Complete Glossary of US Real Estate Terms

Key US Real Estate Terms:

Tip: Save this section for quick reference during visits and negotiations.

Market & Indicators (USA)

Absorption Rate

Measures the speed at which properties are sold over a certain period. Usage: demand/stock reading.

Appreciation

Increase in the value of a property over time. Usage: capital gain.

Capitalization Rate (Cap Rate)

Annual return on a property: NOI ÷ price. Usage: Compare income assets.

Cash Flow

Revenue – operating/financial expenses. Use: investment sustainability.

Cash-on-Cash Return

Return on invested equity. Use: contribution efficiency.

Gross Income Multiplier (GIM)

Price ÷ gross annual income. Use: rapid profitability screening.

Gross Rent Multiplier (GRM)

Price ÷ gross annual rent. Usage: compare rental properties.

Net Operating Income (NOI)

Total revenue – operating expenses (excluding debt/taxes). Usage: Cap Rate basis.

Vacancy Rate

% of time without a tenant. Usage: Estimate revenue risk.

Vacancy Provision

Reserve to cover empty periods. Usage: smooth cash flow.

Yield

Annual return of % on the acquisition cost. Use: benchmark with other asset classes.

Fair Market Value (FMV)

Fair market price in a competitive environment. Use: tax and pricing basis.

Real Estate Appreciation

Asset value gain due to demand/improvements. Usage: long-term strategy.

Financing & Mortgages (USA)

Adjustable-Rate Mortgage (ARM)

Index-linked variable-rate mortgage. Usage: cheaper start, high risk.

Fixed-Rate Mortgage

Fixed rate for the entire term. Use: predictability of installments.

Balloon Mortgage/Balloon Payment

Smaller payments and large settlement at the end. Usage: plan exit/refinancing.

Interest-Only Loan

Initial period paying only interest. Usage: relieve box at the beginning.

Assumable Mortgage

Buyer assumes seller's mortgage. Use: useful in high interest cycles.

Reverse Mortgage

Credit for seniors backed by property. Use: liquidity without selling the house.

HELOC

Line of credit with equity guarantee. Use: renovations/investments.

Conventional Loan

Loan without federal agency guarantee. Usage: stricter criteria.

FHA Loan

FHA-insured financing; low down payment. Usage: access for 1st purchase.

Portfolio Loan

Loan maintained by the lender itself. Usage: more flexible for atypical profiles.

Owner/Seller Financing

Seller finances buyer directly. Use: bypasses banking barriers.

Wraparound Mortgage

Financing “wraps” around the existing mortgage. Usage: creative purchasing structure.

Loan-to-Value (LTV)

Financing ÷ property value. Usage: defines risk/conditions.

Debt-to-Income (DTI)

Monthly debts ÷ monthly income. Usage: credit approval.

DSCR

NOI ÷ debt service. Use: viability of income financing.

PMI (Private Mortgage Insurance)

Insurance required with down payment < 20%. Usage: extra monthly cost.

Pre-Approval

Preliminary credit assessment. Use: streamlines and strengthens offers.

Negative Amortization

Installment does not cover interest; balance increases. Usage: pay attention to the total cost.

Mortgage

Mortgage with the property as collateral. Usage: up to ~80% of value, common case.

Documents & Title

Deed

Document that transfers ownership. Use: official record.

Quitclaim Deed

Transfers interest without guarantees. Usage: family/heritage.

Special Warranty Deed

Guarantees title only during the seller's term. Use: common in commercial.

Title Search

Registry search to find impediments. Usage: essential pre-purchase step.

Title Insurance

Title problem insurance. Use: Protects buyer/lender.

Title Commitment

Title company commitment after checks. Usage: confidence in closing.

Survey

Survey of milestones and boundaries. Use: avoids currency disputes.

Escrow / Escrow Account

Transaction custody account. Use: funds/documents until closing.

Closing Disclosure

Document with financing rates/conditions. Use: final review before closing.

Closing Statement

Statement with all amounts paid/received. Use: proof of closure.

Purchase and Sale Agreement

Purchase and sale agreement (price, terms, conditions). Usage: legal basis of the transaction.

Evaluation & Price

Appraisal

Estimated value by licensed appraiser. Usage: required by the bank.

