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Down payment = $450,000 × 20% = $90,000. Loan amount = $450,000 − $90,000 = $360,000. Loan-to-value ratios and down payments are crucial in determining financing eligibility, mortgage insurance, and buyer affordability.

A leasehold estate provides the tenant the right to use and occupy property for a specified period under a lease agreement. After the lease expires, the property reverts to the landlord. In contrast, a fee simple estate represents full ownership with indefinite duration. Life estates last for the lifetime of a designated individual. Understanding estate types is crucial for advising clients on ownership rights, property transfers, and legal obligations.

GRM is calculated by dividing the property price by annual gross rental income. It is a quick tool for comparing rental properties but does not account for expenses. Investors often use GRM alongside NOI and cap rate for a more complete analysis. Agents should explain GRM as a screening tool for investment opportunities.

The NAR Code of Ethics requires honesty, fairness, and full disclosure. Agents must disclose material facts affecting property value or safety, regardless of client knowledge. Concealment, misrepresentation, or undisclosed dual agency violates ethical standards and may lead to legal or disciplinary action. Ethical conduct fosters trust, professionalism, and long-term client relationships.

The loan amount is calculated by multiplying the purchase price by the loan-to-value (LTV) ratio: $350,000 × 0.80 = $280,000. The LTV ratio indicates the portion of the property’s value financed through a mortgage. Accurate calculation of loan amounts is essential for affordability analysis, monthly payment estimation, and advising clients on financing options. Agents must be proficient in basic real estate math to guide buyers effectively and prevent financial misunderstandings.