Real Estate Math
Math appears throughout the exam in commission, proration, area, and financing problems. Mastering a few core formulas and unit conversions lets you solve these questions quickly and confidently.
Commissions, Percentages, and Area
Most commission problems apply a percentage to the sale price and then split the result between firms, so a 6% commission on a $340,000 sale is $20,400, and a 50/50 split gives each firm $10,200. Area problems rely on knowing that one acre equals 43,560 square feet, so a 150-by-200-foot lot of 30,000 square feet is about 0.69 acres. The formula part equals rate times whole can be rearranged to find any missing value. Careful unit tracking prevents the most common errors.
Prorations and Financing Math
Prorations divide costs like property taxes and interest between buyer and seller as of the closing date, often using a 360-day banker's year or the actual number of days. Loan-to-value ratio equals the loan amount divided by the property value, which helps determine down payment and mortgage insurance requirements. Simple interest equals principal times rate times time. Writing down the known values and the formula before calculating reduces careless mistakes under time pressure.