CSLB General Building (B) — All Questions

A home sells for $400,000 with a total commission rate of 6 percent. What is the total commission?

• a.$24,000✓
• b.$2,400
• c.$40,000
• d.$18,000

Total commission equals sale price times commission rate: $400,000 x 0.06 = $24,000. Percentages are converted to decimals before multiplying. This total would then be split among the brokerages and agents involved.

A property sells for $250,000 with a 6 percent commission. If the listing and selling brokerages split the commission equally, how much does each brokerage receive?

• a.$15,000
• b.$7,500✓
• c.$3,750
• d.$12,500

First find the total commission: $250,000 x 0.06 = $15,000. An equal split gives each brokerage $15,000 / 2 = $7,500. Individual agents would then split their brokerage's share per their own agreements.

A buyer makes a 20 percent down payment on a $350,000 home. How much is the down payment?

• a.$7,000
• b.$35,000
• c.$70,000✓
• d.$280,000

The down payment equals the price times the down payment percentage: $350,000 x 0.20 = $70,000. The remaining $280,000 would typically be financed. Converting 20 percent to 0.20 is the key step.

A lender requires a loan-to-value (LTV) ratio of 80 percent on a home appraised at $300,000. What is the maximum loan amount?

• a.$60,000
• b.$375,000
• c.$24,000
• d.$240,000✓

The maximum loan equals value times the LTV ratio: $300,000 x 0.80 = $240,000. The borrower would need to cover the remaining $60,000 as a down payment. LTV compares the loan amount to the property's value.

Annual property taxes are $3,600. Using a 360-day year, what is the daily proration amount?

• a.$10.00✓
• b.$100.00
• c.$1.00
• d.$30.00

Using a 360-day year, divide annual taxes by 360: $3,600 / 360 = $10.00 per day. Prorations allocate expenses like taxes between buyer and seller at closing. Many closings use a 360-day (banker's) year for simplicity.

A parcel of land measures 200 feet by 300 feet. What is its area in square feet?

• a.500 square feet
• b.60,000 square feet✓
• c.6,000 square feet
• d.1,000 square feet

Area of a rectangle equals length times width: 200 ft x 300 ft = 60,000 square feet. Area calculations are common in real estate for lots and buildings. To convert to acres, you would divide by 43,560.

One acre equals 43,560 square feet. How many acres is a lot containing 87,120 square feet?

• a.1 acre
• b.4 acres
• c.2 acres✓
• d.0.5 acre

Divide total square feet by 43,560: 87,120 / 43,560 = 2 acres. Memorizing that one acre is 43,560 square feet is essential for land math. This conversion appears frequently on real estate exams.

A home's value increased from $200,000 to $250,000. What is the percentage of increase?

• a.50 percent
• b.20 percent
• c.5 percent
• d.25 percent✓

Percentage increase equals the change divided by the original value: ($250,000 - $200,000) / $200,000 = $50,000 / $200,000 = 0.25, or 25 percent. Always divide by the original (starting) amount. The result shows growth relative to the starting value.

An investment property generates $30,000 in net operating income and is valued using an 8 percent capitalization rate. What is its indicated value?

• a.$375,000✓
• b.$240,000
• c.$2,400,000
• d.$37,500

In the income approach, value equals net operating income divided by the cap rate: $30,000 / 0.08 = $375,000. A lower cap rate produces a higher value for the same income. This formula is central to valuing income property.

A seller wants to net $188,000 after paying a 6 percent commission on the sale price. What must the sale price be (rounded)?

• a.$199,280
• b.$200,000✓
• c.$188,000
• d.$211,000

The seller keeps 94 percent of the price after a 6 percent commission, so price = $188,000 / 0.94 = $200,000. You divide the net amount by (100% minus the commission rate). Dividing rather than adding 6 percent avoids a common error.

A mortgage loan of $150,000 has an annual interest rate of 6 percent. How much interest accrues in the first month (simple interest)?

• a.$9,000
• b.$75
• c.$750✓
• d.$1,500

Annual interest is $150,000 x 0.06 = $9,000; one month is $9,000 / 12 = $750. Early in an amortized loan, most of each payment goes toward interest. Monthly interest is the annual interest divided by 12.

A buyer pays 2 discount points on a $180,000 loan. How much do the points cost?

• a.$360
• b.$1,800
• c.$36,000
• d.$3,600✓

Each point equals one percent of the loan amount, so 2 points on $180,000 = $180,000 x 0.02 = $3,600. Points are prepaid interest paid to lower the loan's interest rate. They are calculated on the loan amount, not the purchase price.

Annual property taxes of $2,400 are paid in arrears. At a closing on July 1, using a 360-day year, how much does the seller owe for the 6 months already elapsed?

• a.$1,200✓
• b.$2,400
• c.$600
• d.$400

The seller owes taxes for the portion of the year they owned the property. Six months is half the year: $2,400 x 6/12 = $1,200. In arrears means taxes are paid after the period, so the seller credits the buyer for their share.

A rectangular building is 40 feet wide and 80 feet long. At a construction cost of $120 per square foot, what is the total cost?

• a.$38,400
• b.$384,000✓
• c.$3,840
• d.$96,000

First find the area: 40 ft x 80 ft = 3,200 square feet. Then multiply by cost per square foot: 3,200 x $120 = $384,000. Cost-per-square-foot calculations are common in the cost approach and construction estimates.

An agent receives a 3 percent share of a $500,000 sale, then keeps 70 percent after a 30 percent brokerage split. What is the agent's take-home amount?

• a.$15,000
• b.$4,500
• c.$10,500✓
• d.$7,000

The agent's gross share is $500,000 x 0.03 = $15,000. Keeping 70 percent after the split gives $15,000 x 0.70 = $10,500. Commission splits are applied in sequence: first compute the share, then apply the split.

A property assessed at $250,000 is taxed at a millage rate of 20 mills. What is the annual tax?

• a.$500
• b.$50,000
• c.$2,500
• d.$5,000✓

One mill equals $1 per $1,000 of assessed value, so 20 mills is $20 per $1,000. Tax equals $250,000 / 1,000 x 20 = $5,000. Millage rates are a common way local governments express property tax rates.