Reference
Shore Real Estate Glossary
Twenty-two terms every coastal homeowner should understand — defined with Jersey Shore context, not textbook generalities.
A
AE Flood Zone
A FEMA-designated Special Flood Hazard Area subject to inundation by the 1% annual chance flood (the "100-year flood"), but without significant wave action. On barrier islands, AE zones typically cover bayside blocks and interior streets. Flood insurance is required for federally backed mortgages. Construction in AE zones must meet base flood elevation requirements but does not require the more stringent breakaway-wall and deep-piling standards of VE zones. Most of the redevelopment activity in Sea Isle City and Avalon occurs in AE zones.
B
Base Flood Elevation (BFE)
The computed height of the 1% annual chance flood, expressed in feet above sea level (NAVD88 datum). FEMA publishes BFE for each flood zone on its Flood Insurance Rate Maps (FIRMs). New construction must place the lowest habitable floor at or above BFE — plus any freeboard the municipality requires. A BFE of 9 feet with 2 feet of freeboard means the first living floor must be at least 11 feet above sea level. Homes built below BFE face substantially higher flood insurance premiums.
Bulkhead
A retaining wall along the bay or waterway side of a property that prevents erosion and tidal flooding. On barrier islands, nearly all bayside properties have bulkheads. Replacement is the owner's responsibility and costs vary significantly by material, length, and site conditions. Bulkhead condition is a significant factor in bayside lot valuation — a failing bulkhead can meaningfully reduce what a developer will pay for the lot. Municipal permits are required for bulkhead repair or replacement.
C
Comparable Sales (Comps)
Recent sales of similar properties used to estimate market value. For redevelopment, two comp categories matter: teardown comps (what developers paid for lots with aging structures) and new-build comps (what finished new construction sold for). The spread between these two numbers, minus construction costs, is the development margin. Comps are most relevant within a tight geographic radius — typically 0.1 to 0.2 miles — and a recent time window — usually 18-24 months.
Contingency
A condition in a purchase contract that must be met for the sale to proceed. Common contingencies include financing (buyer must secure a mortgage), inspection (buyer can cancel if significant issues are found), and appraisal (sale price must meet appraised value). When selling to a developer via direct purchase, most contingencies are waived — the buyer does not need financing approval, does not need an inspection of the existing structure (since it will be demolished), and does not require an appraisal. This removes the most common causes of deal collapse.
Closing Costs
Fees and expenses beyond the sale price that are paid at closing. For sellers in New Jersey, these typically include transfer tax ($4-$6 per $1,000 of sale price), attorney fees ($1,000-$2,500), and prorated property taxes. In a traditional listing, the seller also pays the Realtor commission (5-6% of sale price). In a direct developer purchase, there is no commission unless a Realtor introduced the deal. Total seller closing costs on a $1M direct sale typically run $8,000-$15,000, compared to $58,000-$75,000 on a listed sale (includes Realtor commission, which is the largest line item).
D
Direct Purchase
An acquisition where a developer buys a property directly from the owner without listing it on MLS. The developer evaluates the lot based on redevelopment potential and makes an offer reflecting land value, not the depreciated value of the existing structure. Direct purchases typically close in 30-60 days, require no repairs or staging, and avoid the 5-6% Realtor commission of a traditional listing. Redfern Ocean provides written Realtor commission protection when a Realtor introduces the transaction.
Days on Market (DOM)
The number of days a property is listed on MLS before going under contract. In Cape May County barrier island markets, new construction typically sells in 30-90 days. Older homes pre-dating 1980 average 120-240+ days, with significant variation by condition, price, flood zone, and location. Extended DOM increases carrying costs (taxes, insurance, maintenance) and often leads to price reductions. Properties with high DOM tend to attract lower offers because buyers assume something is wrong.
E
Escrow
Funds held by a neutral third party (typically a title company or attorney) during a real estate transaction. Earnest money deposits are held in escrow until closing. In a JV structure, construction draws and profit distributions may also flow through an escrow account for transparency. Escrow protects both parties by ensuring funds are only released when contractual conditions are met.
F
Freeboard
Additional height above FEMA's base flood elevation required by local ordinance. Sea Isle City requires 1 foot of freeboard. Avalon requires 2 feet. Stone Harbor requires 1.5 feet. More freeboard increases construction costs slightly (taller pilings, more stairs) but reduces flood insurance premiums and provides a greater safety margin against flooding. When comparing properties across towns, freeboard differences affect both development cost and insurance economics.
