USP 25 final

What are the components of PESTEL analysis in real estate?

Political, Economic, Social, Technological, Environmental, Legal factors that influence the real estate market.

What does Accrued Depreciation refer to?

The loss of property value due to physical deterioration, functional obsolescence, and external obsolescence.

Define Capitalization Rate (Cap Rate).

A measure of the potential return on an investment property; calculated as Cap Rate = NOI / Property Value.

What is Effective Gross Income (EGI)?

Total income from the property after accounting for vacancy and credit loss.

What is the formula for Net Operating Income (NOI)?

NOI = Total Income - Operating Expenses.

What is the Law of Agency?

The legal relationship between an agent and principal, where the agent acts in the best interests of the client.

What is a Quitclaim Deed?

A deed that transfers ownership interest but does not guarantee that the title is clear.

What is Amortizing Loan?

A loan where the borrower makes regular payments to reduce both principal and interest over time.

Define Eminent Domain.

The government's power to take private property for public use with just compensation.

What is the difference between Hard Costs and Soft Costs?

Hard Costs are direct construction costs, while Soft Costs are indirect costs such as permits and legal fees.

What does the Debt Service Coverage Ratio (DSCR) indicate?

A ratio that assesses if a property's income can cover its debt obligations.

What is the significance of the Bid Rent Curve?

It describes how the demand for land changes with distance from a central business district.

What is the purpose of RESPA?

To provide guidelines for real estate transactions, ensuring transparency in closing costs and processes.

What is Functional Obsolescence?

Depreciation caused by changes in market standards, making a property less desirable.

What is a Dual Agency?

When a broker represents both the buyer and the seller in a transaction.

Define potential Gross Income.

Total income a property could generate before accounting for vacancy and credit loss.

What is the formula for calculating Effective Gross Income Multiplier (EGIM)?

EGIM = Sale Price / Effective Gross Income.

What is an Adjustable Rate Mortgage (ARM)?

A mortgage with an interest rate that may change periodically based on an index.

What is Default in the context of mortgages?

Failure to meet the terms of the mortgage agreement.

What is the purpose of the GI Bill?

To provide veterans with the opportunity to purchase homes with no down payment through VA loans.