FL Computations and Closing of Transactions

You get a loan from the Loan Star Bank to help pay for your home. Find the interest on the loan if you borrowed $12,000 at 10% for one year.

$1,200 12,000 x 0.10 = $1,200 $1,200 / 12 = $100 $100 x 12 = $1,200

Your seller wants to net $100,000 after the 5% commission is paid. Assuming no closing costs, at what price does the home need to sell for the seller to net this amount?

$105, 263.15 100% - 5% = 95% $100,000 / 0.95 = $105, 263.15 CONVERSELY: $105, 263 x 0.95 = $100,000

If Hal sold his client's listing in Miami for $230,000, but it appraised at $200,000 and the buyers agreed to put the extra $30,000 down, what will Hal's commission be if he charged 5%?

$11,500 $230,000 x 0.05 = 11,500

Shelly's listing sold for $650,000. The total commission generated from the sale is 5%, of which Shelly's brokerage keeps half. Shelly has an agreement with her broker that she earns 90% of commission generated. How much will she be paid for this sale?

$14, 625 $650,000 x 0.05 = $32, 500 $32, 500 / 2 = $16, 250 $16, 250 x 0.90 = $14, 625

Calculate six months' interest on a $4,000 loan at 7.5%. Round to the nearest dollar.

$150 $4,000 x 0.075 = $300 $300 / 12 = $25 $25 x 6 =$150

The current value of a property in Pompano Beach is $105,000. What was the original cost of the property if there has been a 30% loss in value?

$150,000 100% - 30% = 70% 105, 000 / 0.70 = 150,000

A property sells for $200,599, which is 15% more than the owner paid eight years ago. What did the owner originally pay for the property? (Round to the nearest cent.)

$174, 433.91 100% + 15% = 115% = 1.15 $200, 599 / 1.15 = $174, 433.91

A property in Fort Walton Beach sells for $200,599, which is 15% more than the owner paid eight years ago. What did the owner originally pay for the property? (Round to the nearest cent.)

$174,433.91 100% + 15% = 115% 200, 599 / 1.15 = 174, 433.91

What did Barb and John, sellers in Siesta Keys, originally pay for their property if they sold it for $268,550 and realized a 13% profit? Round to the nearest cent.

$237,654.87 100% + 13% = 113% $268, 550 / 1.13 = 237, 654.87

Your clients sold their property in Naples for $500,000. Your commission rate is 5%. What's your commission (before splits or sharing with the cooperating agent)?

$25,000

Your seller client has an offer for $300,000. If the agreed-upon commission is 5%, what is net to seller before any other costs are taken into account?

$285,000 The 5% commission is $15,000, so the net to seller would be $285,000 before any other costs are taken into account.

Yasmin listed a house at a 6% commission rate, and it just sold for $463,500. Her brokerage and the buyer's agent's brokerage split the commission equally between them. Then Yasmin, who has a 60/40 commission split with her broker (Yasmin gets the higher split), took her check to the bank. How much did Yasmin earn from this transaction?

$8,343

Charley's loan amount is $212,000, his appraised value is $275,000, and his interest rate is 4.375%. What is his annual interest?

$9, 275 $212, 000 x 0.04375 = 9,275

Charley's loan amount is $212,000, his appraised value is $275,000, and his interest rate is 4.375%. What is his annual interest?

$9,275

In Florida, what percentage of profit would the seller make if he paid $18,000 for a vacant lot, built a home on the lot that cost $145,000, and then sold the property for $200,599? Round your answer to the nearest percent.

23% $18,000 + $145,000 = $163, 000 $200, 599 - $163, 000 = $37, 599 $37, 599 / $163,000 = 0.2306

Calculate nine months' interest on a $6,500 loan at 6.5%. Round to the nearest dollar.

317 6,500 x 0.065 = 422.5 422.5 / 12 = 35.2 35.2 x 9 = 316.8

What is 5/8 ÷ 1/4?

5/2 5/8 / 4/1 = 20/8 = 5/2

Jared has a 70/30 split with his brokerage firm, and his firm has a 50/50 split with cooperating brokerages. Last month, he earned $12,239.50 in commissions from his home sales, which totaled $538,000. What is the brokerage's commission rate?

6.5 % $12, 239.50 / 0.70 = $17, 485 $17, 485 x 2 = $34, 970 $34, 970 / 538, 000 = 0.065

Jared has a 70/30 split with his brokerage firm in Tampa, and his firm has a 50/50 split with cooperating brokerages. Last month, he earned $12,239.50 in commissions from his home sales, which totaled $538,000. What is Jared's brokerage's commission rate?

6.5% 12,239.50 / 0.70 = 17, 485 17, 485 x 2 = 34, 970 34, 970 / 538, 000 = 0.065

You're working with buyers who are pre-approved for a loan up to $90,000. If they estimate paying $525 per month toward interest, what interest rate are they assuming?

7% 525 x 12 = 6,300 6,300 / 90, 000 = 0.07

How is the documentary stamp tax on deeds calculated?

70 cents per $100 of the purchase price

What's the interest rate on a $14,000 loan that requires a semi-annual interest payment of $550? Round to the nearest percent.

8%

What is 40% of 200?

80 200 x 0.40 = 80

The seller net sheet is _______ of closing costs.

An esitmate

Prior to signing the closing documents, what should the parties have already done?

Assured themselves that the conditions and contingencies of the purchase agreement have been met.

When does the seller's broker receive commission?

At or just after the closing

When are the mortgage loan commitment and title insurance contract signed?

At the closing

When is the seller paid the full amount of the purchase price for the property?

At the closing

In Florida, who pays for and receives clear title for the property being purchased at closing?

