South Carolina Unit 2 Cumulative

first substantive contact

the critical point at which agency disclosure is required by a license holder; generally occurs at the first face-to-face meeting with the customer and prior to the sharing of any confidential information or initiation of any action in regards to a specific property

dual agency

An agency relationship wherein both the buyer and the seller are represented by the same broker in an in-house real estate transaction; requires written consent from both parties

single agency

also known as exclusive agency, an agency arrangement in which one agent represents one party in a real estate transaction; the party may be either a seller or a buyer

subagency

a form of agency that arises when an agent enlists the use of other agents to accomplish a client's goal

transaction brokerage

a form of non-agency carried out by a broker who facilitates a transaction absent of any agency relationship with one or both parties to the contract

South Carolina Disclosure of Real Estate Brokerage Relationships

the state-mandated agency disclosure form that license holders must provide to consumers at the first substantive contact or discussion

property disclosure

the act of making known the material facts about a property in order to enable prospective buyers to make informed decisions about its value and desirability

BTU

a measurement of the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit; is the unit of measurement for capacity of heating and air conditioning units

HVAC

an acronym referring to the collective efforts of the heating, ventilation, and air conditioning; is the major system used to control the heating, cooling, and movement of air in indoor environments

stigmatized property

property with suppressed market value unrelated to its physical condition or features; frequently as result of death of an occupant, murder, suicide, or a belief the property is haunted

State of South Carolina Residential Property Condition Disclosure Statement

the state-mandated agency disclosure form typically used to disclose all known material facts that could reasonably influence a buyer's decision to purchase a property

brokerage disclosure policy

the full sum of disclosure policies that the broker-in-charge establishes for all sponsored licensees; will be recorded in the brokerage office manual and contain, at a minimum, all state-mandated policy manual disclosure requirements

novation

the act of replacing an existing contract with a new one

rescission

an attempt to put the parties back in a position as though the contract never existed; a.k.a. annulment

buyer representation agreement

an agency agreement between a broker and a buyer wherein the broker represents the buyer in their effort to purchase or lease a property

listing agreement

a contract between a principal and a broker to sell or lease a property

addenda

additions to a completed contract that specify supplementary information to the contract

amendment

change or modification to an already agreed-upon contract

cloud computing

using the internet to access and store information instead of using a computer's hard drive

ethics

standards of conduct agreed upon and recognized by a particular group or culture

blockbusting

the illegal act of causing owners to sell their homes by creating fear that members of a protected class are moving into the area.

arbitration

A formal resolution tactic that involves the arbitrator (or arbitrators) hears both sides (including evidence and even cross-examination sometimes) and then issues a verdict

due process

A fundamental principle of fairness in legal proceedings

area

the space occupied by a flat shape

perimeter

the total length of the sides of a shape

density

the measure of the proportion of a given area used for residential purposes

front feet

the number of feet of frontage a property has

frontage

the portion of the boundary of a property's lot that borders the street

comparative market analysis (CMA)

a report that compares the prices of recently sold or listed homes ("comparables") in order to estimate the market value of a property located in the same area

depreciation

the reduction in value of a property over time

economic life

the length of time for which an improvement on property is expected to remain functional and useful

principle of substitution

the idea that the value of something is affected by the cost of getting a similar (substitute) item elsewhere

sales comparison approach

approach to determining value by comparing the subject property to similar properties ("comps") that have sold recently

capitalization rate (cap rate)

a rate of return that calculates the percentage of expected annual income earned over a property's value; the present value for expected future income earned

effective gross income (EGI)

the total annual income that a property produces; does not account for any expenses

gross rent multiplier (GRM)

the ratio of the price of investment property to its annual rental income before considering expenses like taxes and insurance, etc.

