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The DSCR is calculated by dividing net operating income (NOI) by annual debt service (loan payments). A DSCR above 1 indicates the property generates enough income to cover debt obligations, while a ratio below 1 signals risk. Lenders use DSCR to evaluate investment property loans. Agents advising investors should understand DSCR for financial analysis.

Annual interest is calculated by multiplying the principal loan amount by the interest rate: $200,000 × 0.06 = $12,000. Accurate calculation of interest payments is essential for affordability analysis, loan comparisons, and budgeting. Agents must understand basic mortgage math to advise buyers on monthly payments, total loan cost, and financing options. Incorrect calculations can mislead buyers, potentially causing financial strain or loan default.

The capitalization rate (cap rate) = Net Operating Income ÷ Property Value. It indicates the expected return on investment and is a key measure for comparing income-producing properties. Investors rely on cap rates to evaluate profitability and risk.

In an open listing, the seller may enter into agreements with multiple brokers and only pays commission to the broker who produces the buyer. This arrangement provides flexibility for the seller but less incentive for brokers since they have no guaranteed compensation. Exclusive right-to-sell listings provide brokers with maximum protection, while exclusive agency allows sellers to avoid commission if they find the buyer themselves. Agents must explain listing types so sellers choose the best arrangement.

The ECOA ensures that all qualified applicants have equal access to credit. Lenders must provide reasons for denying credit applications, and discriminatory practices are prohibited. This complements the Fair Housing Act, which addresses housing-related discrimination. Agents should know ECOA when guiding clients through financing.