Real Estate Math Exams
Cheryl and Roberto just signed a contract for Cheryl to buy Roberto's house for $235,000. Roberto owes $48,750 on his current mortgage, he's going to replace the old furnace ($800), he's agreed to pay 3% toward closing costs, and he'll pay a 6% commission to his agent. How much in whole dollars will he have left to put down on the condo he wants to buy? Topic: Real estate calculations Subtopic: Basic math concepts $164,300 $164,771 $167,696 $168, 688
$164,300 Roberto's closing costs will be $7,050 ($235,000 x 0.03) and commission will be $14,100 ($235,000 x 0.06). Subtract those two amounts, the furnace cost ($800), and the mortgage loan payoff ($48,750) from $235,000 to get $164,300.
Clint is interested in making an offer on a house with hardwood floors that will need to be replaced. The hallway is 18' x 6'. The kitchen is 20' x 30'. The living room is 25' x 45'. Two bedrooms are 12' x 16', and the master bedroom is 14' x 20'. If the cost of the flooring is $5.48 per square foot, and the cost of installation is $1.49 per square foot, how much can Clint plan to spend to replace the floors? $13,683.56 $16,065.85 $16,309.80 $17,404.09
$17,404.09 First, find the area of each room and add them together to get the total square footage. 108 + 600 + 1125 + 192 + 192 + 280 = 2,497 square feet. The total cost of the flooring per sq. ft. is $5.48 + $1.49 = $6.97. 2,497 x $6.97 = $17, 404.09.
An appraiser used the cost approach to estimate a property's value at $220,000. The site value was $50,000, and the total depreciation estimate was $4,000. What was the estimated cost of improvements? $166,000 $174,000 $266,000 $274,000
$174,000 To estimate value, an appraiser adds the site value to the estimated cost to replace improvements then subtracts the estimated depreciation. So to solve the equation, you need to solve for cost of improvements. In order to do this, you have to move the given values to the other side of the equation - $50,000 + $4,000 . Here's the equation used to find the cost of improvements = $220,000 ‒ $50,000 + $4,000.
The Simpsons are buying the Martin's house for $415,000, and closing is set for March 15. The Martins have a loan balance of $230,000 at a rate of 4.7% and have prepaid property taxes ($2,506) and insurance ($1,400), and they also have mortgage interest to consider. Using a 365-day proration method, calculate the prorated amount the Simpsons will owe the Martins at closing. Assume February has 28 days this year. The sellers own the day of closing.
$ 1,997.62 Calculate daily rates for taxes to be prorated: $2,506 ÷ 365 = $6.87. The Martins pay the first 74 days (January 1 through March 15): 74 x $6.87 = $508.38. $2,506 - $508.38 = $1,997.62 owed by the Simpsons. Homeowner's insurance isn't prorated between the buyer and seller. A homeowner's insurance policy is an agreement between the insurance company and the policyholder, so any refund due to the seller/homeowner will be handled between those two parties.
Juan secures a fixed rate amortized 30-year loan for $295,000 at 4.25%. If his monthly P&I payment is $1,750, how much interest does he pay in the second month of the loan? $1,038.59 $1,042.29 $1,044.79 $1,750
$1,042.29 In the first month, Juan pays $1,044.79 in interest ([$295,000 x .0425] ÷ 12). His monthly payment (stated in the question) is $1,750, so that means he paid the principal down $705.21 ($1,750 - $1,044.79). His new principal balance is $294,294.79 ($295,000 - $705.21). We use the new principal balance amount to calculate interest for the next month. Juan pays $1,042.29 in interest ([$294,294.79 x .0425] ÷ 12).
Gunther's gross monthly income is $3,800, and he has no monthly debt payments. The lender's qualifying ratios are 28% for the housing ratio and 36% for the total DTI ratio. What's the maximum housing payment Gunther can afford?