net operating income (NOI)

a property's annual income that remains after paying its operating expenses

potential gross income (PGI)

the total rental income a property would receive if the property was 100% leased

vacancy cost

a property's loss in income from unrented units, under-market rent, and uncollected rent

liquidity

the ability for an investor to convert an asset into cash without losing value

anchor tenant

the leading tenant in a shopping center who can generate higher foot traffic for their lesser-known neighbor tenants

real estate investor

wants to make money from the property itself; they value the property based on the money they can make from others' use of the property

after-tax cash flow (ATCF)

a property's annual income that remains after paying its operating expenses, debt service, and taxes

cash-on-cash return

a rate of return that calculates the cash profit earned as a percentage of the cash invested; before-tax cash flow over total investment cost

internal rate of return

a value calculation that uses the initial cost of an investment and then estimates future cash flows in order to determine the interest rate a property may give an investor

return on investment (ROI)

shows the percentage increase (or decrease) of an investment over a set period of time

agency disclosure

the act of explicitly informing all parties about whom an agent is representing

designated agency

an agency arrangement wherein both parties to the transaction are represented by their own agent, but both agents are employed by the same brokerage; by necessity each client enjoys an agency relationship exclusively with the named agent within the brokerage

material fact

a fact that, if known, could cause someone to take a different course of action or make a different decision regarding the property to be purchased

misrepresentation

a statement, written or spoken, that is false or misleading; can be actionable if also found to be fraudulent

certificate of occupancy (CO)

legal document from a local authority that authorizes a building to be occupied; issued after the building has passed all required inspections

environmental assessment; a.k.a. environmental site assessment

a report prepared for a real estate holding that identifies potential or existing environmental contamination liabilities

bilateral

having or involving two sides, often with some degree of reciprocal impact or obligation

renunciation

unilateral action taken by an agent to abandon or discharge a contract

unilateral

having or involving one side; performed by one party without imposing the obligation of performance on another party

transaction brokerage agreement

a non-agency agreement in which a broker facilitates a transaction absent of any agency relationship with either party to the contract

purchase and sale agreement

a contract used in the sale of real property that outlines the responsibilities of the parties and terms of the sale

laws

rules that are enforced by a local, state, or federal government authority to help create order in society by establishing a "social contract" between citizens and the government.

morals

the personal values derived from a system of beliefs

mediation

negotiation tactic that involves sitting down with a neutral third party (the mediator) and finding a resolution to the issue

procuring cause

the defining action or actions that brought a buyer to purchase a property

livable area

the finished square footage of a property

adjustment

the change made to a comp's value to make it more similar to the subject property when doing a CMA

comparable (comp)

any property which has sold and is similar enough in features, location, and proximity in time to inform the value of a subject property

cost approach

method of estimating the value of a property by determining how much it would cost to replace the building or other improvements, minus the cost of depreciation, plus the value of the land itself

income approach

method of estimating the value of a property by applying a rate of return to the net income it produces

obsolescence

a property's loss of value due to economic or functional factors

physical deterioration

loss of value caused by physical wear and tear over time

gross income multiplier (GIM)

the ratio of the price of investment property to its annual total income before considering expenses like taxes and insurance, etc.

risk

the probability that the amount an investor will earn on their real estate investment will differ from the amount that they expect to earn

tax shelter

any strategy used to minimize the amount of taxable income and, therefore, reduce taxes owed to the government

time value of money (TVM)

an investment concept that states that today's money is worth more now than the same amount will be in the future because of its present earning capacity

rentable square footage (RSF)

the total area that a tenant may access (includes a property's common areas)

usable square footage (USF)

the total area that a tenant may occupy

amenity purchaser

wants a property to house their business; they value the property based on its ability to satisfy their particular business needs

profit and loss statement

a statement that shows the projected profits and expenses for an investment property over a time period

T12

a property's financial statements for the previous twelve consecutive months; also known as trailing twelve

before-tax cash flow (BTCF)

a property's annual income that remains after paying its operating costs and debt service

debt service

amount of money spent on an investment property's loans; includes both the portion spent on the principal and the interest of a loan

rate of return

a measure of the gain or loss of an investment weighed in relation to a metric of cost and/or time