Dictionary - Real Estate
# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

1031 Exchange

A 1031 exchange is a real estate transaction in which the buyer and seller effectively swap properties in order to avoid paying capital gains tax on the sale. For example, let’s assume that John Doe wants to sell his commercial property for $600,000, which he bought for $400,000 as an investment. Read more

Abstract of Title

An abstract of title is a history of a piece of property. For example, let's say John Doe wants to buy the house at 123 Main St. Read more

Adjustable Rate Mortgage (ARM)

An adjustable rate mortgage (ARM) is a type of mortgage using a varying interest rate calculated by adding a premium to a specific benchmark rate.These loans are also called variable-rate mortgages or floating-rate mortgages. Read more

Assessed Value

Assessed value refers to the value of an asset -- usually real estate -- as determined by an assessor for tax purposes.The assessed value is often computed by incorporating the purchases and sales of similar properties in nearby areas. Read more

Back-End Ratio

Banks use the back-end ratio to determine whether a mortgage applicant is a good credit risk.The formula for the back-end ratio, generally, is: Back-End Ratio = (All monthly loan payments + requested loan’s monthly principal and interest payment + monthly property taxes on proposed real estate + monthly homeowners insurance premium)/Gross monthly income For example, let’s assume John Doe wants to get a $500,000 mortgage that comes with a principal and interest payment of $2,400. Read more

Balloon Mortgage

A balloon mortgage is a mortgage with a large payment made near or at the end of a loan term. Unlike a loan whose total cost (interest and principal) is amortized -- that is, paid incrementally during the life of the loan -- most or all of a balloon mortgage's principal is paid in one sum at the end of the term. Read more

Build to Rent (BTR)

Sometimes referred to as B2R, build to rent is a type of residential new construction, purpose-built to be rented out, rather than sold to homebuyers. Read more

Buyer's Market

A buyer's market exists when there are more sellers than buyers in the market for a certain good or service. Housing is a common place to find a buyer's market. Read more

Capitalization Rate

In real estate, a capitalization rate is a measure of return on investment.The formula for capitalization rate is: Capitalization Rate = (Expected Income from Property – Fixed Costs – Variable Costs)/Property Value Let's say Jane Doe buys a house to rent out for extra income. Read more

Case-Shiller Home Price Index

The Case-Shiller Home Price Index refers to a set of indices released by Standard and Poor's that tracks changes in the value of residential real estate. There are several "Case-Shiller" indices to track changes in a variety of markets. Read more

Clean Up Call

A clean up call, also known as a calamity call, is a feature of a collateralized mortgage obligation (CMO) that requires the issuer to pay off a portion of the CMO if the underlying mortgages don't generate enough cash to make the principal and interest payments on the CMOs. Let's say Company XYZ has issued $500 million of CMOs that have principal and interest payments of $2 million per month. Read more

Closing Costs

Closing costs are fees and expenses paid by both the buyer and the seller when a transaction is completed.Closing costs are common expenses in real estate transactions. Read more

Commercial Real Estate

Commercial real estate is any property that is exclusively used for business activity. Commercial real estate is any non-residential property used for commercial profit-making purposes. Read more


A condominium, often shortened to condo, is a multi-unit property where units are individually owned.Ownership typically includes an interest in common properties, like sidewalks, lobbies, and pools, controlled by the condominium management. Read more

Construction Loan

Sometimes referred to as a “self build loan,” a construction loan is a loan that is used to finance the construction of a new home or some other type of real estate project.The loan is made to the homebuyer, builder, or developer on a short-term basis to cover the total cost of the construction. Read more

Conventional Loan

A conventional loan is a mortgage that is not insured or guaranteed by a government agency.Also known as a conventional mortgage, conventional loans are usually fixed-rate loans. Read more


A deed is an ownership document that entitles its holder to specific rights to a property based on a set of explicit conditions. In most cases, a deed establishes proper ownership of a piece of property such as a home or automobile. Read more

