Chapter 10: Real Estate Mathematics Flashcards
A sum due a real estate broker for services in that capacity.
Commission
Equal to one percent of a loan amount. For example, 1 point on a $100,000 is equal to $1,000.
Point
- Calculating Commissions
- Calculating Interest
- Appreciation
- Depreciation
- Points
When are percentages used?
- Amount of commission earned
- Commission rate
- Final sales price
FORMULA:
Commission Earned =
Final Sales Price x Commission Rate
Calculating Commissions
- Principle Balance
- Annual Interest Rate
- Amount Owed
FORMULA:
Annual Interest Rate =
Amount Owed / Principle Balance
Calculating Interest Rates
- Property Value
- Annual Appreciation
SOLUTION:
Property Value (Yr.3) =
Property Value x % increase each year
FORMULA: FV = PV x (1+a)^n *FV - Future Value PV - Percent Value a - appreciation rate n - number of years
Calculating Appreciation
- Property Value
- Annual Depreciation Rate
SOLUTION:
Property Value (Yr.3) =
Property Value x % decrease each year
FORMULA: FV = PV x (1-d)^n *FV - Future Value PV - Present Value d - depreciation rate n - number of years
Calculating Depreciation
A measure of land equaling 43,560 square feet.
Acre
Equal to 10,000 square meters
& 2.47 acres
Hectare
Equal to 640 acres.
Square Mile
Length x Width
Area of a Rectangle
Side x Side
Or
1 Side Squared
Area of a Square
Base x Height / 2
Area of a Triangle
- House Area
- Sales Price
- Price/sq ft
FORMULA:
Price/sq ft =
Sales Price / House Area
Calculating the Price Per Sq Ft
- Break shape down into squares, rectangles, and triangles.
- Calculate the areas of each shape.
- Add together the areas of each shape.
How to Calculate the Area of Irregular Lots
Total income from property before any expenses are deducted.
Gross Income
The result of subtracting expenses from income.
Net Income
A bank will only lend money up to a certain % of the purchase price or Appraised Value, whichever is LESS.
Calculating a Loan-to-Value Ratio
A sum of money lent or invested on which interest is paid.
Principal
A fee paid by the borrower of a loan as a form of compensation for the use of money.
Interest
The tax levy divided by the total taxable assessed value of a taxing jurisdiction, usually expressed in dollars per thousand, dollars per hundred, or mills.
Real Property Tax Rate
- Real Property Transfer Taxes
- Real property transfer tax is typically expressed in $/1000.
FORMULA:
Transfer Tax Amount =
Rate x Property Sakes Price
*Rate = $/1000
- Mortgage, Recording Taxes =
Tax Rate x Mortgage Amount
*Additional rules may apply based on the city where the tax is recorded.
Mortgage Recording Tax Rate:
$2.05 / $100 of loan amount
- Real Property Taxes
Annual Taxes = Assessed Value x Tax Rate
Tax Rates to Know of:
Refers to the length of a parcel facing a street.
Front Foot
