PITI stands for Principal, Interest, Taxes, and Insurance, which are the components of a mortgage payment. Understanding PITI is crucial for homeowners and prospective buyers as it determines the total cost of owning a home.
A plat is a detailed map or plan of a specific land area that outlines property boundaries, lot sizes, easements, utility locations, and streets. It is often used in real estate to provide a clear depiction of a subdivision or parcel of land.
A plat book is a public record containing detailed maps of land, showing the division of the land into streets, blocks, and lots, and indicating the measurements of the individual lots.
A plot plan is a diagram that shows the proposed or existing use of a specific parcel of land, including structures, landscaping, utilities, and other components of the land development. It is a crucial part of the planning and permitting process in real estate and construction.
Plottage refers to the increase in value realized by combining multiple smaller parcels of land into a single, larger parcel. This process is often employed in real estate to optimize land use and maximize profit.
A Pocket Listing is a real estate term referring to the practice of holding back a property from being listed in the Multiple Listing Service (MLS) in order to find a buyer within the listing broker's network, thereby retaining the full commission.
The 'Point of Beginning' (POB) is a crucial term in a Metes and Bounds survey. It refers to the specific location where the survey starts and ends, ensuring the accurate description and enclosure of a land tract.
A Porte-Cochère is a porch or portico that allows a vehicle to pass through, providing protection from the elements for passengers as they exit the vehicle and enter the building. The term is French for 'carriage entrance.'
A clause sometimes inserted in mortgages or deeds of trust; grants the lender (or trustee) the right to sell the property upon certain defaults. The property is to be sold at auction but court authority is unnecessary.
The initial stage in which a lender evaluates a borrower's financial capability to approve a specific loan amount, providing prospective homebuyers confidence and an advantage during the home buying process.
The term 'premises' in real estate refers to land and tenements; an estate; the subject matter of a conveyance.
Prepayment Privilege refers to the right of a borrower to retire a loan before its maturity date without incurring any prepayment penalty. This feature provides borrowers with the flexibility to pay off loans faster, potentially saving on interest costs over the life of the loan.
Prequalifying is an essential step in the home-buying process. It helps buyers estimate the maximum home price they can afford based on their income and liquid assets. While prequalifying does not promise or commit specific financing, it provides an outline of potential affordability.
A presale involves selling properties that are yet to be constructed, such as condominiums. It allows developers to secure financing and gauge market demand before actual construction begins.
A loan typically used outside the United States, whose payments are adjusted according to the rate of inflation, making payments predictable in terms of real value.
Pride of ownership refers to the sense of well-being, accomplishment, and pleasure derived from owning a home or other real property. It embodies an intangible benefit of homeownership correlated with social status, financial accomplishment, and a commitment to the local community.
The Primary Market Area (PMA) is a defined geographic region from which a business, such as a retail store or real estate development, expects to draw the majority of its customers or tenants. Identifying and understanding the PMA helps businesses to gauge market demand, optimize marketing strategies, and make more accurate financial projections.
A primary residence, often referred to as a principal residence, is the main home where an individual resides most of the time. This contrasts with a second home or vacation home.
The term 'Principal' in real estate can refer to the owner or user of the property, the client of an agent or broker, or the amount of money borrowed in a mortgage, excluding interest.
In real estate, a principal residence is the main home where a person lives most of the time. Principal residences qualify for specific tax benefits, such as rollover tax treatments.
Private Mortgage Insurance (PMI) is a type of insurance specifically designed to protect lenders in case a borrower defaults on a mortgage. It is often required for homebuyers who seek a conventional loan with a down payment of less than 20%.
Understanding the conditions and implications of a Private Mortgage Insurance (PMI) default can prevent homeowners from stakeholders from encountering unwanted financial hardships. Private Mortgage Insurance (PMI) is an insurance provided by private companies on conventional loans, ensuring lender protection in case of borrower default, especially when higher loan-to-value ratios are involved.
Pro rata is a Latin term meaning 'in proportion' or 'according to the rate.' In a real estate context, it refers to the equitable distribution of costs, profits, or liabilities based on the share of ownership or participation.
Procuring cause is a legal term used primarily in real estate to determine if a broker is entitled to a commission. It signifies the actions of a broker that ultimately lead to the creation of a transaction or agreement.
Property refers to the legal rights an individual or entity has over certain resources, including real estate and personal belongings. These rights allow the owner to use, enjoy, and dispose of their property as they see fit, subject to certain restrictions enforced by law.
A property description provides a detailed summary of the features, boundaries, and legal status of a particular real estate property. It ensures accurate identification and transference of property rights.
