The Real Estate Reference Desk
Understand the language before the decision.
Clear definitions let buyers, sellers, and commercial clients ask stronger questions — of a lender, an inspector, an attorney, or a real-estate professional. Search a term or browse by category.
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65 terms
A
- Adjustable-rate mortgage (ARM)Financing
- A mortgage whose interest rate can change over time according to the terms of the loan. Payments may rise or fall after the initial period, so ask the lender how often the rate can adjust and what the limits are.
- AmortizationFinancing
- The schedule by which a loan balance is paid down over time through regular payments. Early payments usually apply more to interest and less to principal.
- Annual percentage rate (APR)Financing
- A figure that expresses the cost of borrowing as a yearly rate, generally including the interest rate plus certain lender charges. It is used to help compare loan offers and is often different from the interest rate alone.
- AppraisalTransaction
- An independent professional opinion of a property's value, usually prepared for a lender. An appraisal is an opinion supported by analysis, not a guarantee of sale price or future value.
- Assessed valueOwnership
- The value a taxing authority assigns to a property for property-tax purposes. It is set by an assessment process and may differ from market value or an appraised value.
B
- Base rentCommercial
- The stated rent for commercial space before additional amounts the lease may require, such as operating expenses, taxes, insurance, or percentage rent. The lease defines what is included and how adjustments are calculated.
- Buyer agencyBuying
- A working relationship in which a real-estate professional represents a buyer. The duties, scope, compensation, and length are set out in a written agreement, so review the agreement carefully before signing.
C
- Capitalization rate (cap rate)Commercial
- A ratio used to discuss income property, typically net operating income divided by value or price. It is a comparison tool built on assumptions, not a projection of returns.
- ClosingTransaction
- The point at which the transaction is completed according to the contract and applicable requirements — documents are signed, funds are handled, and ownership transfers. Procedures and participants vary by location.
- Closing costsTransaction
- Fees and charges paid in connection with a transaction, which can include lender charges, title and recording costs, prepaid items, and other service fees. Ask for a written estimate specific to your purchase or sale.
- Commercial due diligenceCommercial
- The investigation period for a commercial property, which can include reviewing use and zoning, income and expenses, leases and tenant obligations, physical condition, environmental matters, title, and financing. Scope and timelines are set by the contract and the professionals involved.
- Common area maintenance (CAM)Commercial
- Charges a commercial tenant may pay toward the upkeep of shared areas of a property, such as parking, landscaping, or lighting. What is included and how it is calculated depends on the lease.
- Comparative market analysis (CMA)Selling
- A real-estate professional's review of recent comparable sales, active competition, and property characteristics to help discuss pricing. It supports a conversation about price; it is not an appraisal.
- ContingencyTransaction
- A condition written into a contract that must be satisfied, waived, or resolved for the agreement to continue as written. Common examples relate to financing, inspections, appraisal, or the sale of another property.
D
- Debt service coverage ratio (DSCR)Commercial
- A ratio commonly used by lenders to compare a property's net operating income with its required loan payments. Calculation methods and acceptable levels vary by lender and transaction.
- Debt-to-income ratio (DTI)Financing
- A comparison of monthly debt obligations to monthly income that lenders use in reviewing a loan request. Which debts and income count, and what ranges apply, depend on the lender and loan program.
- DeedOwnership
- The written instrument used to transfer ownership of real property. Types of deeds differ in what they promise about title, so questions about a specific deed belong with an attorney.
- Due diligenceBuying
- The investigation a buyer performs within the timeframes the contract allows — which may include inspections, document review, and confirming financing. What is permitted and how long it lasts is set by the agreement.
E
- Earnest moneyTransaction
- Funds a buyer places with a designated holder to show commitment to a contract. How it is held, applied, refunded, or disputed is governed by the contract and applicable requirements.
- EquityOwnership
- The difference between what a property could reasonably sell for and the balance of debts secured by it. Equity changes as balances are paid down and as market values move, in either direction.
- EscrowTransaction
- An arrangement in which a neutral party holds funds or documents until agreed conditions are met. The word is also used for accounts that collect taxes and insurance along with a mortgage payment.
