Glossary for Common Real Estate Terminology

Commercial Lease & Investment Terms

Triple Net Lease (NNN) — A lease where the tenant pays base rent plus their share of the three "nets": property taxes, insurance, and maintenance/common area costs, shifting most operating expenses from landlord to tenant.

Gross Lease — The opposite of NNN — the tenant pays one flat rent, and the landlord covers taxes, insurance, and maintenance out of that.

Modified Gross Lease — A middle ground where the tenant and landlord split operating expenses in some negotiated way (e.g., tenant pays utilities and janitorial, landlord covers taxes and structural maintenance).

$/SF/Year (Cost per Square Foot per Year) — The standard way commercial rent is quoted — annual rent divided by square footage — making it easy to compare spaces of different sizes. (Sometimes quoted monthly as $/SF/Month instead.)

CAM (Common Area Maintenance) Charges — Fees charged to tenants to cover the upkeep of shared spaces like lobbies, parking lots, and hallways, common in NNN and retail leases.

Base Rent — The minimum fixed rent specified in a lease, before adding NNN charges, CAM, or percentage rent.

Percentage Rent — Additional rent (common in retail leases) calculated as a percentage of the tenant's gross sales above a set threshold.

TI (Tenant Improvement) Allowance — Money a landlord provides to a tenant to customize or build out a space to their needs, usually negotiated as part of the lease.

Cap Rate (Capitalization Rate) — A property's annual net operating income divided by its purchase price or value, used to gauge and compare investment returns.

NOI (Net Operating Income) — A property's total income minus operating expenses (not including debt payments), used as the basis for cap rate and valuation.

GRM (Gross Rent Multiplier) — Property price divided by annual gross rental income, a quick (if rough) way to compare investment properties.

Cash-on-Cash Return — Annual pre-tax cash flow divided by the actual cash invested, a key metric for leveraged investment deals.

Vacancy Rate — The percentage of available space in a property or market that is unrented, used to gauge market health and a property's income potential.

Anchor Tenant — A large, well-known tenant (e.g., a grocery store or major retailer) that draws foot traffic to a shopping center or mixed-use property, often with more favorable lease terms.

Ground Lease — A long-term lease of land only, where the tenant typically owns or builds a structure on it and turns it over to the landowner at the lease's end.

Rentable vs. Usable Square Footage — Usable square footage is the actual space a tenant occupies; rentable square footage adds a pro-rata share of common areas, which is what rent is often based on.

Listing Terms

MLS (Multiple Listing Service) — A database used by real estate agents and brokers to share information about properties for sale, so listings get maximum exposure across agents and buyers.

Comps (Comparables) — Recently sold or listed properties similar in size, location, and condition, used to help determine a property's fair market value.

DOM (Days on Market) — The number of days a property has been actively listed for sale. A high DOM can signal an overpriced listing or a slow market.

List Price vs. Sale Price — The asking price set by the seller versus the final price the property actually sells for.

Contingent — A listing status meaning an offer has been accepted, but the sale depends on certain conditions being met (financing, inspection, appraisal, etc.) before it closes.

Pending — A listing status meaning all contingencies have been satisfied and the deal is moving toward closing; the property is generally considered off the market.

Staging — Preparing and furnishing a home to make it more appealing to buyers in photos and showings.

Open House — A scheduled period when a listed property is open for the public to walk through without an appointment.

FSBO (For Sale By Owner) — A property being sold directly by the owner without a listing agent.

Exclusive Listing — An agreement where one broker has the sole right to sell a property for a set period, though the owner may still sell it themselves under some versions.

Turnkey — A property that's fully finished, updated, and move-in ready, requiring no repairs or renovation before use (common in both residential resale and rental/investment listings).

Deal Terms

Escrow — A neutral third party that holds funds, documents, or the title during a transaction until all conditions of the sale are met.

