Chapter 21: Real Estate Math Review Flashcards
How many square feet in an Acre
43,560
How do you determine a rectangle’s square footage?
Multiply the length of one side by the length of the adjacent side.
What is considered the front footage?
Th first number given in a set of dimensions.
How is a sales commission calculated?
Multiply the selling price by the commission rate.
Seller Alexa notifies her broker that she wants to net $100,000 from the sale of her home. The seller’s closing costs will be $8,000 and the broker must earn a commission of 10%. How much should the property sell for so that both the seller and broker receive the amount of money they want?
Selling Price = Seller’s Net + Closing Costs divided by 100% - Commission %.
So $100,000 + $8,000 / 100%-10% or
$108,000 / 90% = $120,000.
A broker list a property for $259,000 and agrees to accept a 5% commission on the first $100,000 of the selling price, 6% of the next $100,000, and 7% on the portion over and above $200,000. How much is the broker’s total commission on a sales price of $335,300?
$100,000 x 5% = $5,000
$100,000 x 6% = $6,000
$135,300 x 7% = $9,471
TOTAL = $20,471
What are the three approaches used when appraising real property?
Comparable Sales approach
Cost-Depreciation approach and
Income approach
Describe the processes in the Cost depreciation approach.
Step 1: Reproduction Cost / Economic Life x Effective Age = Total Depreciation
Step 2: Reproduction Cost - Total Deprecation + Land value = Depreciated Value of the Property
Describe the Income Capitalization Approach.
(I) Net Operating Income / (R) Capitalization Rate x (V)Value
Describe the Gross Rent Multiplier Approach.
(V)Value / (R)Monthly Rental Income x (M)Multiplier
What is Gross Income Multiplier Approach
A simple way of determining Value or Gross Annual Rental Income by using the VRM formula.
Shifty Savings and Loan is making a $90,000 loan with an annual interest rate of 7%. If the lender charges 4 discount points at closing to make the loan, what is the yield to the lender and how much will the points cost the borrower?
$90,000 x 4% = $3,600 cost of points
Four points adds 4/8 or ½ of a percent to the lender’s yield
What is the formula for Amortization
I / (PRT)
How do you figure out payment amortization?
- Loan amount x Annual interest rate = Annual interest div by 12 = Monthly interest
- Mortgage payment (principal & interest) – Monthly interest = Principal portion
- Principal balance of loan – principal portion of payment = New loan balance
How much is a Doc stamp on a deed?
.70 per $100 of the purchase price
On a financed property, how much is the Doc stamp on the note?
.35 per $100 of the Mortgage note
How do you calculate the intangible Tax on a new mortgage note?
The Intangible Tax is .002 (2 mills) on the new debt.
How do you calculate prorated property taxes?
Figure out the number of days from January 1st to the date of the closing. Next divide the annual property taxes by 365 days and multiply that by the number of days from the first part.
If a person is in a 32% tax bracket, which of the following represents the most desirable investment?
a. 22% Before Taxes
b. 20% Before Taxes
c. 18% After Taxes
d. 16% After Taxes
Step 1: Convert the before tax answers to after tax answers by subtracting their tax bracket (32%) from 100 to give you 68%.
Step 2: Multipy the Before tax % by their tax bracket to give you their After tax return %.
a. = .22 x 68% = 14.96% after taxes
b. = .20 x 68% = 13.6% after taxes
Step 3: Choose the highest after tax %.
c. 18% After Taxes
A property is 300’ x 550’ and costs $150,000. What is the cost per front foot?
$150,000 / 300 = $500
City taxes are 7 mills, County taxes are 6 mills and school taxes are 5 mills. If a non-homestead property is assessed for $365,000, how much are the total property taxes?
$6570
Broker Bob has agreed to pay sales associate Sam 60% of the total commissions earned by Sam. Sam sold a property for $375,000 with an agreed upon commission of 7.5% of the sales price. What is Bob’s share of the commission?
$11,250
How many acres are in the N ½ of the NE ¼ of the SW ¼ of Section 22?
640 acres (section) / 4 / 4 / 2 = 20
A home sells for $185,000. The buyer assumes an existing first mortgage of $103,225 with the seller taking back a purchase money mortgage of $50,000. How much are the doc. stamps on the deed?
$185,000 / 100 = 1850 * .7 = $1295