Deed of Trust

A deed of trust, most commonly used in real estate transactions, is an agreement between a borrower and a lender that the title to the property purchased by the loan will be held in trust by a neutral third party, a trustee, until the loan is paid in full.Once executed, the document is filed as a public record. Read more

Distressed Sale

A distressed sale occurs when a sale must be made under unfavorable conditions for the seller.   In a distressed sale, the seller is affected by unfavorable conditions that force the sale. Read more

Down Payment

A down payment is the initial payment a borrower puts toward a large purchase, and is usually a specified percentage of the total purchase price.Down payments are typically used for real estate, cars and other big-ticket items that are not usually paid in full at the time of purchase; the remainder of the purchase amount is paid back over time through a loan. Read more

Earnest Money

Earnest money is a good faith deposit, typically on a house purchase.It is not the same as a down payment. Read more


An easement is a legal right to trespass.  Let's say John Doe owns five acres of land. Read more

Easement in Gross

An easement in gross is a legal right to use another person's land for as long as the owner owns that land or the holder of the easement dies. Let's say John Doe owns five acres of land, which includes a good fishing pond. Read more

Eminent Domain

Eminent domain is a legal strategy that allows a federal or local government to seize private property for public use.The seizing authority must pay fair market value for the property seized. Read more


An encumbrance is a limitation on the ownership of a property. In the real estate world, an encumbrance is similar to a lien. Read more

Enterprise Zone

An enterprise zone is a geographical area (often a few blocks or miles in a town) with a 0% tax on gains from the sale of assets and property sold in an enterprise zone. For example, let's say that downtown ABCTown has decayed over the last 10 years. Read more


Escrow is a financial arrangement whereby a third party holds funds in safekeeping pending the completion of a contract or other obligation. For example, let's assume a situation where someone is purchasing a home. Read more

Escrow Account

In the real estate world, mortgage companies use escrow accounts to collect property taxes, homeowners insurance, private mortgage insurance and other payments that are required by the homeowner but are not part of principal and interest.Escrow accounts are also called impound accounts. Read more

Fannie Mae (FNMA)

Fannie Mae (OTC: FNMA) is the nickname for the Federal National Mortgage Association (FNMA).Established in 1938, Fannie Mae's purpose is to create a secondary market for the purchase and sale of mortgages. Read more

Federal Home Loan Mortgage Corporation (Freddie Mac)

The Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac") is a government-sponsored entity that buys certain types of mortgages from banks and uses them to collateralize mortgage-backed securities.Freddie Mac also supplies a variety of periodic housing and mortgage data to the public. Read more

First-Time Homebuyer

A first-time homebuyer an individual or couple purchasing a home for the first time.The IRS also considers someone who has not owned a home in the past two years to be a first-time homebuyer. Read more


Foreclosure occurs when a lender seizes and sells a borrower's collateral after the borrower has failed to repay the lender.The term is most often associated with real estate. Read more

Funds from Operations (FFO)

Funds from Operations (FFO) is a measure of cash generated by a real estate investment trust (REIT).It is important to note that FFO is not the same as Cash from Operations, which is a key component of the indirect-method cash flow statement. Read more

Funds from Operations Per Share (FFOPS)

Funds from operations per share (FFOPS) is a measure of cash generated by a real estate investment trust (REIT).It is important to note that FFOPS is not the same as Cash from Operations Per Share, which is a key component of the indirect-method cash flow statement. Read more

Ginnie Mae (GNMA)

Ginnie Mae is the nickname for the Government National Mortgage Association.Ginnie Mae guarantees the timely payment of interest and principal on certain mortgage-backed securities (MBS). Read more

Good Faith Estimate

A good faith estimate is a written estimate of the fees due at closing for a mortgage. The Real Estate Settlement Procedures Act (RESPA) requires a lender has to provide a written good faith estimate to a borrower within three days of the borrower applying for a mortgage. Read more

