National Real Estate Calculations Flashcards
One lender charges 6.5% interest and the second lender charges 7%. How much money will the borrower save the first year on a $150,000 loan if he goes with the first lender?
A)
$650
B)
$750
C)
$850
D)
$500
One lender charges 6.5% interest and the second lender charges 7%. How much money will the borrower save the first year on a $150,000 loan if he goes with the first lender?
A)
$650
Incorrect Answer
B)
$750
Correct Answer
C)
$850
Incorrect Answer
D)
$500
Incorrect Answer
Explanation
The first lender would charge $150,000 × 6.5% (0.065) = $9,750. The second lender would charge $150,000 × 7% (0.07) = $10,500. $10,500 – $9,750 = $750.
Reference: Real Estate Calculations > Finance
A property was listed with a broker who belonged to a multiple listing service and was sold by another member broker for $253,500. The total commission was 6% of the sales price. The selling broker received 60% of the commission, and the listing broker received the balance. What was the listing broker’s commission?
A)
$5,475.60
B)
$7,605
C)
$6,084
D)
$9,126
A property was listed with a broker who belonged to a multiple listing service and was sold by another member broker for $253,500. The total commission was 6% of the sales price. The selling broker received 60% of the commission, and the listing broker received the balance. What was the listing broker’s commission?
A)
$5,475.60
Incorrect Answer
B)
$7,605
Incorrect Answer
C)
$6,084
Correct Answer
D)
$9,126
Incorrect Answer
Explanation
There are two steps to finding the listing broker’s commission: (1) Find total commission, and (2) using the total commission, find the listing broker’s 40% share of it.
(1) Brokerage rate (6%) × selling price($253,500) = total commission ($15,210)
(2) Listing broker’s share (40%) × total commission ($15,210) = $6,084
Reference: Real Estate Calculations > Settlement/Closing Calculations
The rooms in Sandy’s house measure as follows: living room, 20 ft. × 25 ft.; dining room, 18 ft. × 20 ft.; bedroom, 14 ft. × 26 ft.; bedroom, 15 ft. × 15 ft.; bedroom, 12 ft. × 14 ft.. The carpet she has selected costs $9.95 per square yard. How much will it cost to carpet the entire house?
A)
$732.39
B)
$836.91
C)
$950.77
D)
$1,787.68
The rooms in Sandy’s house measure as follows: living room, 20 ft. × 25 ft.; dining room, 18 ft. × 20 ft.; bedroom, 14 ft. × 26 ft.; bedroom, 15 ft. × 15 ft.; bedroom, 12 ft. × 14 ft.. The carpet she has selected costs $9.95 per square yard. How much will it cost to carpet the entire house?
A)
$732.39
Incorrect Answer
B)
$836.91
Incorrect Answer
C)
$950.77
Incorrect Answer
D)
$1,787.68
Correct Answer
Explanation
To determine the total square footage, see chart.
1,617 ÷ 9 = 179.6667 sq. yds.
179.667 × $9.95 = $1,787.68 for entire house
Total house square footage
20 ft. × 25 ft. = 500 sq. ft.
18 ft. × 20 ft. = 360 sq. ft
14 ft. × 26 ft. = 364 sq. ft
15 ft. × 15 ft. = 225 sq. ft.
12 ft. × 14 ft. = 168 sq. ft.
Total 1,617 sq. ft
Reference: Real Estate Calculations > Measurement
The buyer assumed a loan of $50,000 at 8.25% interest. Payments are due on the first of the month. The last payment was made on April 1, and the closing took place on April 20, with the seller having the day of closing, and using a 360-day year. Which of these is TRUE?
A)
$119.60 DB, CS
B)
$229.17 DS, CB
C)
$229.20 CS, DB
D)
$119.60 CS, DB
The buyer assumed a loan of $50,000 at 8.25% interest. Payments are due on the first of the month. The last payment was made on April 1, and the closing took place on April 20, with the seller having the day of closing, and using a 360-day year. Which of these is TRUE?
