Real Estate Glossary

_We have gathered several glossaries with the most common terms used in real estate. These include Commercial Real Estate Glossaries as well as a real estate glossary from the US FTC.

Some of the real estate investment terms are more thoroughly defined elsewhere on this site.

Cap Rate, Gross Rent Multiplier , Cash on Cash Return , Internal Rate of Return.

As these are terms often used by real estate investors.

Glossary

A

A,B,C Properties

Refers to the different types of properties.

A: High end properties in highly desirable areas, mint condition
B: Often slightly older or somewhat less desirable properties
C: Often neglected, blighted or impoverished areas.

Abandonment

The voluntary surrender of property rights, with no intention of reclaiming them and without vesting interest in another person. Non-use is not necessarily abandonment. In the state of Missouri, this can apply to rental property as follows. After rent remains unpaid for 30 days, a notice of abandonment can be posted. The notice will be effective if the tenant has not responded within the ten day period.

Absentee Landlord

"Absentee Landlord" is a pejorative or derogatory term, usually uttered by hate filled liberals when wanting to tax and penalize real estate investors. Often some of the less informed public will pick up on the term and use it as well. The roots of the term intone a spite for anyone who would invest in real estate other than their own home. Thus the reference to liberals, as they tend to want to punish achievement and success. Often used when pushing for Landlord Licensing, to insinuate that "absentee landlords" or owners who live elsewhere and own real estate near you; are somehow not concerned about the value of upkeep of their investment. By that ridiculous thinking, than anyone who owns stock in Coca Cola, but does not reside in Midtown Atlanta, GA is therefore an absentee investor and likewise does not care about how the company is run.

Absorption Rate

The ratio of the number of properties in an area that have been sold against the number available. Used to show the volatility of a market.

Abstract

A summary of the public records relating to the title to a particular property. An attorney or title insurance company reviews an abstract of title to determine whether there are any title defects which must be cleared before a buyer can purchase clear, marketable, and insurable title. The abstract also identifies encumbrances, easements and covenants that affect the property. Also known as a Title Report.

Abstraction Method

This method of estimating the value of property uses similar properties available in the same market to extract the value of a parcel of land.

Abutter

A person whose property abuts, is contiguous, or joins at a border or boundary; where no other land, road or street intervenes. Or one of those rude people who butt in line!

Acceleration Clause

A provision in a mortgage that gives the lender the right to demand immediate payment of the outstanding loan balance under certain circumstances. Usually when the borrower defaults on the loan.

Acceptance

The expression of the intention of the person receiving an offer (offeree, usually the seller) to be bound by the terms of the offer. The acceptance must be communicated to the offeror and must be in writing to be enforceable. The buyer has the right to revoke the offer anytime before the seller's acceptance.

Accession

Acquisition of title to additional improvements to real property as a result of annexation of fixtures or of accretion of alluvial deposits.

Accessory Building

A building separate from the main structure on a property. Often used for a specific purpose, such as a workshop, storage shed or garage.

Accredited Residential Manager

An Accredited Residential Manager (ARM) has completed training with the Institute of Real Estate Management, met the experience requirements and received a certification.

Accretion

An increase in dry land by gradual deposit of waterborne, solid material and riparian land, i.e., accretion by alluvion. The owner of riparian land becomes owner of title to land formed by accretion. Antonym: erosion.

Accrued Depreciation

The difference between the present worth of improvements and the reproduction or replacement cost new, both measured on the appraisal date.

Acknowledgment

A formal declaration made before an authorized official by a person executing a document, that he signs the document by a free act and deed. The official is usually a notary public who witnesses the signature and verifies the identity of the person.

ACO

All Cash Offer

Acquisition

The act of becoming the owner of certain property; used also of the thing or property acquired.

Acre

43,560 square feet. A measurement of area.

Active Installation

An installation in continuous use by active Army organizations.

Actual Age

The amount of time that has passed since a building or other structure was built. See also: effective age.