Good Faith Money

Good faith money is money a buyer uses to prove to a seller that he or she intends to complete a transaction.In real estate, good faith money is also called earnest money. Read more


In the legal world, a grantee is a person who receives something. In real estate, a grantee is a person who receives property after a sale or other transfer of title. Read more

Habendum Clause

A habendum clause in a real estate contract transfers ownership of a piece of real estate with no restrictions.It generally pertains to oil and gas leases for pieces of property but can relate to any transfer of property. Read more


In the investing world, a half-life is the halfway point of mortgage repayment. Let's say John Doe borrows $100,000 to buy a house. Read more

High-Ratio Loan

A high-ratio loan is a mortgage that has a small down payment. Let's say John Doe wants to buy a $100,000 house. Read more

Home Loan

A home loan (or mortgage) is a contract between a borrower and a lender that allows someone to borrow money to buy a house, apartment, condo, or other livable property.A home loan is typically paid back over a term of 10, 15 or 30 years. Read more

House Poor

House poor is used to describe a homeowner who spends too large a portion of his or her income on home ownership, leaving too little for discretionary spending. Typically, home ownership expenses, including mortgage, insurance, and taxes should comprise no more than 28% of a family's gross income. Read more

Impact Fee

Real estate developers pay an impact fee to cities or other municipalities to offset the town's cost of building the infrastructure to support a private real estate development. Let's say Company XYZ wants to open a new store location at 123 Main Street. Read more

Interest Rate Ceiling

The term interest rate ceiling typically refers to the maximum lifetime interest rate charged on an adjustable rate mortgage according to the terms of a mortgage contract. A potential homebuyer contracts with a mortgage lender to secure a loan. Read more

Interest-Only ARM

An interest-only adjustable-rate mortgage (interest-only ARM) is a mortgage in which the borrower only pays the interest on the loan for a set period. There are two parts to an interest-only ARM that differentiate it from traditional mortgages. Read more

Interest-Only Mortgage

An interest-only mortgage is a mortgage in which the borrower only pays the interest on the loan for a set period. In general, an interest-only mortgage means the borrower only pays the interest on the loan for a set period. Read more

Investment Property

An investment property is a real estate investment purchased with the intent of earning a return on the money used to purchase the property.The return on the investment can be earned through rental income on the property, a gain on the sale of the property, or both. Read more

Investment Real Estate

Investment real estate refers to any residential structure owned solely for the purpose of generating investment returns, either through rental income or through market value appreciation. Often, an individual may own numerous residential properties and live in only one of them. Read more

Joint Owned Property

Joint owned property is a real estate asset with two or more owners. Given the general magnitude of its cost, real estate is often owned in the name of at least two individuals. Read more

Joint Tenancy

Joint tenancy is an arrangement in which two or more individuals occupy a property.Participating tenants each share equally in the rights and responsibilities related to the property. Read more

Junk Fees

Junk fees appear in mortgage closing documents and usually benefit the loan originator or the lender. Let's say John and Jane Doe buy a house and receive the Truth in Lending Act statement at closing. Read more

Just Compensation

Just compensation is the fair market value that a federal or local government must pay to a property owner in order to seize that private property for public use. Let's say John Doe lives in a house on one acre next to Highway 47. Read more

Key Money

Key money is money paid to a landlord or property owner in order to reserve a spot as a tenant on the property. Let's say Company XYZ is a restaurant firm that wants to open a location in the new ABC outdoor mall. Read more

Land Contract

A land contract is a contract in which the buyer of a property agrees to pay the seller in scheduled installments. A land contract allows the buyer of a property to use it while the seller continues to retain the deed. Read more

Land Flip

A land flip is an act of fraud whereby a group of people buy a piece of land and then profits by continually reselling to each other for more than its actual value. In a land flip, several buyers purchase land for a given price. Read more

Land Lease Option

A land lease option is a section of a lease contract that allows a renter to lengthen his or her use of a piece of land beyond the term specified in the contract. An individual who intends to rent a piece of property may ask the owner to include a land lease option as part of the lease contract. Read more

