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 deed is a written document, properly signed and delivered, that conveys title to real property. It serves as a legal record of ownership and may include warranties or specific conditions. There are several types of deeds, including general warranty deeds, quitclaim deeds, and special warranty deeds.
Deed books are official public records maintained by county governments, containing deeds and various real estate-related documents critical for property transactions and ownership verification.
A deed in lieu of foreclosure is a legal process where a borrower voluntarily transfers ownership of the property to the lender to avoid foreclosure proceedings.
A Deed of Reconveyance is a legal document issued by a mortgage holder indicating that the borrower has met the obligations of the mortgage and that the property title is transferred back to the borrower. It effectively nullifies the lender's claim to the property.
A Deed of Release is a document where one who has limited rights to a piece of real estate, such as a mortgagee or lienholder, abandons those rights back to the owner of the property. It often takes the form of a Quitclaim Deed.
A Deed of Trust is a legal instrument used in many states instead of a mortgage to secure the repayment of a loan. Legal title to the property is vested in one or more trustees, who hold it as security for the loan.
A deed restriction is a clause in a deed that may be inserted by a seller to limit the use of land, often to maintain property values or adhere to specific community standards.
A Deed to Secure Debt is a type of mortgage used in many states where property is deeded to a lender to secure a debt, offering a streamlined foreclosure process.
In real estate, default refers to the failure to fulfill an obligation or promise, or to perform specified actions as agreed upon in a contract. This term is frequently used in scenarios involving mortgages or leases where the borrower or tenant fails to meet the terms agreed upon.
A default point in real estate refers to the critical juncture at which a borrower fails to meet their financial obligations, resulting in potential foreclosure or other legal actions. It is conceptually similar to the break-even point in financial analysis.
Defeasance is a clause in a mortgage that gives the borrower the right to redeem the property after a default, typically by paying the full indebtedness and any additional fees incurred.
Defect in title refers to any issue, recorded instrument, or claim associated with a property that obstructs the grantor's ability to convey a clear and absolute title to a prospective buyer or new owner. Common examples include outstanding liens, unresolved legal claims, or errors in the property deed.
A defendant is the party being sued in a court of law or accused of an offense in a legal action.
Deferred charges refer to nontangible costs that are anticipated to provide value over multiple years. These costs are amortized over the period they are expected to provide value, for accounting or tax purposes.
A Deferred Exchange, often termed as a Delayed or Tax-Free Exchange, refers to a real estate transaction facilitated under Section 1031 of the Internal Revenue Code, allowing the deferral of capital gains taxes on the sale of an investment property, provided another like-kind property is acquired within a specific timeframe.
Deferred gain refers to the amount of gain that is realized but not recognized at the time of a transaction, commonly occurring in tax-deferred exchanges, often known as 1031 exchanges. Essentially, deferred gain allows taxpayers to defer paying taxes on capital gains by reinvesting the proceeds in like-kind properties.
Deferred maintenance refers to the practice of postponing necessary repairs and maintenance activities on real estate properties. This neglect typically results from budget constraints or prioritization of financial resources toward other projects, and it consequently leads to physical depreciation.
Deferred payments refer to the payments that are postponed and scheduled to be made at a future date. Commonly utilized in various financial contexts, it allows borrowers to delay payments of the principal or interest.
A deferred-interest mortgage is a type of home financing loan that offers the borrower an option to pay less than the interest due on its outstanding balance. Any shortfall in the interest payment is then added to the loan's principal, leading to negative amortization.
In mortgage finance, a deficiency refers to the shortfall of funds recovered through the sale of a property that had secured a foreclosed loan compared to the total debt owed. This typically includes the unpaid loan balance, accrued interest, foreclosure expenses, and any damages incurred by the lender.
A deficiency judgment is a court order that mandates the borrower to pay the outstanding balance on a loan when the collateral or security for that loan does not entirely cover the defaulted debt.
Deficit Rent refers to the difference between the market rent and the contractual rent for a specific property. It can indicate potential income loss for property owners when actual collected rent is less than the prevailing market rates.
A Delayed (Tax-Free) Exchange refers to a transaction where an investment property is traded for another like-kind property, allowing for the deferment of capital gains taxes as stipulated by IRS guidelines.