The defined boundary which delineates the edge of a plot of land, typically legally recognized and recorded in public land records.
A government levy based on the market value of privately owned property, commonly referred to as ad valorem tax or real estate tax.
A property tax deduction allows homeowners to deduct property taxes assessed on their real estate holdings from their annual income taxes, reducing overall tax liability.
A proprietary lease in a cooperative apartment building is an agreement granted by the corporation to its stockholders, which entitles them to rent or use a specific apartment unit upon meeting the conditions outlined.
Proprietorship refers to the ownership of a business, including income-producing real estate, by an individual, as opposed to a partnership or corporation. This ownership structure allows for direct control of property and income but comes with specific risks and benefits.
Prorate refers to the process of dividing or distributing an amount proportionately between parties, commonly used in real estate for allocating property taxes, insurance, or other periodic charges between the seller and buyer.
A proxy is an individual authorized to act on behalf of another person, primarily in meetings or legal proceedings. The term also refers to the document granting this authority.
The public sector refers to the portion of the economy that is controlled and operated by the government at various levels, encompassing federal, state, and local authorities. This segment includes government-owned or operated institutions like public schools, libraries, courthouses, public housing, and subsidized rental properties.
A punch list is an enumeration of items requiring correction prior to the completion or sale of a construction project. It ensures all agreed-upon work is finished to satisfactory standards.
A mortgage provided by the seller to the buyer in part payment of the purchase price of real estate. It serves as an alternative or additional financing option for buyers who may not qualify for traditional loans.
Pyramiding is an investment strategy that seeks to build a portfolio by reinvesting the proceeds from sales, or by refinancing existing properties into higher-valued properties using leverage.
A Qualified Real Estate Professional is a taxpayer who qualifies for an exception to passive activity income rules through significant material participation in real property trades or businesses.
A nineteenth-century-style house that is unique-looking, multi-story, and irregular in shape with a variety of surface textures, materials, and colors. The term Queen Anne has come to be applied to any Victorian house that cannot be otherwise classified.
A radius clause in a shopping center tenant's lease restricts the tenant from opening another store within a specified distance from the shopping center to prevent competition and reduced traffic to both the existing store and the shopping center. This is often crucial for anchor tenants and can also apply to ancillary tenants.
Lines parallel to a principal meridian, marking off the land into six-mile strips known as ranges in the government rectangular survey system.
Real estate refers to land and anything attached to it, including buildings and other structures. It encompasses ownership, use, and transfer of physical property. Real estate business activities include accounting, appraisal, legal advising, brokerage, counseling, regulation, and financing.
The Real Estate Educators Association (REEA) is a professional organization of individuals who specialize in teaching real estate across various educational platforms, including junior colleges and proprietary license preparation schools.
A Real Estate Investment Trust (REIT) is an investment vehicle that allows investors to invest in real estate or mortgages without directly owning the property. REITs avoid double taxation by distributing most of their income to shareholders and complying with specific IRS requirements.
A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-producing real estate.
The Real Estate Settlement Procedures Act (RESPA) is a federal law intended to provide greater transparency and knowledge to consumers about real estate transactions. It stipulates how mortgage lenders must treat applicants for federally-related real estate loans on properties containing 1–4 dwelling units. RESPA aims to eliminate unnecessary fees and ensure borrowers receive pertinent information to facilitate informed comparison shopping.
Real Property encompasses a variety of rights associated with the use and ownership of land and structures. It can include a full ownership interest, the use of a property under a lease, or partial interests like easements.
Real Property Trades or Businesses encompass various activities in real estate such as development, construction, rental, and management. For tax purposes, a taxpayer must own an interest greater than 5% in the business for the hours to count toward material participation.
A realized gain refers to the financial gain generated from the sale or exchange of a property, though this gain may not always be subject to immediate taxation. In cases of tax-free exchanges, such as under Section 1031, the gain is realized but not recognized for tax purposes.
A REALTIST is a member of the National Association of Real Estate Brokers (NAREB), primarily consisting of minority brokers and real estate professionals who uphold a rigorous ethical code. They often represent minority communities and promote fair housing and homeownership opportunities.
The REALTORS® Land Institute (RLI) is a specialized affiliate of the National Association of REALTORS® focused on facilitating land brokerage transactions across various categories including farms and ranches, undeveloped tracts of land, transitional and development land, and more.
Realty, also known as real estate, encompasses properties consisting of land and buildings on it, along with its natural resources like crops, minerals, or water. Realty is a crucial component of the economy and plays a significant role in investment, development, and personal wealth management.
A reappraisal lease is a type of lease agreement where rental levels are periodically reviewed and adjusted based on appraisals conducted by independent appraisers. This ensures that the rent reflects the current market value of the property.