Land Rehabilitation

Land rehabilitation is the practice of returning a piece of land to the natural state it was in prior to human interference or damage from natural disasters. Land rehabilitation reclaims the natural state of a piece of land by removing buildings and other artificial structures, cleaning up and disposing of nonessential material and toxic chemicals and reintroducing vegetation once the soil has been nutrient fortified. Read more

Land Trust

A land trust is a trust comprised exclusively of real estate assets. A land trust holds one or more properties for the benefit of a designated group or organization (beneficiary). Read more

Land Value

Land value is the overall value of a piece of property. The value of a piece of property includes a number of variables including location, the distance of from commercial and health amenities (for example, shopping centers, hospitals and restaurants), the quality of the school district and enhancements to the property itself. Read more


Landlocked is a term describing a piece of property that has no direct access. Landlocked property is separated from major access ways including streets, canals and public roads. Read more


A landlord is an individual who owns real estate that he or she leases to renters. Landlords may own either residential or commercial properties. Read more


A landominium is a housing community in which residents own the housing units as well as the land on which they are built. Typically developed as retirement communities, landominiums are usually multiple single-family homes surrounded by a plethora of amenities, including gardens, parks, golf courses and recreation facilities. Read more

Lease Payments

There are many kinds of leases and thus many ways to calculate and record lease payments.Some allow the lessee to buy the asset at the end of the lease term, some do not, for example. Read more

Leasehold Improvement

A leasehold improvement is a change to a leased asset. For example, let's say Company XYZ is a restaurant company. Read more

Like-Kind Property

Like-kind property is property that, for tax purposes, is similar in nature to property being sold.Like-kind property is a key component of Section 1031 exchanges, which are real estate transactions in which the buyer and seller effectively swap properties in order to avoid paying capital gains tax on the sale. Read more

Main Home

In the tax world, a main home is where a taxpayer has lived for most of the tax year or is the only home the taxpayer owns. For example, let's assume John Doe buys a house in Austin, Texas, for $150,000. Read more

Maintenance Bond

A maintenance bond is a surety bond for construction projects. For example, let's say Company XYZ is a contracting company hired to build the new ABC office building. Read more

Making Home Affordable (MHA)

Making Home Affordable is a government program designed to help homeowners avoid foreclosure. The Making Home Affordable program is actually a collection of several programs: Home Affordable Modification Program (HAMP) Principal Reduction Alternative SM (PRA) Second Lien Modification Program (2MP) FHA Home Affordable Modification Program (FHA-HAMP) USDA’s Special Loan Servicing Veterans Affairs Home Affordable Modification (VA-HAMP) Home Affordable Foreclosure Alternatives Program (HAFA) Second Lien Modification Program for Federal Housing Administration Loans (FHA-2LP) Home Affordable Refinance Program (HARP) FHA Refinance for Borrowers with Negative Equity (FHA Short Refinance) Home Affordable Unemployment Program (UP) Hardest Hit Fund (HHF) These programs have a variety of qualification guidelines and requirements, but in general they seek to lower homeowners' monthly loan payments, lower the interest rate on homeowners' mortgages, and help homeowners adjust the principal balances on their mortgages if necessary. Read more


A McMansion is a derogatory slang term for a fancy house that looks like all the other houses in the neighborhood or region. Let's say John and Jane Doe buy a house in McMinnville. Read more

Minimum Lease Payments

Minimum lease payments are the lowest total amount that a renter can expect to pay during the term of a lease. When a landlord contracts a renter, the renter agrees to pay the landlord a specific periodic amount, or lease rate, for a predetermined amount of time (usually one year). Read more

Mortgage Accelerator

A mortgage accelerator is a type of checking account that allows a borrower to repay a mortgage more quickly using the balance of monthly paychecks as opposed to recurring monthly payments. Common in the United Kingdom and Australia, a mortgage accelerator is a checking account connected directly to a mortgage account. Read more