Buyer

At the closing table, who examines all documents for buyers and represents their best interests?

Buyer's attorney

Who at the closing table examines all documents for buyers or sellers and represents their best interests?

Buyer's or seller's attorney

In Florida, how do brokers/licensees obtain their commission?

By providing the attorney or closing agent with a broker statement that shows how much each broker should receive

According to RESPA, what must the lender give to the borrower in the days immediately prior to settlement?

Closing Disclosure

In Florida, if the buyer and seller both have costs to pay, how do the parties know who pays what?

Closing Satement

Which document is signed and agreed to at closing in Florida and reconciles what the final financial obligations are for both the buyer and seller?

Closing Statement

Which two items will appear on a closing disclosure?

Credits and Debits

What's the term for a charge that either party has to pay at closing?

Debit

Martin is looking at the closing statement on his property in Siesta Key. Which of the following items is he likely to see?

Debits

Seller Martin is looking at his closing statement. Which of the following items is he likely to see?

Debits

When would a buyer have a home tested for radon gas?

During an home inspection

How is the broker's commission usually paid out in Florida?

Escrow creates checks for both agents' brokerages, which in turn cut checks to the agents for their commission split.

Chaz represents the buyer in a transaction that has just closed. How will he typically be paid?

His brokerage will receive a commission check from closing; his broker will compensate Chaz according to the terms of their agreement.

Which type of insurance must a buyer obtain if a mortgage is involved?

Homeowners fire and hazard insurance

A(n) ______ fraction is where the numerator is more than the denominator.

Improper

When the property is financed, who is named as an additional insured entity on the homeowner's insurance policy?

Lender

According to RESPA, what must the lender give to the borrower at either the time of loan application or within three days following application?

Loan Estimate

Which document provides an estimate of the costs a buyer is likely to pay at settlement before the closing?

Loan Estimate

What is the calculation used to determine the estimated annual interest amount a borrower will pay on a loan?

Loan balance x interest rate

What is interest?

Money paid consistently at a particular rate for the use of borrowed money.

Which type of federally related lending transaction is covered under RESPA?

Mortgages and home equity credit lines

How would you calculate a transfer tax of .04% on a $350,000 property?

Multiply 350,000 by 0.0004 $350, 000 x 0.0004 = $140

How is the documentary stamp tax rate usually calculated?

Multiply the tax rate by the number of $100s in the sales price.

Nonny is purchasing a rental property where the tenants pay month-to-month rent. Which of the following is the most likely way for the rent to be prorated?

Nonny will receive prorated rents beginning the day after closing.

What's a percent?

Part of 100

A _____ is made when a property is sold for more than the original price.

Profit

A(n) ______ fraction is where the numerator is less than the denominator.

Proper

What's a typical prepaid item that goes into a seller's credit column and a buyer's debit column on a closing statement?

Property Taxes

Which act ensures a buyer in a residential transaction financed by a federally related mortgage loan has knowledge of all settlement costs?

RESPA

Which act ensures a buyer in a residential transaction that's financed by a federally related mortgage loan has knowledge of all settlement costs?

RESPA

A ______ is a ratio that compares two quantities.

Rate

What does RESPA stand for?

Real Estate Settlement Procedures Act

Which type of contract allows a buyer to legally possess the property after all of the terms and conditions have been met?

Sale agreement

Broker Mica wants to figure out her commission from her current sale in Vero Beach. Which numbers does she need to do this?

Sales price and commission rate

Which of the following is provided at the time of a buyer's offer and shows what the seller's proceeds will be if the seller accepts the offer?

Seller net sheet

Which of the following is provided at the time of a buyer's offer and shows what the seller's proceeds will be if the seller accepts the offer?

Seller net sheets

RESPA prohibits kickbacks between which parties?

Settlement service providers

What's a fraction?

Something that's divided into a number of equal parts

Who usually pays the documentary stamp tax on notes and the intangible tax on new mortgages in Florida?

The buyer

Who closes on the mortgage loan commitment at closing?

The buyer and the lender's attorney

Which of the following actions occurs prior to closing?

The buyer obtains a binder for insurance coverage on the new home.

What could be a potential drawback to not getting a home inspection done before closing on the home if the buyer has an FHA loan?

The buyer would be unable to sell the home back to the FHA if there are problems found after closing.

When does the buyer's agent, attorney, or lender contact the buyer to tell them the exact amount to bring to closing?

The day of signing, or just prior to it

According to custom, who pays the costs on the day of closing for property taxes, utilities, etc.?

The seller

How are accrued real estate taxes that have been assessed but not yet due handled in a real estate transaction?

The tax bill will be prorated to the day of closing

Jamison, the seller, is closing on his property with Conrad, the buyer. Jamison paid the current year's property taxes already. Is this a prepaid or accrued expense, and how will it be represented on the settlement statement?

The taxes are a prepaid expense and will appear as a buyer debit and a seller credit.

How are mortgage interest, taxes, insurance, and other similar expenses prorated?

These are usually prorated based on a 360-day calendar year (30 days x 12 months).

Danette hasn't paid the first quarter water bill on her property. It was due on April 1. She's closing with the buyer, Jason, on April 1. What type of expense is this and how will it appear on the settlement statement?

This is an accrued expense, and will appear as a seller debit and a buyer credit.

Who delivers the evidence of a clear title at the closing?

Title insurance representative

What would be a reason for getting a home inspection done before closing on a property?

To get more detailed information about the overall condition of the home and find any defects or repairs that are needed before purchasing the property

The ______ is the whole number or amount of something.

Total

Which of the following is a typical accrued adjustment?

Unpaid real estate taxes