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NAR National Association of Realtors.

NATURAL VACANCY RATE the average vacancy rate for a rental property market that would result if supply and demand were in balance. The level to which vacancy rates adjust over the long term. A benchmark by which current vacancy rates in the market are considered high or low

NEGATIVE AMORTIZATION A method of loan amortization in which the loan payments are less than the amount needed to pay the loans interest. The unpaid interest is added to the outstanding principal balance of the loan, thus increasing the balance over time. Can occur under indexed loans for which the applicable interest rate may be changed (raised) without affecting the monthly payments. Can be intentionally structured to give lower payments at the beginning of a loan.

NEGATIVE CASH FLOW A situation in which a property owner must make an outlay of funds to operate a property.

NEGATIVE LEVERAGE A situation in which financial benefits from ownership accrue at a lower rate than the mortgage interest rate. The borrowed funds are invested at a rate of return lower than the cost of the funds to the borrower.

NEGOTIABLE INSTRUMENT A promise to pay money, transferable from one person to another.

NEGOTIATION The process of bargaining that precedes an agreement. Successful negotiation generally results in a con. tract between the parties.

NEIGHBORHOOD A district or locality characterized by similar or compatible land uses. Neighborhoods are often identified by a place name and have boundaries composed of major streets, barriers, or abrupt changes in land use.

NEIGHBORHOOD LIFE CYCLE A generalized pattern that describes the physical and social changes that residential areas experience over time.

NET ABSORPTION Absorption is a measure of the amount of office space leased over a period of time. Net absorption is a measure of the total square feet leased over a period of time taking into consideration office space vacated in the same area during the same period. See also GROSS ABSORPTION.

NET INCOME (1) In accounting, the amount remaining after all expenses have been met. (2) In appraisal, same as net operating income.

NET INCOME MULTIPLIER A factor that, when applied by multiplication to a property's net operating income, results in a property value estimate.

NET LEASABLE AREA Space in a building or project, floor space that may be rented to tenants. The area upon which rental payments are based. Generally excludes common areas and space devoted to the heating, cooling, and other equipment of a building.

NET LEASE A lease in which the tenant pays, in addition to rent, certain costs associated with a leased property, including property taxes, insurance premiums, repairs, utilities and maintenance. There are also ?net-net? (double net) and ?net-net-net? (triple net) leases, depending upon the degree to shich the tenant is responsible for operating costs. See also GROSS LEASE.

NET LISTING A listing in which the broker's commission is the excess of the sale price over an agreed-upon (net) price to the seller; illegal in so -me states.

NET OPERATING INCOME (NOI) The annual income of an income producing property converted into a single value. Equal to the potential rental income plus other income, less vacancy, credit losses and operating expenses.

NET PRESENT VALUE A method of determining whether expected performance of a proposed investment promises to be adequate. The sum of all present values of all future cash flows netted against the initial investment.

NET RENTABLE AREA Floor area of a building less any vertical penetrations of the floors. No deductions are made for necessary columns and projections of the building. (BOMA Standard)

NET SPENDABLE INCOME Same as after-tax cash flow.

NET WORTH The excess of assets over liabilities. The amount of equity .

NET YIELD The return on an investment after subtracting all expenses.

NEUTRAL LEVERAGE An investment situation where the cost of borrowed funds is exactly equal to the yield provided by the investment.

NOI Net operating income.

NO MONEY DOWN General term referring to real estate acquisition strategies based on seller-provided financing and/or existing loan assumption and minimal use of cash down payments. It is a method of achieving maximum profits from real estate investments.

NOMINAL LOAN RATE Same as face interest rate.

NOMINEE One who, in a limited sense, acts for or represents another.

NON-COMPETITIVE SPACE Space in office buildings which contain or are intended to contain one office occupant so that the space is rarely if ever available for lease or sublease.

NON-CONFORMING USE A use that violates zoning regulations or codes but is allowed to continue because it began before the zoning restriction was enacted.

NON-DISTURBANCE CLAUSE An agreement in mortgage contracts on income-producing property that provides for the continuation of leases in the event of loan foreclosure.

NON-EXCLUSIVE LISTING Same as open listing.

NON-RECOURSE LOAN A loan which does not allow for a deficiency judgment against a borrower in the event of default. The borrower cannot be held personally liable. The lender?s only available recourse in the event of default is the collateral or property.

NON-JUDICIAL FORECLOSURE SALE A property sale by a trustee under a deed of trust, or a mortgage under a power of sale of a mortgage.

NORMAL WEAR AND TEAR Physical depreciation arising from age and ordinary use of the property.

NOTARIZE To attest in one's capacity as a notary public, to the genuineness of a signature.

NOTARY PUBLIC An officer who is authorized to take acknowledgments to certain types of documents, such as deeds, contracts, and mortgages, and before whom affidavits may be sworn.

NOTE A written instrument that acknowledges a debt and promises to pay.

NOTICE Official communication of a legal action or one's intent to take an action.

NOTICE OF DEFAULT A letter sent to a defaulting party as a reminder of the default. May state a grace period and the penalties for failing to cure the default.

NOTICE TO QUIT A notice to a tenant to vacate property.

NOTORIOUS POSSESSION Generally acknowledged possession of real estate. One of the requirements to gain ownership of real estate through adverse possession.

NOVATION A 3-party agreement whereby one party is removed from a contract and another party is substituted.

NPV Net present value.

NUISANCE A land use whose associated activities are incompatible with surrounding land uses.

NULL AND VOID That which cannot be legally enforced, as with a contract provision that is not in conformance with the law.