Mortgage Application

A mortgage application is a document that a prospective property buyer submits to a lender to secure a mortgage.The lender must approve the application before any money is lent. Read more

Mortgage Banker

A mortgage banker is a person or entity who lends mortgages. A mortgage banker may be a sole agent or larger institution that originates mortgages to property buyers in exchange for a commission. Read more

Mortgage Bankers Association (MBA)

The Mortgage Bankers Association (MBA) is a professional organization that represents the property finance industry in the United States. The Mortgage Bankers Association facilitates communication among mortgage bankers and provides ethical standards to ensure transparent and fair mortgage lending throughout the industry. Read more

Mortgage Broker

A mortgage broker is an agent who connects property buyers with mortgage lenders. A mortgage broker acts as a professional intermediary on a property buyer's behalf. Read more

Mortgage Equity Withdrawal (MEW)

A mortgage equity withdrawal (MEW) is a loan that uses the value of a mortgaged property as collateral. When a property is worth more than is owed on it, it has positive equity. Read more

Mortgage Excess Servicing

Mortgage excess servicing is the percentage remainder of the annual yield on a mortgage-backed security (MBS) once it has been allocated between the holder, the servicer, and the underwriter. The annual yield on an MBS is divided into three components: interest and principal for the holders and fees for the servicer and underwriter. Read more

Mortgage Fallout

Mortgage fallout is the percentage of an originator's mortgages that fail to close. A mortgage originator maintains a number of clients for whom it secures mortgages at competitive rates. Read more

Mortgage Interest

Mortgage interest is the compensation a borrower pays a lender for money used to purchase property. Mortgage interest is the percentage charged on a mortgage that must be paid in addition to the principal. Read more

Mortgage Originator

A mortgage originator is an individual or institution that collaborates with the borrower to complete a mortgage transaction. Mortgage originators facilitate the mortgage application process from the time a prospective borrower expresses interest until the mortgage loan itself has been disbursed. Read more

Mortgage Points

Mortgage points (also called interest rate points or discount points) are fees you can pay to a lender at closing to lower your mortgage's interest rate -- or annual percentage rate (APR).The cost of each point is equal to one percent of the loan amount. Read more

Mortgage Pool

A mortgage pool is a group of mortgages in a mortgage-backed security (MBS). Once a lender completes a mortgage transaction, it generally sells the mortgage to another entity. Read more

Mortgage Rate

A mortgage rate is the rate of interest a borrower pays on his or her mortgage. Mortgage rates can be either fixed or variable. Read more

Mortgage Rate Lock Deposit

A mortgage rate lock deposit is a sum of money that a borrower must pay the lender to lock in a specific interest rate until a borrower's mortgage is approved and given out. When a mortgage originator finds a mortgage rate for a borrower, the offering lender often charges the borrower a fee to hold that rate until his mortgage application has been approved. Read more

Mortgage Rate Lock Float Down

A mortgage rate lock float down is a provision that allows a borrower to obtain a lower rate if interest rates decline during the process of applying for a mortgage. Lenders usually allow those applying for a mortgage to lock in a specific mortgage rate using a mortgage rate lock. Read more

Mortgage Real Estate Investment Trust (mREIT)

Mortgage real estate investment trusts (mREITs) invest in residential mortgages that have been bundled together into securities called mortgage-backed securities (MBS) Unlike a regular real estate investment trust (REIT) that own real estate properties such as shopping centers or medical office buildings, mortgage REITs own no physical property.There are two types of mREITs: non-agency and agency. Read more

Mortgage Servicing Rights (MSR)

Mortgage servicing rights (MSR) is an arrangement by which a third party promises to collect and disseminate mortgage payments in exchange for a fee. Mortgage payments are processed continually over the entire term of a mortgage. Read more

Mortgage Short Sale

A mortgage short sale is the sale of a mortgaged property for less than the remaining value of the mortgage itself. In a weak housing market, it is common for the outstanding mortgage balance on a property to exceed the market value of the property itself. Read more