Reassessment is the process of revising or updating the value estimate of property for ad valorem tax purposes. It forms the basis for determining the property taxes homeowners and businesses owe to local government entities.
A receiver is an individual or entity appointed by a court to manage, oversee, and maintain a property that is involved in ongoing litigation to ensure that the property is preserved and managed properly.
A recession is characterized by a significant decline in economic activity across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.
Recognized gain is the portion of a realized gain that is subject to taxation in a so-called tax-free exchange, such as under the IRS Section 1031 rule.
Reconveyance is the process through which the lender transfers the title of the property back to the borrower once the mortgage loan is paid off in full. This legal instrument removes the lender's claim and gives the property owner clear title.
The record owner is the individual or entity whose name is listed on the public records as the current legal owner of a property or asset.
Recourse refers to the legal right of a lender to claim money from a borrower in the event of default, in addition to repossessing the property pledged as collateral.
The act of curing a default by paying off all overdue loan payments and applicable penalties before a lender can initiate foreclosure proceedings.
A Reduction Certificate is a document issued by a mortgage lender, acknowledging the sum due on the mortgage loan, and is crucial when mortgaged property is being sold and the buyer assumes the existing debt.
The reinstatement period is a phase in the foreclosure process during which the homeowner has an opportunity to stop the foreclosure by paying the money that is owed to the lender.
A formal process that frees real estate from a mortgage or other lien, indicating that the debt has been fully paid off. This is crucial in ensuring that the property is clear of legal claims and can be sold or transferred without encumbrances.
Reliction is the gradual subsidence of water levels that exposes previously submerged land, creating dry land.
Relocation service refers to specialized companies that arrange and manage the relocation of employees from one city to another. These companies typically take charge of selling the employee's existing home, purchasing a new home, and may include services like furniture moving.
In real estate, a remainder refers to the portion of an estate that takes effect after the termination of a prior estate, such as a life estate. It can also denote the part of a property retained by the owner after a partial acquisition by the government through eminent domain.
A Remainderman is the individual who is designated to inherit or receive possession of a property after the termination of the preceding estate, typically after the death of a life tenant.
The remaining balance, also referred to as the outstanding balance, is the amount of loan principal that has not yet been repaid, plus any accrued interest or fees.
The Remaining Term refers to the amount of time left before a loan or mortgage reaches its maturity date. It represents the period remaining for the borrower to fulfill the debt obligation according to the contractual agreement.
Remodeling refers to changes made to the appearance and functional utility of a building, which could include painting, repairing, and replacing of fixtures and equipment.
Rent refers to the payment made by a tenant for the use of a landlord's property, which can be residential, commercial, or industrial. It is a fundamental concept in real estate, encompassing various types and factors that determine its amount and structure.
Rent bid models are conceptual tools used to explain how land is allocated in competitive markets. The model is based on the assumption that the space is controlled by the activity that offers the highest bid for the site.
Rent concession refers to a temporary reduction or discount on the rent payable by a tenant to attract or retain tenants in rental properties. These concessions can take various forms, such as free rent periods, reduced rent, or landlord-paid improvements.
Rent escalation refers to a provision in a lease agreement that allows for periodic increases in the rental rate.
A Rent Roll is a detailed list of individual tenants within a property, typically including information such as unit numbers, lease agreements, monthly rents, and lease expiration dates. It serves as a critical document for property management, providing an overview of rental income and tenant occupancy status.
A rent spike refers to a sudden and temporary rise in market rents that significantly outpaces the general inflation rate, often driven by changes in demand or external factors impacting the housing market.
The rental rate is the periodic charge per unit for the use of a property. The period may be a month, quarter, or year, and the unit may be a dwelling unit, square foot, or other unit of measurement.
Real Estate Owned (REO) refers to properties that have reverted to the lender, typically a bank, after an unsuccessful foreclosure auction. These properties are then listed for sale as part of the lender’s inventory.
Repairs refer to work performed to restore a property to its original condition without extending its useful life. This term is distinct from capital improvements, which add value or extend the life of the property. In the context of income property, repairs are considered an operating expense for accounting and tax purposes.
The Repeat Sales Price Index (Home Price Index) is constructed using sales data for homes that have sold more than once over the time period covered by the database. It aims to provide an accurate measurement of home price appreciation by analyzing price changes for the same properties over time.
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.
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.
Residential refers to properties intended for people to live in, which includes housing projects such as single-family homes, condominiums, apartments, and townhouses.
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.
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.
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.
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.
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 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.
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.
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.
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-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.
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.
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 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.