Actual Cash Value

An amount equal to the replacement value of damaged property minus depreciation.

Ad Valorem Tax

A tax on the value of the object or thing subject to taxation.

Addendum

A supplement to any document that contains additional information pertinent to the subject. Appraisers use an addendum to further explain items for which there was inadequate space on the standard appraisal form.

Adjustable-Rate Mortgage (ARM)

A type of mortgage where the interest rate varies based on a particular index, normally the prime lending rate.

Adjusted Basis

The value of an asset (property or otherwise) that includes the original price plus the value of any improvement, and less any applicable depreciation.

Adjusted Sales Price

An opinion of a property's sales price, after adjustments have been made to account for differences between it and another comparable property.

Adjustment Date

The date the interest rate changes on an adjustable rate mortgage.

Adjustment Period

The time between interest rate adjustment dates for an ARM. They are usually the initial period between the time the ARM is originated and the first interest rate change date, and subsequent adjustment periods between each interest rate change after the first interest rate change.

Administrator

A person appointed by the court to manage and settle the estate of a deceased person who has left no will.

Adverse Possession

Acquisition of title to real property owned by someone else, by open, notorious, and continuous possession for the statutory period of time. Burden to prove title is on the possessor, who does not have a marketable title until he obtains and records a judicial decree quieting title. No right of adverse possession may be obtained against the United States.

AEREP

AEREP is an Accredited Equestrian Real Estate Professional, and has been certified as such by the Institute of Equestrian Real Estate Professionals (IEREP).

Aesthetic Value

The additional value a property enjoys based on subjective criteria such as look or appeal.

Affidavit

A written declaration, sworn before an officer who has authority to administer oaths.

Affirmation

A declaration that a certain set of facts are truthful.

Affordability Analysis

A calculation used to determine an individual's likelihood of being able to meet the obligations of a mortgage for a particular property. Takes into account the down payment, closing costs and on-going mortgage payments.

Agent

A person who has been appointed to act on behalf of another for a particular transaction.

Agreement of Sale

Known by various names - such as contract of purchase, purchase contract, purchase agreement, purchase & sales agreement, or sales agreement - according to local custom. This is a written contract in which a seller agrees to sell and a buyer agrees to buy the subject property. This contract spells out specific terms and conditions of the agreement and is signed by both parties.

Air Rights

The rights vested by a grant of an estate in real property to build upon, occupy, or use, in the manner and degree permitted, all or any portion of space above the ground or any other stated elevation within vertical planes, the basis of which corresponds with the boundaries of the real estate described in the grant.

Alienation

The voluntary transfer of real property from one person to another.

Allotment

Authorization by the head of an agency to subordinates to incur financial obligations up to a specified amount. An agency makes allotments under the regulations in OMB Circular No. A-34, and not to exceed the amount allowed by OMB.

Alluvion

A kind of accretion on riparian land by action of water which deposits sediment. See also alluvium, avulsion.

Alluvium

Sand, clay or mud deposited as sediment on riparian land.

Amenity

Any feature of a property that increases its value or desirability. These might include natural amenities such as location or proximity to mountains, or man-made amenities like swimming pools, parks or other recreation.

American Society of Appraisers

An organization of appraisal professionals and others interested in the appraisal profession.

Amortization

The repayment of a loan through regular periodic payment.

Amortization Schedule

The breakdown of individual payments throughout the life of an amortized loan, showing both principal contribution and debt service (interest) fees.

Amortization Term

The length of time over which an amortized loan is repaid. Mortgages are commonly amortized over 15 or 30 years.

Amperage

A measure of electric current describing the magnitude.

Animal Unit

A measure of numbers of livestock equivalent to a mature cow. One A.U. equals 1,000 pounds live weight, or one cow, horse, or mule; five sheep or swine; six goats.

Animal Unit Month

A measure of forage or feed sufficient to feed one animal unit for 30 days. Usually expressed relative to acres of land.

Annexation

The act of attaching, adding or joining one thing to another, generally a smaller or subordinate thing with a large or principal thing. Usually with respect to land or fixtures.