National Association of Mortgage Brokers (NAMB)

The National Association of Mortgage Brokers (NAMB) is an industry trade group representing mortgage brokers. Founded in 1973, the NAMB's primary objective is to promote ethics and professionalism among mortgage brokers. Read more

National Association of REALTORS (NAR)

The National Association of REALTORS (NAR) is a trade association for real estate professionals. The NAR has 1 million members in the United States. Read more

Negative Points

For mortgages, negative points are a strategy for qualified borrowers to decrease the amount of cash they need upfront to finance their home.A mortgage company will pay fees and closing costs on the borrower’s behalf (in the form of points) in exchange for a higher interest rate on the mortgage.  Negative points are also known as rebates, yield spread premiums, or no-cost mortgages. Read more

New Home Sales

New Home Sales is an economic indicator released monthly by the United States Census Bureau.The data reflect the number of newly constructed homes purchased in the previous month. Read more

Non Judicial Foreclosure

A judicial foreclosure occurs when a court allows a lender to seize and sell a borrower's collateral when the borrower has failed to repay the lender.The term is most often associated with real estate. Read more

Occupancy Rate

Occupancy rate is the ratio of rental units rented versus the total number in the building, city, state, etc. The formula for occupancy rate is: Occupancy Rate = Units Rented Out / Total Units For example, let's assume that Company XYZ owns an apartment building that has 300 units. Read more

Odd Days Interest

Odd days interest refers to interest earned on loans that close on any day other than the standard day the lender requires interest and principal payments. For example, let's assume that John obtains a mortgage from his bank, and the monthly interest and principal payments will be $2,500. Read more

Office Of Federal Housing Enterprise Oversight (OFHEO)

The Office of Federal Housing Enterprise Oversight (OFHEO) is a defunct regulatory body that ensured the financial safety of Freddie Mac and Fannie Mae. Started in 1922 after the passage of the Federal Housing Enterprises Financial Safety and Soundness Act, the OFHEO became part of the Federal Housing Finance Agency (FHFA) in 2008 when President Barack Obama signed the Housing and Economic Recovery Act of 2008. Read more

Owner Financing

Owner financing is when a seller, usually of a property or a business, provides financing for the purchase directly to the buyer under a for sale by owner situation. Owner financing is also referred to as seller financing or creative financing.[Related: 5 Seller Financing Options for Homebuyers] When arranged under a for sale by owner situation, the sale typically requires a form of down payment (often a percentage of the sales price) and the transaction is facilitated and recorded by a promissory note. Read more

Passive Loss

A passive loss is a financial loss from rental property, limited partnership or other activities in which the investor is not materially involved. When an investor buys shares in a rental property, for example, in which he or she is not actively involved in the operations, it is considered a passive investment. Read more

PMI - Private Mortgage Insurance

Private mortgage insurance (PMI), also called mortgage insurance, is what borrowers must pay on each mortgage payment if they didn't make a 20 percent down payment toward their home loan.The insurance protects the lender financially in case the borrower fails to repay. Read more

Price Level Adjusted Mortgage (PLAM)

A price level adjusted mortgage (PLAM) is a mortgage with a fixed interest rate but an adjustable principal balance. For example, let's assume you take out a traditional 30-year, $100,000 mortgage at 7%. Read more

Property Lien

A property lien is a lender's claim against a piece of real estate that may be legally sold should the borrower fail to repay a loan. When someone takes out a sizeable loan, such as a home mortgage, the lender often requires an asset that can be held as collateral against the loan. Read more

Property Tax

Property tax is a tax on property -- usually real estate -- as determined by an assessor. Let's assume you own a house. Read more

Qualified Acquisition Cost

A qualified acquisition cost refers to the cost of buying, building, or rebuilding a home.Investors can often withdraw qualified acquisition costs from their IRAs without paying early withdrawal penalties. Read more

Qualified Appraisal

A qualified appraisal is a document that formally describes and estimates the value of a piece of property. Assume that John wants to donate a painting to his favorite charity. Read more