A)
$119.60 DB, CS
Incorrect Answer
B)
$229.17 DS, CB
Correct Answer
C)
$229.20 CS, DB
Incorrect Answer
D)
$119.60 CS, DB
Incorrect Answer
Explanation
Step 1, determine the amount of interest owed: $50,000 × 8.25% (0.0825) = $4,125. Step 2, determine what days the buyer owes: April 1 to April 20 = 20 days. Step 3, determine the amount owed. Total amount due ÷ total days × days owed. $4,125 ÷ 360 × 20= $229.17.
Reference: Real Estate Calculations > Settlement/Closing Calculations
A property manager of a 15-unit residential apartment building was considering bids on four proposed projects. For which of the following will the property manager typically NOT have the authority to make a decision and bind the principal?
A)
A bid to repair a swimming pool at the apartment complex
B)
A bid to repair an existing deck next to the proposed swimming pool
C)
A bid to add a swimming pool to the apartment complex
D)
A bid to replace a number of roofing shingles
A property manager of a 15-unit residential apartment building was considering bids on four proposed projects. For which of the following will the property manager typically NOT have the authority to make a decision and bind the principal?
A)
A bid to repair a swimming pool at the apartment complex
Incorrect Answer
B)
A bid to repair an existing deck next to the proposed swimming pool
Incorrect Answer
C)
A bid to add a swimming pool to the apartment complex
Correct Answer
D)
A bid to replace a number of roofing shingles
Incorrect Answer
Explanation
Typically, the authority of a property manager does not extend to making decisions related to capital improvements. A capital improvement adds to or alters real estate by 1) increasing the value of the real estate or prolonging its useful life, and 2) becoming a permanent part of the real estate. The addition of a swimming pool falls under the category of a capital improvement.
Reference: Real Estate Calculations > Property Management Calculations
All of these are typically prorated at closing EXCEPT
A)
property taxes.
B)
security deposits.
C)
water.
D)
rent.
All of these are typically prorated at closing EXCEPT
A)
property taxes.
Incorrect Answer
B)
security deposits.
Correct Answer
C)
water.
Incorrect Answer
D)
rent.
Incorrect Answer
Explanation
Security deposits are transferred in full from the seller to the buyer to hold for the tenants.
Reference: Real Estate Calculations > Settlement/Closing Calculations
A borrower secured an $80,000 loan at 8.25% interest, and the lender’s cash outflow was $77,600. What was the effective yield to the lender?
A)
8.38%
B)
8.85%
C)
8.50%
D)
8.63%
A borrower secured an $80,000 loan at 8.25% interest, and the lender’s cash outflow was $77,600. What was the effective yield to the lender?
A)
8.38%
Incorrect Answer
B)
8.85%
Incorrect Answer
C)
8.50%
Incorrect Answer
D)
8.63%
Correct Answer
Explanation
$80,000 – 77,600 = $2,400
2,400 ÷ $80,000 = 3 points (0.03)
0.125 × 3 = 0.375
8.25% + 0.375 = 8.63%
Reference: Real Estate Calculations > Finance
If the amount of a loan is $13,500 and the interest rate is 6%, what is the amount of the semiannual interest payment?
A)
$405
B)
$59,655
C)
$20,250
D)
$810
If the amount of a loan is $13,500 and the interest rate is 6%, what is the amount of the semiannual interest payment?
A)
$405
Correct Answer
B)
$59,655
Incorrect Answer
C)
$20,250
Incorrect Answer
D)
$810
Incorrect Answer
Explanation
A semiannual interest payment is paid twice a year. To find the amount of the payment, divide the annual interest amount by 2:
$13,500 × 6% (0.06) (the interest rate) = $810 (annual interest amount)
$810 ÷ 2 = $405 (semiannual interest)
Reference: Real Estate Calculations > Finance
The listing broker and the buyer’s broker agree to split a 7% commission 50-50 on a $196,900 sale. The buyer’s brokerage firm gives its salesperson 35% of the commission. How much does the buyer’s salesperson earn from the sale?
A)
$2,412.03
B)
$1,206.01
C)
$1,174.78
D)
$4,824.05
The listing broker and the buyer’s broker agree to split a 7% commission 50-50 on a $196,900 sale. The buyer’s brokerage firm gives its salesperson 35% of the commission. How much does the buyer’s salesperson earn from the sale?
