Real Estate Calculations
This topic reviews commission, proration, loan, and area math commonly tested on the exam.
Commission and Proration
Commission equals sale price times rate, then split among brokerages and agents. Proration allocates prepaid or accrued items such as property taxes and rent between buyer and seller by days or months of ownership. When taxes are paid in arrears, the accrued seller portion is typically credited to the buyer at closing. Convert percentages to decimals before multiplying.
Loan and Area Math
Loan-to-value equals loan divided by value; multiply value by the LTV percentage to find the loan amount. Simple interest is principal times rate times time, and one discount point equals one percent of the loan. Rectangular area is length times width, and an acre is 43,560 square feet. Investment value uses capitalization (NOI divided by cap rate).