Annual Percentage Rate (APR)

The rate of annual interest charged on a loan.

Annuity

A sum of money paid at regular intervals, often annually.

APN

Assessors Parcel Number

Application

A form used to apply for a mortgage loan that details a potential borrower's income, debt, savings and other information used to determine credit worthiness.

Application Fee

The fee that a mortgage lender charges to apply for a mortgage to cover processing costs.

Apportionment

A distribution by OMB of amounts available for obligation in an appropriation or fund account, including budgetary reserves established by law. An apportionment divides amounts by specific time periods (quarters), activities, projects, objects, or a combination.

Appraisal

A "defensible" and carefully documented opinion of value. Most commonly derived using recent sales of comparable properties by a licensed, professional appraiser.

Appraisal Foundation

A not-for-profit educational organization established by the appraisal profession in the United States in 1987. It is dedicated to the advancement of professional valuation and responsible for establishing, improving, and promoting the Uniform Standards of Professional Appraisal Practice (USPAP).

Appraisal Institute

A world-wide organization dedicated to real estate appraisal education, publication and advocacy.

Appraisal Principles

The basic building blocks of the property valuation process, including property inspection, market analysis and basic economics.

Appraisal Report

The end result of the appraisal process usually consists of one major standardized form such as, the Uniform Residential Appraisal Report form 1004, as well as all supporting documentation and additional detail information. The purpose of the report is to convey the opinion of value of the subject property and support that opinion with corroborating information.

Appraisal Standards Board (ASB)

An independent board of the APPRAISAL FOUNDATION, which writes, amends, and interprets USPAP. The ASB is composed of up to seven appraisers appointed by the Foundation's Board of Trustees. The ASB holds public meetings throughout the year to interpret and amend USPAP.

Appraised Value

An opinion of the fair market value of a property as developed by a licensed, certified appraiser following accepted appraisal principals.

Appraiser

An educated, certified professional with extensive knowledge of real estate markets, values and practices. The appraiser is often the only independent voice in any real estate transaction with no vested interest in the ultimate value or sales price of the property.

Appreciation

The natural rise in property value due to market forces.

Appropriation

Authorization by act of Congress permitting Federal agencies to incur obligations and make payments out of the Treasury for specific purposes.

Appropriations Bill

A bill that gives legal authority to spend or obligate money from the Treasury. An appropriations bill usually provides the actual monies approved by authorization bills, but not necessarily the full amount permissible.

Appurtenance

Something annexed to another principal thing and which passes as incident to it, for example a right of way or barn passing with a principal property.

Arbitration

A process where disputes are settled by referring them to an impartial third party (arbitrator) chosen by the disputing parties who agree in advance to abide by the decision of the arbitrator. There is a hearing where both parties have an opportunity to be heard, after which the arbitrator issues the decision.

Arms Length Transaction

Any transaction in which the two parties are unconnected and have no overt common interests. Such a transaction most often reflects the true market value of a property.

ARV

After Repair Value

Asbestos

A toxic material that was once used to make insulation and fireproofing material in houses. Because some forms of asbestos have been linked to certain lung diseases, it is no longer used in new homes. However, some older homes may still have asbestos in these materials.

Assessed Value

The value of a property according to jurisdictional tax assessment.

Assessment

The function of assigning a value to a property for the purpose of levying taxes.

Assessment Ratio

The comparative relationship of a property's assessed value to its market value.

Assessor

The jurisdictional official who performs the assessment and assigns the value of a property.

Asset

Any item of value which a person owns.

Assignment

Transfer of ownership of a mortgage usually when the loan is sold to another company.

Assumable Mortgage

A mortgage that can be taken over by the buyer when a home is sold.

Assumption

When a buyer takes over, or "assumes" the sellers mortgage.

Attached Housing

Any number of houses or other dwellings which are physically attached to one another, but are occupied by a number of different people. The individual houses may or may not be owned by separate people as well.