Earnest Money — A deposit a buyer puts down to show good faith when making an offer, typically applied toward the purchase price at closing.

Contingency — A condition that must be satisfied for a deal to proceed (e.g., financing contingency, inspection contingency, appraisal contingency).

Due Diligence — The period during which a buyer investigates a property's condition, title, finances, and other factors before committing fully to the purchase.

Closing — The final step in a real estate transaction, when ownership officially transfers from seller to buyer and funds are disbursed.

Closing Costs — Fees paid at closing beyond the purchase price, including title insurance, appraisal fees, taxes, and lender charges.

Title — Legal ownership of a property; a "clean" or "clear" title means there are no competing claims or liens against it.

Title Insurance — A policy protecting the buyer or lender against losses from disputes over property ownership.

Appraisal — An independent, professional estimate of a property's market value, usually required by lenders before approving a loan.

Contingent Offer — An offer to buy that depends on the buyer selling their own current home first, or on other stated conditions.

Escalation Clause — A provision in an offer that automatically increases the buyer's bid up to a set maximum if a competing offer comes in higher.

As-Is Sale — A sale in which the seller will not make repairs or concessions for issues found during inspection.

Key Money — A payment made outside the standard rent or purchase price to secure a lease or unit — sometimes a legitimate landlord fee for improvements or a desirable space (common in commercial leasing), and sometimes an under-the-table payment that's restricted or illegal depending on the jurisdiction.

Broker Terms

Listing Agent — The agent who represents the seller and markets the property.

Buyer's Agent — The agent who represents the buyer's interests in a transaction.

Dual Agency — A situation where one agent (or brokerage) represents both the buyer and seller in the same transaction; rules and disclosure requirements vary by state.

Commission — The fee paid to real estate agents/brokers for facilitating a sale, typically a percentage of the sale price, often split between listing and buyer's agents.

Broker vs. Agent — A broker has additional licensing and training beyond an agent, and can operate independently or oversee other agents; agents typically must work under a licensed broker.

Fiduciary Duty — The legal obligation an agent or broker has to act in their client's best interest.

REALTOR® — A trademarked term for a real estate agent who is a member of the National Association of REALTORS® and subject to its code of ethics (not all licensed agents are REALTORS®).

Listing Agreement — The contract between a seller and a broker authorizing the broker to market and sell the property.

Referral Fee — A fee paid between agents or brokers for referring a client, without doing the deal's core work themselves.

Financing Terms

Pre-Approval — A lender's conditional commitment to loan a buyer a certain amount, based on a review of their financials, prior to house hunting.

Pre-Qualification — A more informal, less rigorous estimate of what a buyer might be able to borrow, based on self-reported information.

LTV (Loan-to-Value Ratio) — The loan amount divided by the appraised property value, used by lenders to assess risk.

PMI (Private Mortgage Insurance) — Insurance typically required when a buyer puts down less than 20%, protecting the lender if the borrower defaults.

Points — Optional upfront fees paid to reduce a mortgage's interest rate; one point equals 1% of the loan amount.

Amortization — The gradual repayment of a loan through scheduled payments that cover both principal and interest over time.

Underwriting — The lender's process of verifying a borrower's financial information and assessing risk before finalizing a loan.

Property & Legal Terms

Zoning — Local government regulations dictating how a parcel of land can be used (residential, commercial, industrial, mixed-use, etc.).

Easement — A legal right for someone other than the owner to use part of a property for a specific purpose (e.g., utility access).

HOA (Homeowners Association) — An organization that manages shared spaces and enforces rules in a community, funded by mandatory dues.

Lien — A legal claim against a property, often for unpaid debt, that must typically be resolved before the property can be sold with clear title.

Deed — The legal document that transfers ownership of a property from one party to another.

Encroachment — A situation where a structure or improvement illegally extends onto a neighboring property.

Square Footage (GLA) — Gross Living Area; the measurable interior space of a home, often a point of dispute or clarification in listings.