- Estoppel certificateCommercial
- A signed statement in which a tenant or another party confirms specified facts about a lease, such as rent, term, deposits, amendments, or claimed defaults. Its effect depends on the document and applicable law, so legal review may be appropriate.
F
- Fair market valueOwnership
- A general concept describing the price a willing buyer and willing seller might agree to, with neither under pressure and both reasonably informed. It is an estimate, not a fixed number.
- Fixed-rate mortgageFinancing
- A mortgage in which the interest rate stays the same for the life of the loan. The principal-and-interest payment stays level, though taxes and insurance can still change.
- Full-service leaseCommercial
- A commercial lease in which the quoted rent generally includes specified operating expenses or services. Inclusions, expense stops, and pass-throughs vary, so the lease must be reviewed to understand the actual allocation of costs.
G
- Gross leasable area (GLA)Commercial
- The floor area intended for a tenant's exclusive occupancy and use, commonly used in retail and other income-property analysis. Measurement standards and exclusions can differ, so confirm how the stated area was calculated.
- Gross leaseCommercial
- A commercial lease structure in which the landlord pays some or all property operating expenses from the rent received. Modified forms may shift certain increases or expenses to the tenant, as defined by the lease.
H
- Home inspectionBuying
- An independent evaluation of a property's accessible systems and visible condition at the time of the visit. It is not a guarantee or a warranty, and specialized inspections may be recommended.
- Homeowners association (HOA)Ownership
- An organization that administers rules, shared areas, or services in certain communities, usually funded by assessments. Obtain and read the governing documents and current financial information before relying on assumptions.
- Homeowners insuranceOwnership
- Property insurance a homeowner carries, and a lender usually requires. Coverage, exclusions, deductibles, and separate policies such as flood coverage depend on the property and the insurer.
I
- InterestFinancing
- The cost a lender charges for the use of borrowed money, expressed as a rate and paid as part of the loan payment.
L
- Lease optionCommercial
- An arrangement that combines a lease with a contractual option allowing a party to purchase the property under stated terms during a defined period. Rights, deadlines, and obligations depend on the documents and warrant legal review.
- LenderFinancing
- The party that makes a loan, such as a bank, credit union, or mortgage company. Programs, requirements, documentation, and timelines differ from lender to lender.
- Letter of intent (LOI)Commercial
- A preliminary written outline of proposed terms, often used in commercial transactions before a full agreement. Whether any part of it is binding depends on its language and should be reviewed by an attorney.
- Listing agreementSelling
- The written agreement between a property owner and a brokerage covering the marketing and sale of the property, including scope, term, and compensation. Read it fully before signing.
- Loan estimateFinancing
- A standardized disclosure lenders provide for many consumer mortgage applications, summarizing estimated terms, payments, and costs so offers can be compared.
- Loan-to-value ratio (LTV)Commercial
- A comparison of a loan amount with the property's value, usually expressed as a percentage. Lenders may define value and apply limits differently depending on the property, loan, and underwriting standards.
M
- MortgageFinancing
- A loan secured by real property, together with the documents that give the lender rights in the property if the loan is not repaid as agreed. Terms, costs, and conditions vary by loan.
- Multiple listing service (MLS)Selling
- A cooperative database used by participating real-estate professionals to share property information. Rules, coverage, and data vary by MLS, and public websites may not show identical information.
N
- Net operating income (NOI)Commercial
- For income property, revenue remaining after operating expenses and before debt service and certain other items. How it is calculated depends on the assumptions used, so verify the underlying figures.
P
- Percentage leaseCommercial
- A commercial lease, often used for retail space, in which rent includes a percentage of the tenant's defined sales, sometimes in addition to base rent. The lease controls the percentage, breakpoint, reporting, and included sales.
- PreapprovalFinancing
- A lender's review of a borrower's information that generally involves more verification than prequalification. It is not a final loan commitment — ask what was verified and how long it is valid.
- PrequalificationFinancing
- An early, informal estimate of what a borrower might qualify for, often based on information the borrower provides without full verification. Processes and terminology differ by lender.
- PrincipalFinancing
- The amount borrowed, or the remaining loan balance, separate from interest and other charges.