Qualified Appraiser

A qualified appraiser is a person authorized to produce a qualified appraisal.  A qualified appraisal is a document that formally describes the value of a piece of property, usually exceeding $5,000.For example, let's imagine that John wants to donate a painting to his favorite charity. Read more

Qualified Exchange Accommodation Arrangements

Qualified exchange accommodation arrangements are a strategy to simplify and assist with real estate exchanges made under Section 1031. For example, let's assume that John wants to sell his commercial property for $600,000. Read more

Quiet Title

Quiet title is the name of a legal action intended to ensure that the owner of a property is in fact the real owner and that the property has no other ownership claims on it.To do this is known as quieting the title. Read more

Quiet Title Action

Quiet title action is the name of a legal action intended to ensure that the owner of a property is in fact the real owner and that the property has no other ownership claims on it.To do this is called quieting the title. Read more

Quitclaim Deed

A quitclaim deed is a document that transfers interest in a property to another person. For example, let's say John Doe and Jane Doe are married and live in a house that they own together. Read more

Rate and Term Refinance

A rate and term refinance occurs when a borrower replaces one mortgage with another mortgage that has a different maturity and interest rate. For example, let's say John Doe bought a house 10 years ago for $250,000. Read more

Real Estate

Real estate refers to land, as well as any physical property or improvements affixed to the land, including houses, buildings, landscaping, fencing, wells, etc. Vacant land and residential lots, plus the houses, outbuildings, decks, trees sewers and fixtures within the boundaries of the property are examples of real estate. Read more

Real Estate Agent

A real estate agent, working on behalf of a licensed real estate broker, is a licensed professional who works on behalf of the buyer and seller of real estate during a sales transaction. A real estate agent, working on behalf of a real estate broker, acts as an intermediary between sellers and buyers. Read more

Real Estate Investment Trust (REIT)

A real estate investment trust (REIT) is a closed-end investment company that owns assets related to real estate such as buildings, land and real estate securities.REITs sell on the major stock market exchanges just like common stock. Read more

Real Estate Owned (REO)

Real estate owned (REO) is a term describing real estate owned by lenders, usually because the lender has foreclosed on the property. Let's say John Doe falls behind on his house payments, and his lender, Bank XYZ, forecloses on the house. Read more

Real Estate Short Sale

A real estate short sale is the sale of property that is worth less than what is owed on it. For example, let's say John Doe buys a house for $500,000. Read more

Real Property

Real property is anything that is attached to land. For example, Company XYZ's factory, the five-acre lot on which the factory sits and whatever oil, gas or mineral rights that are attached to the land are real property. Read more


A realtor is a professional designation for a real estate broker who has membership in the National Association of Realtors (or NAR). Real estate agents must be certified members of the NAR in order to bear the title "realtor." Realtors work for real estate agencies affiliated with the NAR and act in a brokerage capacity, bringing together buyers and sellers in the real estate market. Read more


A recapture occurs when a person or entity takes back an asset from a buyer under certain conditions. Taxing authorities can implement tax recaptures in which the taxing authority requires a taxpayer to pay taxes on previous years of income (usually when the taxpayer took a deduction or tax credit that the taxing authority decides was inappropriate). Read more

Recapture Clause

A recapture clause is language in a contract that allows a person or entity to take back an asset under certain conditions. Let's say John Doe owns the ABC Shopping Center. Read more

Recording Fee

A recording fee is the cost of making a public record of a real estate transaction. Let's say John Doe buys a house from Jane Smith for $300,000 on October 1. Read more

Seller's Market

A seller's market exists when there are more sellers than buyers in the market for a certain good or service. Housing is a common place to find a seller's market. Read more

Short Sale

In investing, a short sale occurs when an investor sells a stock they don’t own yet.They borrow the stock from a broker-dealer and ideally sell it at a high price. Read more