A)
$2,412.03
Correct Answer
B)
$1,206.01
Incorrect Answer
C)
$1,174.78
Incorrect Answer
D)
$4,824.05
Incorrect Answer
Explanation
196,900 × 7% (0.07) = $13,783 (total commission)
$13,783 ÷ 2 (between both brokers) = $6,891.50
$6,891.50 × 35% (0.35) = $2,412.03 (salesperson’s commission)
Reference: Real Estate Calculations > Settlement/Closing Calculations
A homeowner sold his property for $99,500. He paid a real estate commission of 6%, paid an attorney $250, paid a transfer tax of $99.50, paid his existing mortgage of $50,140, and agreed to a purchase money mortgage of $10,000. What were his net proceeds at the closing?
A)
$33,050.40
B)
$43,050.40
C)
$33,040.50
D)
$53,040.50
A homeowner sold his property for $99,500. He paid a real estate commission of 6%, paid an attorney $250, paid a transfer tax of $99.50, paid his existing mortgage of $50,140, and agreed to a purchase money mortgage of $10,000. What were his net proceeds at the closing?
A)
$33,050.40
Incorrect Answer
B)
$43,050.40
Incorrect Answer
C)
$33,040.50
Correct Answer
D)
$53,040.50
Incorrect Answer
Explanation
$99,500 × 6% (0.06) = $5,970
Debits Credits
$5,970.00 $99,500
$250
$99.50
$50,140
$10,000
$66,459.50 $99,500
$99,500 ‒ $66,459.50 = $33,040.50
Reference: Real Estate Calculations > Settlement/Closing Calculations
A broker sold a property and received a 6.5% commission. The broker gave the listing salesperson $3,575, which was 30% of the firm’s commission. What was the selling price of the property?
A)
$55,000
B)
$95,775
C)
$152,580
D)
$183,333
A broker sold a property and received a 6.5% commission. The broker gave the listing salesperson $3,575, which was 30% of the firm’s commission. What was the selling price of the property?
A)
$55,000
Incorrect Answer
B)
$95,775
Incorrect Answer
C)
$152,580
Incorrect Answer
D)
$183,333
Correct Answer
Explanation
The answer requires two steps: (1) find the firm’s full commission, and (2) find the selling price using the full commission and the rate.
$3,575 (the listing salesperson’s commission) = 30% × full commission
(1) To find the full commission, divide the listing salesperson’s commission by the salesperson’s share of 30%: full commission = $3,575 ÷ 30% (0.30) = $11,916.67.
(2) To find the sales price, divide the full commission by the brokerage commission rate: full commission ($11,916.67) ÷ brokerage rate (6.5%) = sales price ($183,333).
Reference: Real Estate Calculations > Settlement/Closing Calculations
A salesperson took a listing on a house that sold for $329,985. The commission rate was 8%. A salesperson employed by another broker found the buyer. The listing broker received 60% of the commission on the sale. The other broker received 40%. If the listing broker kept 30% and paid the listing salesperson the remainder, how much did that salesperson earn on this sale?
A)
$7,391.66
B)
$11,087.50
C)
$3,167.86
D)
$15,839.28
A salesperson took a listing on a house that sold for $329,985. The commission rate was 8%. A salesperson employed by another broker found the buyer. The listing broker received 60% of the commission on the sale. The other broker received 40%. If the listing broker kept 30% and paid the listing salesperson the remainder, how much did that salesperson earn on this sale?
A)
$7,391.66
Incorrect Answer
B)
$11,087.50
Correct Answer
C)
$3,167.86
Incorrect Answer
D)
$15,839.28
Incorrect Answer
Explanation
The listing broker received $329,985 × 8% (0.08) × 60% (.60) = $15,839.28. The listing broker kept $15,839.28 × 30% (0.30) = $4,751.78. The listing salesperson received $15,839.28 – $4,751.78 = $11,087.50.
Reference: Real Estate Calculations > Settlement/Closing Calculations
Federal income tax law excludes gains realized on the sale of a primary residence for couples filing jointly. The amount of this exclusion is
A)
$200,000.
B)
$250,000.
C)
$500,000.
D)
$600,000.
Federal income tax law excludes gains realized on the sale of a primary residence for couples filing jointly. The amount of this exclusion is
A)
$200,000.
Incorrect Answer
B)
$250,000.
Incorrect Answer
C)
$500,000.
