Business Glossary-Term List

The loss of the value of real estate due to changes outside the particular property affected, e.g., a decline in the neighborhood or change in zoning.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary

The estimated period of time during which a property can be used by its owner to produce income.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary

The rent that a property would bring if offered in the open market. Same as market rent; often differs from the contract rent.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary

The condition of the property based on its earning potential.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary

For purposes of appraisal, the physical age given to a building based on its present condition, which may differ from its actual age.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary

Stabilized income after vacancy and bad debt allowances that a property is expected to generate.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary

Normal annual income, principally salary, that is regular, significant and stable.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary

The stabilized income (after vacancy and bad debt allowances) that a property is expected to generate.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary

The actual rate of return to the investor, considering commitment fees, loan points or other fees. Also called yield.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary

The rental income generated by a lease computed over the life of the lease and expressed as an annual dollar amount or annual dollar amount per square foot. This figure is typically computed as the aggregate rent to be paid under the lease net of any abated rent and allowances, divided by the term of the lease. However, there has been a trend toward computing effective rent more realistically by using a time-value-of-money calculation. In this latter approach, sometimes called the "equivalent level rent calculation," a market discount rate is applied to all cash flows from the lease to obtain a present value which is then reduced by the cost of any concessions or inducements paid to put the lease in place. The resultant net value is then converted to the equivalent level payment stream which would produce an equivalent net present value at that discount rate.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary

The annual return expressed as the face interest rate divided by the amount invested, used when a mortgage or other debt instrument is bought at a discount or premium.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary

Anything that affects or limits the fee simple title to property, such as mortgages, leases, easements or restrictions.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary

The net value of an asset. In the case of real estate, it would be the difference between the present value of the property and the mortgage amount on that property.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary

Money invested by shareholders who are owners and who receive a share of profits.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary

See EFFECTIVE RENT.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary

An item of value, money or documents, deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate. In some parts of the country, escrows of taxes and insurance premiums are called impounds or reserves.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary

The segregated trust account in which escrow funds are held.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary

The difference, determined by escrow analysis, between escrow funds on deposit and escrow funds required to make a payment when it becomes due.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary

That portion of a mortgagor�s monthly payments held by a lender or servicer to pay taxes, hazard insurance, mortgage insurance, lease payments and other items as they become due. Also called "impounds" or "reserves" in some states.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary

An amount of income derived from the operation of a property or business after deducting or paying all expenses.

Term Source: MBA Glossary

Term Type: Data

Focus Area: #MBAGlossary