight of the objects above it, providing stability to the building.
A bedroom community, also known as a commuter town or suburb, is primarily residential in nature, located close to a city or employment center. These communities typically lack substantial employment opportunities themselves and are inhabited largely by workers who commute to urban areas for work.
The Before and After the Taking provision is found in many states' condemnation laws and provides compensation to property owners based on the difference in property market value before and after the taking.
Before-tax cash flow refers to the amount of cash that a property generates before income taxes are deducted. This figure is critical for evaluating the performance of real estate investments and comparing different investment properties.
The funds returned to the equity investor after the sale of a property, exclusive of income taxes.
The term Beginning of the Year (BOY) refers to events that occur at the start of a financial year. In the context of real estate, BOY often includes the due dates for rent payments, financial projections, budget implementations, or financial assessments.
Below-Market Interest Rate (BMIR) is a government-driven program where property owners are charged a reduced interest rate with the stipulation that the savings from the reduced rate are passed on to tenants through lower rents.
A beltway is a highway that encircles a metropolitan area, providing access to surrounding suburban areas while also serving as a bypass to alleviate congestion in the central urban area. It is also known as a loop, perimeter, or circumferential highway.
A benchmark in real estate serves as a reference point for measuring site elevations and comparing performance standards. It is critical for surveyors and institutional real estate performance assessments.
Beneficial interest refers to the right to enjoy the benefits of ownership of a property or asset without necessarily holding the legal title. This can arise in various contexts, such as trusts, real estate investment trusts (REITs), and financial securities.
In real estate and other facets of financial planning, a 'Beneficiary' is a person or entity designated to receive benefits or assets, such as proceeds from a life insurance policy, trusts, or estates.
Bequeath refers to the act of leaving personal property to beneficiaries through a will. Unlike 'devise,' which typically refers to the transfer of real property, 'bequeath' is used exclusively for personal property.
A bequest is the act of giving personal property or financial assets to an individual or organization through the provisions of a will.
A berm is a raised barrier, typically made of earth, used to control water runoff, reduce erosion, or serve as a visual or sound barrier. Berms are common in landscaping, construction, and environmental protection.
Betterment refers to an improvement made to a property that enhances its value, utility, or physical condition. This term is commonly used in the context of real estate to describe upgrades or modifications that increase the overall quality of the property.
A bi-level house, also known as a split-level home, features two floors, with the main entrance located between the two levels, giving unique architectural and functional advantages.
Biannual refers to events or actions that occur twice within a single year, similar to the term 'semiannual.' It is important not to confuse it with biennial, which means occurring every two years.
A BID is the amount someone is willing to pay for a property. It is a proposal by a potential buyer in response to a seller's ASKING PRICE. It sets the stage for negotiating the purchase agreement.
Biennial refers to events or processes that occur every two years. In real estate, this can relate to property assessments, contract renewals, or other cyclical activities.
A Big Box Retailer is a physically large store typically part of a chain, occupying a substantial area (25,000–200,000 square feet) on a single floor, selling either general merchandise or specialty products. They operate both nationally and internationally and are prevalent in Power Centers.
A contract under which each party to the agreement promises to perform a certain act or duty. Bilateral contracts are binding promises where both parties require performance—a cooperative and mutual engagement. It contrasts with unilateral contracts, which involve only one party making a promise or taking action.
A Bill of Assurance is a legal document containing a collection of restrictive covenants that apply to a group of contiguous lots, ensuring specific standards and regulations for development and property use.
A Bill of Sale is a written instrument that serves as a legal document transferring ownership of personal property from a seller to a buyer. It is commonly used for transactions involving items such as furniture and portable appliances.
A binder is an initial agreement, often coupled with a deposit, that indicates the purchaser's good faith in buying a piece of real estate. It is typically used to show the intent to buy and precedes a formal contract of sale.
A biweekly loan is a mortgage that requires principal and interest payments at two-week intervals, leading to faster amortization and potentially significant interest savings compared to traditional monthly payments.
Black mold, scientifically known as Stachybotrys Chartarum, is a hazardous, toxic fungus that can grow indoors on wet and damp surfaces. Its presence can pose serious health risks to inhabitants and requires proper remediation to ensure a safe living environment.
A blacklist in real estate refers to a list maintained by lenders that contains names of individuals or entities flagged for mortgage application fraud or possessing poor credit history, aimed at avoiding issuance of loans to untrustworthy borrowers.
A blanket mortgage is a single mortgage that covers more than one parcel of real estate, often used by developers to finance multiple properties under a single loan.
A blanket mortgage is a type of financing that covers multiple properties under a single mortgage, making it a useful tool for real estate investors and developers.
Bleeding a project refers to the unethical practices in real estate development or management where expenses and fees are overstated to increase profits or where routine maintenance is neglected to maximize current income at the expense of property value.
