Appraisal gap
The difference between a property’s appraised value and contract price. Contract language determines how that difference affects the transaction.
Explore appraisal gap in contextUnderstand the language
Real estate glossary
Definitions give context. Your contract and current professional guidance determine how a term applies to your transaction.
17 terms
Escalation clause
An offer provision that can increase price under specified conditions, generally up to a stated limit. Exact terms matter.
Explore escalation clause in contextConcession
A negotiated benefit, credit or cost paid by one party for another, subject to contract and financing requirements.
Explore concession in contextCap rate
Annual net operating income divided by purchase price or value. It excludes the effect of financing.
Explore cap rate in contextNOI
Net operating income: property income after vacancy and operating expenses, before debt service, income tax, depreciation and capital expenditures.
Explore noi in contextCash-on-cash return
Annual pre-tax cash flow divided by cash invested. Be explicit about closing costs, initial work and reserves included in the denominator.
Explore cash-on-cash return in contextIRR
Internal rate of return: the discount rate that makes the net present value of a series of cash flows equal to zero. Results depend on timing and exit assumptions.
Explore irr in contextDSCR
Debt service coverage ratio: income available for debt service divided by required debt service. A lender’s calculation may differ from a simple property model.
Explore dscr in contextLTV
Loan-to-value ratio: the loan balance divided by the property value used for that calculation.
Explore ltv in contextAbsorption rate
A measure of sales pace relative to available inventory over a defined period. Always check the source’s methodology.
Explore absorption rate in context1031 exchange
A qualifying exchange of business or investment real property that may defer recognition of gain. Professional tax and legal coordination is essential.
Explore 1031 exchange in contextReserve study
An assessment of major shared components, their expected replacement needs and a funding plan, commonly used by associations.
Explore reserve study in contextSpecial assessment
An additional association charge for expenses beyond regular dues, often tied to major work or funding needs.
Explore special assessment in contextRELO
Shorthand for relocation. In a transaction, an employer or relocation company may introduce additional procedures or documentation.
Explore relo in contextALTA
American Land Title Association, an industry association associated with standardized title and settlement forms.
Explore alta in contextTitle insurance
Coverage for certain title risks under a specific policy’s terms and exclusions. Owner and lender policies serve different interests.
Explore title insurance in contextBridge loan
Short-term financing used to connect a purchase or other transaction with a later source of repayment, such as a property sale.
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