Correct Answer
D)
$600,000.
Incorrect Answer
Explanation
Federal tax laws permit a couple filing jointly to exclude up to $500,000 in profits from capital gains taxes on a primary home, not on an investment property.
Reference: Real Estate Calculations > Investment
After closing expenses of $550 and a 6% commission was paid, the seller received a check for $149,850. What was the sale price of the property?
A)
$155,424
B)
$159,424
C)
$150,400
D)
$160,000
After closing expenses of $550 and a 6% commission was paid, the seller received a check for $149,850. What was the sale price of the property?
A)
$155,424
Incorrect Answer
B)
$159,424
Incorrect Answer
C)
$150,400
Incorrect Answer
D)
$160,000
Correct Answer
Explanation
100% – 6% = 94%
$149,850 + 550 = $150,400 (needed before commission)
$150,400 ÷ 94% (0.94) = $160,000.
Reference: Real Estate Calculations > Property Valuation
A first-time buyer paid $135,500 for her property. Taxes in her community are assessed at 80% of the market value. If the tax rate is 700 mills per $100, how much will be escrowed for taxes for her monthly PITI payment?
A)
$63.23
B)
$63
C)
$75.88
D)
$75.60
A first-time buyer paid $135,500 for her property. Taxes in her community are assessed at 80% of the market value. If the tax rate is 700 mills per $100, how much will be escrowed for taxes for her monthly PITI payment?
A)
$63.23
Correct Answer
B)
$63
Incorrect Answer
C)
$75.88
Incorrect Answer
D)
$75.60
Incorrect Answer
Explanation
Tax rate = 700 mills ÷ 1,000 = 0.7 ÷ 100 = 0.007
Assessed value $135,500 × 80% (0.80) = $108,400
$108,400 × 0.007 = $758.80 annual taxes
$758.80 ÷ 12 = $63.23 monthly tax
Reference: Real Estate Calculations > Investment
A salesperson received $2,250 as his 50% share of the brokerage fee on a $75,000 sale. What was the full brokerage commission rate?
A)
5.5%
B)
6.5%
C)
6%
D)
5%
A salesperson received $2,250 as his 50% share of the brokerage fee on a $75,000 sale. What was the full brokerage commission rate?
A)
5.5%
Incorrect Answer
B)
6.5%
Incorrect Answer
C)
6%
Correct Answer
D)
5%
Incorrect Answer
Explanation
$2,250 (the salesperson’s commission) ÷ $75,000(the sales price) = 3% (0.03) (salesperson’s share)
3% ÷ 50% (0.50) (salesperson’s percentage of full commission) = 6% (0.06) (the full commission)
Reference: Real Estate Calculations > Settlement/Closing Calculations
How much monthly PITI payment can a purchaser qualify for if he earns $6,600 gross income monthly and the lender applies 28/36 qualifying ratios?
A)
$1,650
B)
$1,848
C)
$2,376
D)
$2,300
How much monthly PITI payment can a purchaser qualify for if he earns $6,600 gross income monthly and the lender applies 28/36 qualifying ratios?
A)
$1,650
Incorrect Answer
B)
$1,848
Correct Answer
C)
$2,376
Incorrect Answer
D)
$2,300
Incorrect Answer
Explanation
$6,600 income × 28% (0.28) = $1,848 (monthly PITI payment). The lender’s 28/36 qualifying ratios mean that the purchaser’s total monthly housing expenses should be no more than 28% of his total monthly gross income, and that the purchaser’s total monthly obligations must not exceed 36% of his total monthly gross income.
Reference: Real Estate Calculations > Finance
If a bank wants to earn $3,150 on a loan of $50,000 over 12 months, what interest rate would the bank have to charge?
A)
6%
B)
6.25%
C)
5.5%
D)
6.3%
If a bank wants to earn $3,150 on a loan of $50,000 over 12 months, what interest rate would the bank have to charge?
A)
6%
Incorrect Answer
B)
6.25%
Incorrect Answer
C)
5.5%
Incorrect Answer
D)
6.3%
Correct Answer
Explanation
$3,150 (amount of yearly interest) ÷ $50,000 (loan amount) = 6.3% (0.063) (the interest rate)
Reference: Real Estate Calculations > Finance
A small condo sold for $62,250, which was 75% of the list price. What was the list price?