Short Selling

Short selling is a trading strategy that seeks to capitalize on an anticipated decline in the price of a security. Essentially, a short seller is trying to sell high and buy low. Short selling involves a three-step process. Read more

Tax Lien Certificate

A tax lien certificate is written proof that a taxing authority has placed a lien on a piece of property for unpaid property taxes. Let's assume that John owns a house in the country and the annual property taxes are $4,000. Read more

Tax Lien Foreclosure

A tax lien foreclosure occurs when a taxing authority seizes a piece of property after the property owner has failed to pay property taxes due. Let's assume that John owns a house in the country and the annual property taxes are $4,000. Read more

Tax Roll

A tax roll is a list of taxable property in a city, county, state or other taxing authority. For example, let's assume that the city of Investon has 1,500 residents. Read more

Tax Service Fee

A tax service fee is paid by mortgage borrowers to mortgage lenders to ensure that a mortgaged property's property taxes are paid on time. For example, let's assume that John buys a house. Read more

Tenancy at Will

Tenancy at will is a legal term describing an arrangement whereby a tenant occupies a piece of property with the permission of the property owner. Let's say John Doe is a bachelor trying to make it in Hollywood. Read more

Tenants in Common (TIC)

Tenants in common (TIC) describes an ownership status that applies when a property is severally owned by two parties. If two co-owners of a property are tenants in common, they own the property independent of one another. Read more

Title Insurance

Title insurance is a type of insurance policy that protects property owners and their lenders against losses resulting from problems with a property title.It provides coverage for financial costs caused by pre-existing or future property ownership issues. Read more

Troubled Asset Relief Program (TARP)

The Troubled Asset Relief Program (TARP) is a U.S.government program created in an attempt to mitigate the fallout from the subprime mortgage crisis of 2007-2008.  The subprime mortgage crisis came to the forefront of the U.S. Read more


An encumbrance is a limitation on the ownership of a property.When an asset is unencumbered, there are no limitations on its ownership. Read more

Vacancy Rate

Vacancy rate is the ratio of rental units not rented versus the total number in the building, city, state, etc. The formula for vacancy rate is: Vacancy rate = Units not rented out / Total units For example, let's assume that Company XYZ owns an apartment building that has 300 units. Read more

Vacation Home

A vacation home is a house that the owner uses only a few days or weeks per year. Let's say John Doe lives in Minneapolis. Read more


A viager is a French method of real estate sale whereby the buyer makes a down payment and agrees to make a series of payments for the rest of the seller's life. Let's say John Doe wants to buy a $700,000 house in Paris. Read more

Warranty Deed

A warranty deed is a real estate document which states that the owner owns the purchased property free and clear of any outstanding mortgages, liens, or other types of encumbrances against it.  A general warranty deed legally transfers property from one individual or business to another (in most cases for real estate).They’re usually put in place when a grantee is looking to secure financing for mortgage or title insurance.  Grantor vs. Read more

Yield Maintenance

Yield maintenance is a kind of prepayment fee that borrowers pay to banks to reimburse them for the loss of interest resulting from the prepayment of a loan.  The formula for the yield maintenance premium is: Yield Maintenance = Present Value of Remaining Payments on the Mortgage x (Interest Rate - Treasury Rate) note that the Treasury rate should be for bonds of the same duration as the mortgage in question.Let's assume John takes out a $1,000,000 mortgage from ABC Bank at 7%. Read more

Yield-Spread Premium

Also known as negative points, yield-spread premiums are rebates lenders pay to mortgage brokers or borrowers.Yield-spread premiums are a percentage of the principal. Read more

Zero-Lot-Line House

A zero-lot-line house is a house whose structure goes right up the edge of the property line. Let's say John Doe buys a tiny tenth-of-an-acre lot and decides to build a house on it. Read more

Zoning Ordinance

A zoning ordinance is a rule regarding how people can use land and buildings within a certain area. Zoning ordinances typically delineate acceptable areas within a town for residential construction, commercial construction, industrial construction and agricultural space. Read more