Appraised Value

Value defined in the appraisal report. Use: basis of the amount financed.

Broker Price Opinion (BPO)

Price opinion made by broker. Usage: alternative when appraisal is not necessary.

Comparative Market Analysis (CMA)

Estimated price based on recent comparables. Usage: pricing strategy.

Contracts & Clauses

As-Is Condition

Sale “as is”. Usage: May require post-purchase repairs.

Due diligence

Pre-purchase legal/structural/financial audit. Use: avoid surprises.

Due-on-Sale Clause

Requires settlement of debt upon sale. Usage: limits assuming mortgage.

Escalation Clause

Offer automatically increases compared to competitors. Usage: contested markets.

Right of First Refusal

Right of first refusal to purchase before third parties. Use: common in rentals/condos.

Lease Option

Lease with future purchase option. Use: part of the rent becomes a deposit.

Rent-to-Own

Rent with option to buy; similar format to above. Usage: accumulate capital gradually.

Offer

Formal purchase proposal with terms and contingencies. Usage: opens negotiation.

Ownership & Use

Single-Family Home

Single-family house (1 unit). Use: housing or seasonal.

Multi-Family Home

Property with multiple units (duplex, etc.). Use: income from multiple rentals.

Income Property

Property acquired to generate income. Usage: focus on return.

Turnkey Property

Ready to use/rent without renovations. Use: immediate return.

Fixture

Fixed item that accompanies the property (e.g. cabinets). Use: unless excluded by contract.

Homeowners Association (HOA)

Association that governs community rules/amenities. Usage: may restrict usage/short-term.

HOA Fees

HOA fees for maintenance/security/amenities. Usage: consider in total cost.

Subdivision

Division of land into lots for development. Use: residential/commercial expansion.

Land Lease

Use of land without owning the land. Use: common in commercial.

Situs

Legal-economic location of the property. Usage: applicable rules/taxes.

Zoning

Local rules of use (residential/commercial/industrial). Use: authorizations and restrictions.

Easement

Right of limited use by third parties (access/utilities). Usage: impacts use and value.

Lien

Seizure/creditor's right over the property. Usage: needs to be paid off/released.

Lien Waiver

Waiver/release of attachment. Use: common in construction/renovations.

Lis Pendens

Lawsuit pending against the property. Usage: litigation alert.

Execution & Opportunities

Foreclosure

Foreclosure due to default. Use: risk, requires extra due diligence.

Foreclosure Auction

Auction of property repossessed by the bank. Use: may have discounts and risks.

Real Estate Owned (REO)

Property already repossessed and maintained by the bank. Usage: “as-is” sale, negotiation possible.

Real Estate Syndication

Several investors buy/trade together. Use: access to larger projects.

Insurance & Taxes

Homeowner's Insurance

Home insurance against damage/loss. Usage: lenders requirement.

Capital Gains Tax

Tax on sales profit. Usage: consider treaties and tax residency.

Depreciation

Accounting reduction in the value of the asset over time. Use: tax benefit on rent.

Capital Expenditures (CapEx)

Improvement/useful life expenses (e.g., roof). Use: Increases value/attraction.

Capital Improvements

Relevant improvements that add value. Usage: impact on assessment and taxes.

Tax Lien

Seizure for unpaid taxes. Usage: needs to be resolved before closing.

Operation & Management

In Escrow

Transaction in progress with amounts in custody. Use: until conditions are met.

Inspection

Technical inspection of the property. Use: negotiate repairs/credits.

Walk-Through

Final pre-closing inspection. Usage: check combined conditions.

Maintenance Reserve

Reserve for maintenance and repairs. Use: prevent surprises at the checkout.

Holding Period

Time keeping the asset. Usage: impact on taxes/strategy.

Pro Forma

Financial projection (revenue, expenses, return). Usage: decide feasibility.

Refinancing

Exchange of the loan for another with new terms. Usage: reduce rate/free up capital.

Seller Concession

Seller concession to help with costs. Usage: close the difference at closing.

Underwater Mortgage

Mortgage balance > market value. Use: makes it difficult to sell without losses.

Tenant Screening

Tenant screening (credit, history). Use: reduce default/risk.