Deleveraging is the process of reducing the level of one's financial leverage. This term often refers to corporations but has broadened to include any entities that suffer from too much debt, including individuals, governments, and economic sectors such as real estate. The primary aim is to reduce financial risk.
Delinquency Rate is a critical metric in real estate finance, used to gauge the risk of loan defaults within a portfolio. It measures the percentage of loans that are past due for a specified period, typically 90 days or more.
Delinquent refers to the state of having an unpaid amount after the due date and any grace period has passed. This term is often used before default is declared.
Delivery refers to the transfer of possession of a thing from one person to another. In real estate, it typically involves the transfer of a deed or other documents to confirm possession.
Demand refers to the quantity of goods or services that consumers are willing and able to purchase at a given price. It plays a crucial role in the real estate market as it influences prices and availability.
A Demand Loan is a type of loan that the lender can require to be repaid at any time, with often little to no advance warning to the borrower.
The term 'Demised Premises' refers to the property or portion of property that is leased or rented to a tenant under the terms outlined in a lease agreement.
A demising partition is a barrier or partition used to separate two adjacent tenant spaces or to separate a tenant space from common areas, such as corridors, in commercial real estate. This term is commonly used in the context of lease agreements and construction specifications.
Demographics relate to the characteristics of a population such as race, sex, age, household size, growth, and density, which influence market trends and demand in real estate. Understanding demographics is essential for developers to make informed decisions about new projects and strategic marketing.
The study of the characteristics of people residing in an area, including age, sex, income, educational levels, and more. Understanding demographics is crucial for real estate market analysis and strategic planning for developments.
Demolition is the process of tearing down and removing an existing structure, typically to clear a site for new development or construction. This can involve a variety of methods, depending on the size, location, and type of construction of the building to be demolished.
Density in real estate refers to the intensity of land use, often quantified as the number of dwelling units, residents, or floor space per unit of land area. It is an essential aspect in urban planning and zoning regulations.
Density zoning refers to laws that regulate the number of structures or occupants permitted per unit of land area, aiming to control land use intensity, promote sustainable development, and manage population density.
The Department of HUD plays a pivotal role in American housing policy to ensure liquidity, stimulate economic development, and facilitate fair access to housing.
The Department of Veterans Affairs (VA) is a U.S. government agency responsible for providing vital services to America's veterans, including health care, disability compensation, education, and housing loan benefits.
The Departure Provision, formerly found in the Uniform Standards of Professional Appraisal Practice (USPAP), allowed appraisers to depart from specific requirements given that the departure did not result in misleading assignments. However, this provision was replaced with the Scope of Work rule, emphasizing transparency in how an appraisal is conducted.
Depletion refers to a non-cash deduction that accounts for the reduction in value of an income-generating natural resource, such as minerals, oil, gas, or timber.
A deposit signifies money paid in good faith to assure the performance of a contract, commonly used with sales contracts and leases. If the individual who put up the deposit fails to fulfill contract terms, the deposit could be forfeited unless contract conditions allow for a refund.
A deposit account is an arrangement whereby an individual or organization places cash with a financial institution for safekeeping. The institution can invest the cash and pay the depositor a specified interest while allowing the depositor to reclaim the full value of the account following agreed-upon procedures.
The Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of 1980 is a landmark federal law that significantly reformed the regulatory environment for financial institutions, allowing savings and loan associations to compete more effectively with commercial banks while also standardizing reserve requirements for banks.
The Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) deregulated financial institutions and thereby broadened the range of banking activities available to them. The act aimed to improve monetary policy control, enhance banking sector competition, and provide more comprehensive services to consumers.
Depreciable basis refers to the portion of an asset’s cost that can be depreciated over its useful life for tax purposes. It is an essential concept in the calculation of depreciation expenses, influencing both financial reporting and tax liabilities.
Depreciable life is the time period over which the cost of an asset can be spread for tax or appraisal purposes, reflecting either the recovery of investment or the estimated useful economic life of an asset.
Depreciable real estate refers to property used in a trade or business or for investment purposes that is subject to depreciation deductions under Section 167 of the Internal Revenue Code. This typically includes both residential and commercial properties, excluding the value of the land.