$1,064 Calculate the debt and housing ratios that buyers need to meet both lending ratios. While Gunther qualifies for a payment of $1,368 under the total DTI, he only qualifies for $1,064 under the housing DTI ($3,800 x 28%).
Phoebe's gross monthly income is $4,200, and she has $360 in monthly non-housing debt payments. The lender's qualifying ratios are 28% for the housing ratio and 36% for the total DTI ratio. What's the maximum housing payment she can afford?
$1,152 The maximum house payment is the lesser of the amounts calculated using both ratios. DTI: $4,200 x .36 = $1,512. $1,512 - $360 = $1,152. Housing ratio: $4,200 x .28 = $1,176. Phoebe's maximum payment is $1,152.
A seller received $800,000 for a 5.5 acre rectangular parcel alongside a road frontage. The property is 400' deep. What was the price per front foot of the property? $1,335.67 $2000 $363.64 $598.95
$1,335.67 First, find the square footage (5.5 x 43,560' = 239,580). You're given one dimension of the rectangle, so find the other: 239,580 ÷ 400' = 598.95 front feet. To find the price per front foot, $800,000 ÷ 598.95' = $1,335.67 per front foot.
Stu's seller client, Gabi, wants to figure out how much equity she has in the home she's selling. Gabi paid $200,000 eight years ago and made several great renovations over the years. She still owes $125,000. Stu calculates that comparable home values in her area have risen about 15% since Gabi bought. Assuming Stu pulled appropriate comps, about how much equity does she have? $105,000 $155,000 $205,000 $230,000
$105,000 Gabi's home value has risen $30,000 in the eight years since she bought it ($200,000 x .15). That brings her home's market value to $230,000. She owes $125,000, which brings her equity amount to $105,000. ($230,000 - $125,000).
If Hal sold his client's listing 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%? $10,000 $11,500 $13,500 $16,000
$11,500 Sales price x commission rate = commission. $230,000 x 5% = $11,500.
A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. What is the total amount of interest the borrower will pay over the course of the loan?
$117,687.80 First, multiply the monthly payment ($2,042.71) by the total number of payments (180 = 12 payments/year for 15 years). So, 12 multiply 15 to get 180. 180 x $2042.71 = $367,687.80. Total pay back. Then subtract the original loan value: $367,687.80 ‒ $250,000 = $117,687.80.
A property has a market rental income potential of $20,000 per month. The vacancy and loss rate is 5%. Operating expenses are expected to be 45% of the property's total income potential. The owner's monthly mortgage payment is $5,000. What is the annual net operating income that would be reported on the operating budget? $120,000 $132,000 $228,000 $240,000
$120,000 The owner's mortgage payment isn't a factor in net operating income on the operating budget. Instead, focus on property income, expenses, and the vacancy and loss rate. Net operating income = Operating income - Vacancy and loss rate - Operating expenses. Operating income is $240,000 = ($20,000 x 12). Vacancy and loss rate is $12,000 = ($240,000 x .05). Operating expenses are $108,000 = ($240,000 x .45). Net operating income is $120,000 = ($240,000 - $12,000 - $108,000).
Sherman owes $225,000 on his home. It's currently worth $240,000. How much equity does Sherman have in his home? $15,000 $225,000 $240,000 $465,000
$15,000 240,000-225,000= 15,000.
Edric owes $115,000 on his lakefront home, which he's selling for $350,000. He's spent $73,000 in major renovations, and he wants to take that expense into consideration when he calculates how much he'll actually pocket at closing. What number does he come up with? $162,000 $235,000 $277,000 $308,000
$162,000 Once Edric's loan is paid off, he'll be left with $235,000 ($350,000 - $115,000). When he subtracts the cost of the renovations, he's left with $162,000 ($235,000 - $73,000).
Sage owned an income property with an adjusted cost basis of $1,500,000 and a fair market value of $2,000,000. He exchanged the property for another income property, which had a fair market value of 2,1000,000. Both parties had no loans against them and no adjustment was made for the difference in value. For federal income tax purposes, new property will have a basis for Sage of?