FAR (Floor Area Ratio)
The ratio of a building's total floor area to the lot area. A 3,500 sq ft lot with a 0.75 FAR allows up to 2,625 sq ft of floor area. FAR is the primary zoning constraint that determines how much you can build on a lot, and therefore what the lot is worth. Each municipality measures FAR slightly differently — some exclude stairwells, garages, or mechanical rooms; others include them. Always verify the local calculation method before sizing a project.
FSBO (For Sale By Owner)
A sale where the property owner lists and markets the home without a Realtor. In barrier island markets, FSBO transactions represent a small fraction of sales and tend to take longer to close. For redevelopment-eligible properties, FSBO can work if the owner understands lot-value pricing and markets directly to developers — but most owners undervalue the land component and price based on residential comps, leaving significant money on the table.
Finished Square Footage vs. Heated Square Footage
Finished square footage includes all enclosed, finished living space. Heated square footage is the subset with permanent HVAC. The distinction matters in shore homes because ground-floor enclosed areas below flood elevation — often used for storage, parking, or recreation — may be finished but not heated. Zoning FAR calculations, MLS listings, and appraisals may use different definitions. Cape May County MLS typically reports heated square footage. Always clarify which measurement is being used when comparing properties or evaluating construction costs.
J
Joint Venture (JV)
A partnership where the landowner retains ownership of the property while a developer handles demolition, permitting, construction, and sale of the new home. Profits are split according to a pre-agreed structure — typically 25-40% of net proceeds to the landowner. A JV takes 18-24 months but can produce 30-50% more total return than a direct sale. The landowner bears construction timeline risk but puts up no capital for building. See our joint venture development page for details.
L
Lot Value
The market value of a parcel based solely on the land and its development potential, independent of any existing structure. Lot value is driven by location, lot size, zoning (FAR and permitted use), flood zone, and comparable recent sales of teardowns and new construction nearby. In barrier island markets, lot value for a redevelopment-eligible parcel often exceeds the property's total assessed value by 40-100%. Our lot-value calculator estimates this number using parcel data, FEMA zones, and local comps.
M
MOD-IV
New Jersey's Municipal Online Data, Version IV — the statewide property tax assessment database. MOD-IV contains parcel-level records for every property: lot dimensions, building area, year built, zoning classification, assessed land and improvement values, and owner information. Updated annually by municipal assessors. Developers and analysts use MOD-IV data to identify properties where land value significantly exceeds improvement value, screen for redevelopment candidates, and verify lot dimensions before making offers.
MLS (Multiple Listing Service)
The shared database used by licensed Realtors to list properties for sale. In Cape May County, the primary MLS is maintained by the Cape May County Association of Realtors. MLS exposure maximizes buyer visibility but carries a 5-6% commission cost and requires the home to be show-ready. For aging properties where the value is in the land, MLS listing can work against the seller — residential buyers see the repair costs, while developer buyers (who would pay more for the lot) may not be monitoring MLS actively.
N
NPV (Net Present Value)
A financial calculation that discounts future cash flows to their present-day value. Relevant for JV decisions: a JV might return $1.6M in 20 months, while a direct sale returns $1.2M today. The NPV analysis compares those options by accounting for the time value of money — a dollar today is worth more than a dollar in 20 months. At a 6% discount rate, $1.6M in 20 months is worth roughly $1.45M in today's dollars. This framework helps landowners decide whether the JV premium justifies the wait.
R
S
Substantial Improvement Rule
A FEMA regulation that triggers full flood compliance when the cost of improvements to a structure equals or exceeds 50% of the building's pre-improvement market value. In practice, this means most serious renovations to pre-FIRM shore homes require elevating the entire structure to current flood standards — an expense that often makes teardown-and-rebuild the more economical path. The 50% threshold is cumulative over the life of the structure in some jurisdictions, not per-project.
Seller Carryback
A financing arrangement where the seller provides a loan to the buyer for a portion of the purchase price. In redevelopment transactions, a seller carryback can take the form of deferred payment — the seller receives a portion at closing and the remainder after the new home is built and sold. This structure is sometimes used as an alternative to a full JV, giving the seller some upfront liquidity while retaining exposure to the upside. Interest rates and terms are negotiated between the parties.
V
VE Flood Zone
A FEMA coastal high-hazard zone subject to both inundation and wave action (velocity). VE zones carry the strictest building requirements: deeper pilings, breakaway walls below the base flood elevation, and elevated utilities. Under FEMA's Risk Rating 2.0, VE zone properties typically face higher insurance premiums than AE zone properties due to wave action risk, though individual rates depend on many property-specific factors. Oceanfront blocks in Sea Isle City, Stone Harbor, and Wildwood are almost always VE. Redevelopment in VE zones is more expensive due to foundation requirements but can produce premium finished values because of proximity to the beach.
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