Depreciated cost, also known as book value or adjusted tax basis, represents the value of a property after accounting for depreciation – the gradual reduction in the value of an asset over time. This figure is used in financial reporting and tax assessments to reflect the lowered worth of a property due to wear and tear, deterioration, or obsolescence.
Depreciation (Accounting) refers to the method of allocating the cost of a tangible asset over its useful life. It is an accounting technique used to account for the gradual wear and tear, aging, or decrease in the utility of an asset.
Depreciation, in real estate appraisal, refers to the reduction in a property's value due to wear and tear, age, or other factors, which impacts its overall market value.
Depreciation (Appraisal) is a charge against the reproduction cost (new) of an asset for the estimated wear and obsolescence. This type of depreciation can be categorized as physical, functional, or economic.
Depreciation (Tax) refers to an annual tax deduction for wear and tear and loss of utility of property. It allows property owners to account for the decrease in value of their real estate assets over time.
Depreciation methods are accounting techniques used to allocate the cost of an asset over its useful life. These methods help businesses recognize the wearing out, aging, or decrease in value of an asset.
Depreciation recapture refers to the process of collecting income tax on gains made through the sale of depreciable property, where deductions for accelerated depreciation exceed via recapture in accordance with Section 1250 of the Internal Revenue Code.
In real estate, a depression signifies a severe decline in business activity characterized by high unemployment, excess supply, and public fear, which typically results in reduced real estate construction and high vacancy rates.
The term DEPTH in real estate refers to the distance between the curb and the rear property boundary (lot depth) or between the front and rear walls of a building.
`Depth Tables` are a set of percentages indicating the proportion of site value attributable to each additional amount of depth in the lot. These tables help in understanding and appraising land value, especially when the depth of the lot exceeds standard dimensions.
A derivative is a financial instrument whose value is based on the price of another underlying asset. Derivatives are commonly used for hedging, speculation, and arbitrage purposes to mitigate risk or enhance potential returns.
Descent refers to the acquisition of property by an heir when the deceased leaves no will.
A formal depiction of the dimensions and location of a property; generally included in deeds, leases, sales contracts, and mortgage contracts for real property. Different methods such as government rectangular survey, lot and block, and metes and bounds are used for legal descriptions and plats.
A Descriptive Memorandum, often used in the realm of real estate and securities, serves as an offering circular for properties or securities in scenarios where a prospectus is not required.
A Designated Broker is typically the real estate broker for a corporation or entity, often synonymous with Principal Broker, responsible for legal compliance and business operations.
Detached housing residential buildings are standalone dwelling units that are completely separated from adjacent residences, typically situated on individual lots.
A detention pond is a reservoir designed to temporarily hold a set amount of water while slowly draining to another location. Principally used for flood control when large amounts of rain could cause flash flooding.
Detrimental condition refers to environmentally negative or hazardous substances within real estate that can affect property value, safety, and habitability.
A developer is an individual or company that improves raw land into improved property by utilizing labor, capital, and entrepreneurial efforts.
Developer profit is the anticipated increase in value created by a real estate developer. This profit represents the difference between the final market value of the developed real estate project and the aggregated costs of materials, labor, and overhead.
Development refers to the process of adding improvements to a parcel of land, which can include drainage, utilities, subdividing, access, and buildings. It encompasses all activities from the preparation of detailed plans to securing government permits and the actual construction.
A development loan is a type of commercial loan designed to finance the construction or renovation of buildings primarily for commercial use. It is sometimes interchangeably referred to as a construction loan.
Development rights refer to the legal entitlements attributed to property owners to improve and develop a piece of land within certain regulatory constraints set by local authorities.
A gift of real estate property bequeathed through a will or last testament, often compared with the term 'bequeath,' which generally refers to the gifting of personal property.
A devisee is an individual or entity designated in a will to receive real estate property from the estate of a deceased person. They inherit the property as specified by the terms outlined in the will.
Direct capitalization is a valuation method used in real estate to estimate the value of an income-producing property by dividing the net operating income (NOI) by the capitalization rate (cap rate).
Direct costs are expenses that are readily identifiable in the construction of real estate, including labor, materials, and contractor’s overhead and profit. These are contrasted with indirect costs, which include expenses like architect’s fees and interest during construction.