A)
$81,250
B)
$77,812
C)
$83,000
D)
$74,700
A small condo sold for $62,250, which was 75% of the list price. What was the list price?
A)
$81,250
Incorrect Answer
B)
$77,812
Incorrect Answer
C)
$83,000
Correct Answer
D)
$74,700
Incorrect Answer
Explanation
$62,250 (sales price) ÷ 75% (0.75) = $83,000 (the list price)
Reference: Real Estate Calculations > Property Valuation
A property was purchased for $175,000. If the loan was $131,250, what was the loan-to-value (LTV) ratio?
A)
90%
B)
75%
C)
80%
D)
70%
A property was purchased for $175,000. If the loan was $131,250, what was the loan-to-value (LTV) ratio?
A)
90%
Incorrect Answer
B)
75%
Correct Answer
C)
80%
Incorrect Answer
D)
70%
Incorrect Answer
Explanation
$131,250 ÷ $175,000 = 75% (0.75)
Reference: Real Estate Calculations > Finance
A broker received a 6% commission from the sale of a property. The broker gave the salesperson $3,500, which was 30% of the firm’s commission. What was the selling price of the property?
A)
$196,000
B)
$75,000
C)
$194,450
D)
$83,333
A broker received a 6% commission from the sale of a property. The broker gave the salesperson $3,500, which was 30% of the firm’s commission. What was the selling price of the property?
A)
$196,000
Incorrect Answer
B)
$75,000
Incorrect Answer
C)
$194,450
Correct Answer
D)
$83,333
Incorrect Answer
Explanation
To find the broker’s total commission, divide the salesperson’s commission by the percentage of the salesperson’s commission: $3,500 ÷ 0.30 (30%) = $11,667. The broker’s commission is 6% of the sales price. To find the sales price, divide the broker’s commission by the percentage of the broker’s commission: $11,667 ÷ 0.06 (6%) = $194,450.
Reference: Real Estate Calculations > Settlement/Closing Calculations
A savings and loan agreed to make a $65,000 mortgage at 8% interest for 30 years and charged three points to negotiate the loan. What was the effective yield to the lender?
A)
8.35%
B)
8.25%
C)
8.38%
D)
8.735%
A savings and loan agreed to make a $65,000 mortgage at 8% interest for 30 years and charged three points to negotiate the loan. What was the effective yield to the lender?
A)
8.35%
Incorrect Answer
B)
8.25%
Incorrect Answer
C)
8.38%
Correct Answer
D)
8.735%
Incorrect Answer
Explanation
The lender yield per point is 1.25% (0.125).
0.125 × 3 = 0.375
8% + 0.38 = 8.38%
Reference: Real Estate Calculations > Finance
An investment property was purchased for $250,000. The owner added a tennis court at a cost of $10,000. Two years later, the property sold for $325,000 and the seller paid a 7% commission plus $250 in attorney fees. If he purchases another property for $350,000, how much capital gains will he exclude?
A)
$42,520
B)
$22,750
C)
$42,250
D)
$42,000
An investment property was purchased for $250,000. The owner added a tennis court at a cost of $10,000. Two years later, the property sold for $325,000 and the seller paid a 7% commission plus $250 in attorney fees. If he purchases another property for $350,000, how much capital gains will he exclude?
A)
$42,520
Incorrect Answer
B)
$22,750
Incorrect Answer
C)
$42,250
Incorrect Answer
D)
$42,000
Correct Answer
Explanation
$250,000 + 10,000 = $260,000
$325,000 – 22,750 (7%) = $302,250 – 250 = $302,000
$302,000 – 260,000 = $42,000
What is the sales price of a property whose owner paid a $7,000 commission at a 7% rate?
A)
$136,000
B)
$42,000
C)
$100,000
D)
$420,000
What is the sales price of a property whose owner paid a $7,000 commission at a 7% rate?
A)
$136,000
Incorrect Answer
B)
$42,000
Incorrect Answer
C)
$100,000
Correct Answer
D)
$420,000
Incorrect Answer
Explanation
$7,000 (commission) ÷ 7% (0.07) = $100,000 (sales price)
Reference: Real Estate Calculations > Settlement/Closing Calculations