Chapter 11 of 147% of exam
Real Estate Calculations
Licensees calculate commissions, area, financing ratios, and investment returns. Precision matters, especially at closing.
Commission and Financing Math
Commission is a percentage of the sale price and may be split among brokerages. Loan-to-value ratio compares the loan to the property's value or price, determining the required down payment. Careful percentage work avoids costly mistakes.
Investment and Proration
Capitalization rate equals net operating income divided by value and measures return. At closing, taxes and other items are prorated between buyer and seller by the closing date. Understanding these formulas supports accurate settlement statements.