A blended rate is an interest rate applied to a refinanced loan that is higher than the rate on the old loan but lower than the rate offered on new loans. It is generally offered by the lender to induce homebuyers to refinance existing low-interest rate loans as an alternative to assuming the existing loan.
A blighted area refers to a section of a city primarily characterized by deteriorating, dilapidated, or unsafe structures. It often necessitates significant urban renewal and rehabilitation to revitalize and redevelop the area.
A Blind Pool is an investment fund where the investors do not know the specific assets that will be purchased at the time of their investment. It is typically managed by a syndicator who makes purchasing decisions after collecting the capital.
A 'Block' in real estate is typically defined as an area of land enclosed by streets or delineated by street intersections. Blocks form the basic units of city layouts and are crucial in urban planning and design.
Blockbusting is a racially discriminatory and illegal practice involving coercing a homeowner to sell their property at a depressed price and causing others in the neighborhood to sell by using scare tactics.
BlockShopper.com is a website that provides comprehensive information on housing sales in selected cities and suburban towns, allowing users to input community names to retrieve relevant real estate data.
A Blue Top Lot refers to a parcel of land that has achieved specific legal and physical readiness for development, typically including entitlements, grading, and close proximity to utilities. Variations exist in definitions regarding the presence and status of street improvements.
State securities laws designed to protect investors from fraudulent sales practices and activities.
A blueprint is a detailed set of plans used as the guide for the construction of a building. It encompasses architectural, structural, mechanical, and electrical drawings necessary to visualize the final construction.
A board foot is a unit of measurement for lumber, defined as one foot wide, one foot long, and one inch thick, or 144 cubic inches. Notably, the dimensions refer to the nominal width and thickness of lumber, which are initially measured before drying and planing processes.
A Board of Directors consists of individuals elected by the stockholders to oversee the management and policies of a corporation or organization, ensuring it adheres to established goals and legal requirements.
The Board of Equalization (BOE) is a government entity responsible for ensuring uniform property tax assessments within its jurisdiction. This entity operates at both local and state levels to maintain equity and fairness in property taxation.
A board of equalization is a governmental body tasked with ensuring property assessments for tax purposes are fair and equitable. These boards are pivotal in balancing the property tax system to avoid over- or under-taxation.
A local organization comprised of licensed real estate professionals who are members of the state and National Association of REALTORS®.
A Board of Zoning Appeals is an appointed administrative body that hears and decides appeals on land use and zoning decisions made by local government officials.
BOMA, also known as the Building Owners and Managers Association, is a professional association that represents the interests of the commercial real estate industry through a range of services, advocacy, standards, and educational programs.
BOMA Measurements refer to the standards offered by the Building Owners and Managers Association for accurately measuring the leasable square footage of commercial buildings.
The term 'Bona Fide' refers to actions, transactions, or situations conducted in good faith, without intent to deceive or defraud. It signifies genuine sincerity and authenticity in legal and financial contexts.
A bond in real estate refers to a certificate representing a debt obligation that specifies the repayment terms and conditions under which the debt is undertaken.
A bond-type lease is a type of net lease requiring the tenant to pay rent for the entire lease term, providing a near-guaranteed income stream to the landlord and often resulting in favorable rental rates for the tenant. This lease arrangement continues regardless of any damage to the leased property.
Bonus depreciation refers to an additional deduction that allows businesses to depreciate a larger portion of the cost of qualifying property in the first year it is placed in service. This is in addition to Section 179 expensing and the standard first-year depreciation.
Book cost refers to the acquisition cost of property as recorded on accounting statements. It typically includes the purchase price, installation costs, and indirect costs such as interest during construction.
Book depreciation refers to the method that accountants and businesses use to systematically allocate the cost of tangible assets over their useful lives.
Book value represents the carrying amount of an asset as recorded on the company's balance sheet. It is generally the purchase price of the asset plus any capital improvements minus accumulated depreciation.
Boot, in a real estate context, refers to any non-like-kind property that is included in a property exchange to balance the value. It can comprise cash, personal property, or other liabilities.
A borrower is a person or entity that has received a loan and is obligated to repay the amount borrowed, often with interest and other fees, according to the loan terms. The term is commonly used interchangeably with 'debtor.'
Borrowing capacity, also referred to as loan eligibility or credit capacity, determines the maximum amount of funds that an individual or entity can borrow from a lender. It is calculated based on factors such as monthly income, existing liabilities, credit score, and financial assets. Understanding borrowing capacity is critical for making informed financial decisions and optimizing loan approvals.
Bottomland refers to the low land adjacent to rivers, lakes, or streams that are prone to periodic flooding. It is often characterized by rich, fertile soil, and is typically found in valleys or dales.
A boundary, often referred to as a property line, defines the physical extent of a parcel of land, delineating ownership and legal rights. They are crucial for determining land use, development, and resolving disputes.
