Topic 11 Flashcards
Real estate math
The area of a square or rectangle is:
Length X Width = Area
L X W = A
The area of a triangle is:
base X height divided by 2
B X H = A/
2
Area is expressed in ___
square feet.
Volume equals:
length x width x height
L x W x H
For commission problems use the “T” formula:
Small # / % Big #
The horizontal line in the formula means “divide”, and the vertical line means “mulitply”
For mortgage problems, the big number is the ____,
the small number is the _____,
and the % is the _____.
mortgage balance
yearly interest paid on the mortgage
interest rate on the loan
Mortgages are always based on either the selling price or the appraised value, whichever is ____
less
Amortization tables are used to find the monthly payment including principle and interest for a given loan amount at a given interest rate for a given term (number of years of loan). This amount is sometimes referred to as the ____
factor from the amortization table
To find the monthly payment…
multiply the factor times the number of thousands of the loan amount
When buying or selling a house, at the closing the taxes are ____ so that the buyer and seller each pay their share for the part of the year that they own the house.
prorated
Proration may be based either on a ___ or a ____
360 day year (30 days in every month), or a 365 day year
When using a 360 day year you can …
just find the cost per month then multiply times the total number of months.
When using a 365 day year, you must …
find the cost per day, then figure the total number of days and multiply the daily cost by the number of total days.
To find the amount owed by the buyer or seller, …
divide the amount for taxes by twelve to get a monthly cost, or by 365 to get a daily cost. Then multiply that number by the appropriate number of months or days to find the amount owed.
The formula for taxes is:
Tax = Tax Rate X # of 1000’s of assessed value
The tax rate is usually expressed in ___
mills and may be called the millage rate.
A mill is one thousandth of a dollar, that is, one penny equals 10 mills.
paid to get a lower interest rate on a loan. paid at the closing, and are always figured on the loan amount, NOT the selling price. Each is figured as 1% of the loan amount. may be paid by either the buyer or the seller.
discount points
used to calculate capitalization rates and value. This formula is used for investment property. Works exactly like the T formula.
The IRV formula
I /RV
I = net yearly income R = capitalization rate, or rate of return V = value
The net income is determined by ____. Monthly debt service (mortgage payment) is NOT considered an expense in this type of problem.
subtracting the yearly expenses for the property from the gross yearly rents.
a number which, when multiplied by the rent for a property, will give the value of the property.
gross rent multiplier or
gross income multiplier
Found by dividing the market value by the rent for several properties in a given area and taking the average of the values found. This number may then be applied to other similar properties to determine value.