- Private mortgage insurance (PMI)Financing
- Insurance some lenders require that protects the lender, not the borrower, typically when a down payment is below a program threshold. Rules for adding and removing it depend on the loan.
- Pro formaCommercial
- A forward-looking financial presentation based on assumptions about income, expenses, occupancy, or operations. It is a planning or comparison tool, not a guarantee, and its assumptions should be independently examined.
- Property disclosureSelling
- A form or statement in which a seller provides information about the property, generally limited to what the seller knows. Required content varies by location, and a disclosure is not a substitute for inspections.
- Property taxOwnership
- A tax assessed on real property by local authorities. Amounts depend on assessment, rates, classifications, and any applicable exemptions, and they can change over time.
- Purchase agreementTransaction
- The written contract setting out the agreed terms for buying and selling a property, including price, contingencies, dates, and obligations. Legal questions about its terms belong with an attorney.
R
- REALTOR®Transaction
- REALTOR® is a registered membership mark identifying a real-estate professional who is a member of the National Association of REALTORS® and subscribes to its code of ethics. Not every licensed real-estate professional is a member, so confirm membership directly.
- Rent rollCommercial
- A property-level schedule summarizing tenants and lease information, often including spaces, rents, terms, deposits, and expiration dates. It is a snapshot that should be checked against leases and other records.
- Right of first refusal (ROFR)Commercial
- A contractual right giving its holder an opportunity to match or accept specified terms before an owner completes a transaction with another party. The triggering events, notice, timing, and scope depend on the agreement.
S
- Sale-leasebackCommercial
- A transaction in which an owner sells a property and simultaneously leases it back from the buyer. The sale and lease terms shape the parties' obligations and financial outcomes and require transaction-specific professional review.
- Seller concessionSelling
- An agreed contribution by a seller toward certain buyer costs, as permitted by the contract and any applicable loan program limits. Availability and limits vary.
- SurveyTransaction
- A professional depiction of a property's boundaries and, depending on type, improvements and easements. What a survey shows depends on the type ordered and the standards used.
T
- Tenant improvement allowanceCommercial
- An amount a commercial landlord may agree to contribute toward building out leased space. What it covers, who controls the work, and how it is paid are negotiated in the lease.
- Tenant mixCommercial
- The combination of occupants and uses within a commercial property. Owners may consider how the businesses complement one another, serve demand, and affect operations, while actual performance remains uncertain.
- TitleOwnership
- The legal ownership interest in real property, along with the rights that come with it. Questions about how title is held or transferred belong with an attorney.
- Title insuranceTransaction
- Insurance that protects against certain covered title problems, subject to the policy's terms and exclusions. Lender and owner policies cover different interests.
- Triple-net lease (NNN)Commercial
- A commercial lease structure in which the tenant is responsible for certain property expenses — commonly taxes, insurance, and maintenance — in addition to base rent. Actual responsibilities are defined by the lease itself.
U
- UnderwritingFinancing
- The lender's review and decision process for a loan request, including verification of information and documentation. Requirements and timelines differ by lender and program.
- Use clauseCommercial
- A lease provision describing how a tenant may use the premises and sometimes restricting other uses. Its wording can affect operations, approvals, and enforcement, so questions about a particular clause belong with an attorney.
V
- Vacancy rateCommercial
- The share of available space or units that is unoccupied during a stated period. The measure can be physical or economic and may be calculated differently, so compare figures only when their methods and timeframes are clear.
W
- Walk-throughBuying
- A buyer's visit to the property shortly before closing, typically to confirm condition and any agreed items. What is permitted and when is governed by the contract.
Z
- ZoningCommercial
- Local regulation of how land and buildings may be used, along with related requirements. Because zoning is local and changes over time, confirm current use and requirements with the governing authority.
These definitions are general education. Terms, requirements, and practices can vary by location, contract, lender, property type, and transaction. Confirm details with the qualified professionals involved in your situation. Educational content only. It is not legal, tax, lending, financial, appraisal, inspection, or other professional advice, and it guarantees no approval, closing, appreciation, returns, or homeownership. Consult qualified professionals about your individual situation.
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