A branch office is an auxiliary site of a business, often housing a subsidiary of the main real estate firm. While it operates separately from the main office, it is owned by the firm but managed by a licensed broker often referred to as an 'associate broker' or 'broker associate,' and may have other agents operating out of it.
Breach of Contract refers to the violation of the terms agreed upon in a legal contract, enabling the affected party to seek legal remedies such as rescission of the contract, damages, or specific performance.
The Break-Even Point in real estate is the rental income or occupancy level necessary to cover all operating expenses and debt service, ensuring that the property does not operate at a loss.
In real estate appraisal, the Breakdown Method is a comprehensive approach used to divide accrued depreciation into distinct categories: physical depreciation, functional obsolescence, and economic obsolescence. This method contrasts with the age-life method of depreciation.
A term used to describe the physical property and infrastructure of a business or organization, as opposed to its intangible assets or online presence.
A Bridal Registry Mortgage is a unique financial tool, sponsored by the Federal Housing Administration (FHA), enabling soon-to-be-married couples to establish a registry where friends and family can contribute funds. These contributions can be used toward the down payment for an FHA-insured mortgage.
A bridge loan is a short-term financing solution used to bridge the gap between the termination of one loan and the commencement of another loan. Typically employed in real estate, bridge loans allow borrowers to meet liquidity requirements while awaiting long-term financing.
A British Thermal Unit (BTU) is a unit of heat energy, defined as the quantity of heat required to raise the temperature of one pound of water by one degree Fahrenheit.
A British Thermal Unit (BTU) measures the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit. It is a fundamental unit of measurement in heating and cooling systems and energy production.
An individual or firm licensed to arrange real estate transactions, matching property buyers and sellers or tenants and landlords, while earning a commission for services rendered.
A broker protection clause, often referred to as an extender clause, allows a real estate agent to earn a commission after the expiration of the listing contract if the agent introduced the buyer during the contract period.
A Broker's Opinion of Value (BOV) is an analysis provided by a real estate broker to help clients make informed decisions about the listing price or a suitable bid for a property. While similar to a comparative market analysis, it is not as in-depth as a licensed appraisal used for mortgage lending.
The term brokerage encompasses both the business operations of brokers and the commissions they earn through these services. Brokers act as intermediaries, facilitating transactions and charging fees for their expertise.
A description for the condition in which property should be left by the seller or previous tenant before it is handed over to the new buyer or tenant. It usually implies that the floors are to be cleared of trash and swept, leaving the premises tidy, but not necessarily scrubbed or thoroughly cleaned.
Brownfield sites are areas of land previously used for industrial purposes or certain commercial uses that may be contaminated by hazardous waste or pollution. Cleaning and redeveloping these sites is essential for community health and environmental sustainability.
Brownstone refers to a nineteenth-century style house typically characterized by its distinctive brownstone facade, 4 or 5 stories, and a stoop that leads up to the first floor. These houses commonly share side walls with adjacent houses, creating a row of similar structures often found in urban settings.
BTXE refers to toxic chemicals, specifically the aromatic hydrocarbons benzene, toluene, xylenes, and ethylbenzene, that are commonly associated with petroleum products and environmental contamination.
A bubble in real estate is a market situation where the prices of properties rise rapidly and excessively beyond reasonable valuations due to high demand, speculation, and investor behavior. Eventually, the bubble 'bursts,' leading to a sharp decline in prices.
An itemized list of expected income and expenses prepared weekly, monthly, or annually. A budget is crucial in managing finances efficiently and planning for future needs in real estate investments.
A Budget Mortgage is a mortgage structure which includes monthly payments for taxes and insurance, in addition to the standard interest and principal. This type of mortgage ensures that homeowners set aside the necessary funds for property tax and insurance premiums.
A buffer zone is a designated area used as a transitional space between two distinct land uses. This zone helps reduce the potential conflicts and impacts between differing land uses by providing a physical and sometimes functional separation.
Build to Suit is a contractual arrangement where a landowner agrees to construct a building based on the specifications of a tenant and then lease both the land and the completed building to the tenant. This allows tenants to customize space without the upfront capital expense of buying and developing land.
Builder Standard represents the lowest acceptable level of functional performance for construction features or appliances in a new or remodeled house, covering all essential aspects of home construction.
A builder warranty is a guarantee provided by the developer or building contractor covering the quality and integrity of the construction. It assures homebuyers that the property will be free from significant structural defects within a specified period.
Builders and Sponsors Profit and Risk Allowance (BSPRA) is an amount above the cost of apartments that is allowed to be included in the project cost for purposes of determining the loan amount in certain government-sponsored programs.
Building and Loan Associations, also known as Savings and Loan Associations, are financial institutions that specialize in offering savings accounts and originating residential mortgage loans.
