Topic 11 Flashcards

Real estate math

1
Q

The area of a square or rectangle is:

A

Length X Width = Area

L X W = A

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2
Q

The area of a triangle is:

A

base X height divided by 2

B X H = A/
2

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3
Q

Area is expressed in ___

A

square feet.

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4
Q

Volume equals:

A

length x width x height

L x W x H

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5
Q

For commission problems use the “T” formula:

A

Small # / % Big #

The horizontal line in the formula means “divide”, and the vertical line means “mulitply”

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6
Q

For mortgage problems, the big number is the ____,

the small number is the _____,

and the % is the _____.

A

mortgage balance

yearly interest paid on the mortgage

interest rate on the loan

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7
Q

Mortgages are always based on either the selling price or the appraised value, whichever is ____

A

less

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8
Q

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 ____

A

factor from the amortization table

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9
Q

To find the monthly payment…

A

multiply the factor times the number of thousands of the loan amount

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10
Q

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.

A

prorated

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11
Q

Proration may be based either on a ___ or a ____

A

360 day year (30 days in every month), or a 365 day year

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12
Q

When using a 360 day year you can …

A

just find the cost per month then multiply times the total number of months.

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13
Q

When using a 365 day year, you must …

A

find the cost per day, then figure the total number of days and multiply the daily cost by the number of total days.

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14
Q

To find the amount owed by the buyer or seller, …

A

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.

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15
Q

The formula for taxes is:

A

Tax = Tax Rate X # of 1000’s of assessed value

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16
Q

The tax rate is usually expressed in ___

A

mills and may be called the millage rate.

A mill is one thousandth of a dollar, that is, one penny equals 10 mills.

17
Q

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.

A

discount points

18
Q

used to calculate capitalization rates and value. This formula is used for investment property. Works exactly like the T formula.

A

The IRV formula

I /RV

I = net yearly income
R = capitalization rate, or rate of return
V = value
19
Q

The net income is determined by ____. Monthly debt service (mortgage payment) is NOT considered an expense in this type of problem.

A

subtracting the yearly expenses for the property from the gross yearly rents.

20
Q

a number which, when multiplied by the rent for a property, will give the value of the property.

A

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.