Direct damages refer to the compensation paid by a government entity for the value of land and improvements taken through eminent domain proceedings. It contrasts with indirect damages and severance damages.
A Direct Reduction Mortgage is a type of fixed-rate mortgage where both interest and principal are repaid with each payment, ensuring that the loan is fully amortized over its term.
The Direct Sales Comparison Approach, also known as the Sales Comparison Approach, is a real estate appraisal method used to estimate the value of a property by comparing it to recently sold properties with similar characteristics within the same market area.
Directional growth refers to the location or direction toward which a city or urban area is expanding. Understanding directional growth is crucial for real estate investors, developers, city planners, and policymakers to make informed decisions about property investments, infrastructure development, and urban planning.
A disbursement refers to the act of paying out money, often seen in contexts like loan origination or the dissolution of investment ventures.
Discharge in Bankruptcy refers to the release of a bankrupt party from the obligation to repay debts that were, or might have been, proved in a bankruptcy proceeding.
Procedures resulting from the state Real Estate Commission's investigation of complaints against licensees, potentially leading to revocation or suspension of licenses and other penalties.
A disclaimer is a statement that rejects responsibility or renunciation of ownership concerning a specific matter. In real estate, disclaimers are commonly used in financial documents and ownership claims.
A Disclosure Statement is a legally required document in real estate transactions that compels sellers to reveal specific information about the property's condition and any material facts relevant to the transaction.
A discount in the context of real estate represents the difference between the face amount of an obligation and the amount advanced or received for the loan. It often indicates the sale of a loan or mortgage at less than its face value.
A licensed broker who provides brokerage services for a lower commission than that typically charged in the market, often offering less extensive services or unbundled service options.
Discount points are fees paid directly to the lender at the time of the loan origination to reduce the interest rate and lower monthly mortgage payments. Frequently used in conventional, FHA, and VA loans, they offer borrowers flexibility in managing loan costs.
The discount rate serves as a critical financial mechanism for converting future income streams into present-day values, ensuring the appropriate valuation and feasibility of real estate investments.
Discounted Cash Flow (DCF) is a valuation method used to estimate the value of an investment based on its expected future cash flows. This technique incorporates the time value of money by discounting the future cash flows to present value.
Discounted Cash Flow (DCF) is a financial valuation method used to determine the value of an investment based on its expected future cash flows, which are discounted to reflect their present value. This technique takes into account the time value of money.
A discounted loan is a loan that is sold or traded for less than its face value due to market interest rate differences or inherent risk characteristics.
Discounted Present Value (DPV) is the present value of expected future cash flows, discounted at a specific rate to account for the time value of money. It's often used to evaluate the attractiveness of an investment.
Discounting is the process of estimating the present value of an income stream by reducing expected cash flow to reflect the time value of money. It is the opposite of compounding, and mathematically, they are reciprocals.
Discrimination in real estate refers to applying special treatment, often unfavorable, to individuals based on race, religion, sex, color, national origin, handicap, or familial status. It is a serious issue as real estate transactions should be conducted fairly and equitably.
Disintermediation refers to the process where financial intermediaries, such as banks or savings and loan associations, are bypassed, and funds are directly invested into other assets to seek higher yields.
Displacement in real estate refers to the involuntary movement of population due to the conversion of their homes to other uses. This can occur due to various factors, including legal actions like condemnation, urban renewal projects, redevelopment initiatives, and natural disasters.
Disposition costs refer to the various expenses incurred by a seller in the process of selling a property. These can include real estate agent commissions, legal fees, closing costs, and transfer taxes.
Dispossess proceedings refer to the legal process initiated by a landlord to remove a tenant from a rental property and regain possession, typically due to non-payment of rent or violation of lease terms.
The termination of an agreement or contract, regardless of the initiating circumstances, is known as dissolution. This could occur due to various reasons such as the completion of contract terms (performance), a court order, or mutual agreement among the parties involved.
The Distinguished Real Estate Instructor (DREI) designation is awarded to exceptional real estate educators who exhibit profound expertise, mastery in teaching techniques, and a dedication to lifelong learning in the real estate industry.
Distraint is the legal right of a landlord to seize a tenant’s personal property to satisfy the payment of back rent.
