Principles Of Real Estate 2 Key Terms

Question 1

Whole Number

Answer 1

Any number between zero and infinity. Whole numbers are not fractions or negative numbers.

Example: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14… (you get the idea)

Synonyms: Positive integers, basic numbers

Question 2

Fraction

Answer 2

A fraction is part of a whole — a fraction is not a whole number.

Example: Michael’s client is petitioning to rezone his plot of land in the country — one half (1⁄2) of the plot will be rezoned for commercial use, the other (1⁄2) will stay zoned for agricultural use.

Question 3

Numerator

Answer 3

The number on top of a fraction’s division line or the number of the parts with which you are working; also called the divisor.

Example: Amy’s client is trying to sell her plot of land that is in downtown Austin. It is 3⁄8 of an acre in prime real estate. The number 3 is the numerator of the fraction.

Question 4

Denominator

Answer 4

The number below the fraction’s bottom line or the number of equal parts in total; also called the dividend.

Example: There are 3⁄8 pizza slices left in the break room. The number 8 is the denominator of this fraction.

Question 5

Improper Fractions

Answer 5

When the value of the numerator (the number on top) is greater than the denominator (the number on the bottom), the fraction is an improper fraction.

Improper Fraction Examples:
• 13⁄8
• 7⁄4
• 5⁄3
• 8⁄6

Question 6

Mixed Numbers

Answer 6

A number consisting of a whole number and a fraction.

Example: The house sits on a plot that consists of 4 and 1⁄3 acres of land.

Question 7

Decimal

Answer 7

A fraction whose denominator is a power of ten and whose numerator is expressed by figures placed to the right of a decimal point.

Decimal Definition in Normal, Real Life Words: A number that involves a decimal point.

Decimals in Real Life: Here are some decimals in their real world math environments.

0.3 is an example of a decimal. 0.72 is another example of a decimal.

Question 8

Ratio

Answer 8

The quantitive relation between two numbers.

Example 1: My kid tells the truth as opposed to lying at a 2:1 ratio.

Question 9

Percentage

Answer 9

A fraction or ratio with a denominator of 100.

Usually written as just the numerator and a % symbol.

Example 1: A large percentage of licensed real estate agents in Texas are commercial.

Example 2: Only a small percentage of Texas real estate transactions involve subagents.

Question 10

Profit

Answer 10

A financial gain. Making more money selling a product than was spent buying or producing the product.

Example 1: Josh bought those Jordans at Foot Locker for $100, but he sold them to collectors for $150. He made a profit of $50 on the sneakers.

Example 2: Jenny started her dog walking business with only $500 and sold it for $20,000. She made a profit of $19,500!

Question 11

Loss

Answer 11

A financial loss — Making less money selling a product than was spent buying or producing the product.

Example 1: Josh bought this house for $100,000 and spent $150,000 in renovating the house. However, it only sold for $200,000. He lost $50,000 on the house.

Example 2: Jenny spent $5,000 on her skincare business, but she only sold it for $500. She suffered a loss of $4,500.

Question 12

Interest

Answer 12

Money repaid regularly at a specified rate as compensation for money lent.

Example 1: Shane is paying 4.3% interest on his $250,000 loan.

Example 2: I’m going to loan you the money, but you’ll have to pay me back with interest.

Question 13

Principal

Answer 13

The amount lent to a borrower to purchase a house — the borrower pays the lender interest in exchange for the principal.

Example 1: Shane is paying 4.3% interest on his $250,000 loan. The principal of the loan is $250,000.

Example 2: The more I pay on my mortgage every month, the more money I’m able to pay back on my principal.

Question 14

Mortgage

Answer 14

A mortgage is a secured loan that is tied to real estate, where the borrower has to pay the money back to the lender on a set schedule and amount of payments. Mortgages are also considered “liens against property” or “claims on property.”

Example: A borrower put down a 20% down payment on a $100,000 house. They got an $80,000 mortgage from their bank for the other 80% of the house price.

Question 15

Down Payment

Answer 15

The initial payment made when buying something on credit; a down payment is paid directly by the buyer to the seller. The standard down payment is 20% of the overall house price, and while a 20% down payment is recommended, it is not required. The minimum down payment required by mortgage lenders is 3% of the house’s price.

Example: Geni told me she put down a 20% down payment on her $200,000 house, so I know she put down $40,000 as her down payment.

Question 16

Amortization

Answer 16

The repayment of a loan over time in equal installments that include principal and interest.

Example 1: After closing on her house, Audrey’s lender sent her the amortization schedule of her mortgage payments, including how much of each monthly payment would go to principal and how much of each payment would go to interest.

Example 2: Unless you plan on paying off your mortgage immediately or have an interest-only loan, you’ll be paying off your principal via an amortization schedule.

Question 17

Proper Fractions

Answer 17

When the numerator (the number on top) is smaller than the denominator (the number on the bottom), the fraction is a proper fraction

Question 18

Greatest Common Divisor

Answer 18

The largest number that divides both the denominator and the numerator to reduce fractions to their simplest form

Question 19

Decimal Conversion Steps

Answer 19

Divide the numerator by the denominator.

Write down the answer (that’s the decimal verison of the fraction).

Question 20

Percentage

Answer 20

A rate or amount in each hundred (3⁄4 is 75% written as a fraction)

Question 21

Part

Answer 21

A portion of the total amount, the numerator (3 of 3⁄4)

Question 22

Total

Answer 22

The “final” or “end result” number, the denominator (4 of 3⁄4)

Question 23

Commission

Answer 23

a percentage of the sales price.

Question 24

Variable

Answer 24

A placeholder in an equation to represent an unknown amount or an amount that can change (vary).

Question 25

Operation

Answer 25

In math, an operation is not when you get your antenna replaced. When we talk about math operations, we’re talking about addition, subtraction, multiplication, and division.