CAUTION! This is actually a very trick question because there is actually no math involved, numbers are tricking you that it's a math problem. This question is a tax-deferred exchange transaction and any tax-deferred exchange transaction the cost basis of the property transferred becomes the cost basis o the property. Which is acquired or received, even though Sages new property had a higher fair market value, no adjustment was made for the difference in value, so the base is the new property remain the same as the base of the old property. Just remember the cost base the new becomes the cost base is the old!
Sue is selling her house for $265,000. Closing is set for June 19, and Sue owns the day of closing. She has a loan balance of $78,000 at a 4.2% rate, and she's current on her payments. She prepaid the property taxes ($1,350) and insurance ($925). Using a calendar-year proration method for calculations, how will these amounts appear on Sue's closing statement?
Credit of $706.70 Tax daily rate: ($1,350 ÷ 365 = $3.70) 191days(July~December each month calculated 30days each - June 19-1=18) (days from closing until year end) = a $706.70 seller credit. Any prepaid seller's homeowners insurance will be refunded to the seller outside closing, so this doesn't appear on the closing statements.
A rectangular lot is 450 feet long and 250 feet wide. How do you calculate the square footage?
Multiply the length by the width.
Your client, a builder, is considering buying three adjacent lots. They each have the same depth, 275 feet. Lot A is 35,750 s.f., Lot B 53,900 s.f., and Lot C is 33,000 s.f. If your client buys all three lots, what total street frontage will he have?
The total street frontage is 446 feet. Add up the square footages of the three lots and divide by the lot depth (275) to get the total street frontage. (35,750 + 53,900 + 33,000) ÷ 275 = 446
The Smith home has an assessed value of $64,120, and their tax rate is 3.2%. What is their annual tax bill?
$2,051.84 Assessed value x tax rate = Annual tax bill. $64,120 x 0.0032=$2,051.84
Seller Adelaide and buyer Colin close on a transaction for two rental condos on March 15. They live in a state where the seller is considered the owner of the property on the day of closing. The combined rental income per month is $4,000. How much rental income can Colin expect to earn in March? $2,011.56 $2,064.48 $2,193.51 $2,300.25
$2,064.48 In many states, the seller is considered the property owner on closing date. Divide the monthly income by the days in March ($4,000 ÷ 31 = $129.03) for daily rent, then multiply that by the 16 days Colin will own the property for the total of $2064.48.
The Slathertons are looking at buying a $300,000 property with a 20-year loan at a 6% interest rate. How much would their monthly principal and interest amount be? Plug in the numbers using the amortization chart in your resources to see what the payment per month would be. (Use the amortization chart your lesson instructed you to print out.) $2,149.30 $2,421.65 $2,981.92 $3,1596.30
$2,149.30 The estimated payment is $2,149.30. Remember to divide $300,000 by 1,000, then multiply the factor (7.16431) by 300.
A buyer has a 30-year, $400,000 loan with a 7% interest rate. How much of the first month's mortgage payment is interest? $2,333.33 $28,000 $3,100 $933.33
$2,333.33 $400,000 x 0.07 = $28,000; then $28,000 ÷ 12 = $2,333.33
Gabi owns one parcel measuring one square mile and another parcel measuring one mile x half a mile. She combined the parcels and sold them for $2.5 million. What price per acre did she receive for the land? $1,953.13 $2,604.17 $3,125.00 $3,906.25
$2,604.17 One square mile is 640 acres. The area of the second parcel is 5,280' x 2,640' = 13,939,200 sq. ft. Divide that by 43,560 (sq. ft. in an acre) to get 320 acres. 640 + 320 = 960 acres. $2.5 million divided by 960 acres = $2,604.17 per acre.
Your buyer client Heather just signed a purchase agreement for a $520,000 home. The LTVR is 60%. How much is Heather putting down on the purchase? $208,000 $220,000 $300,000 $312,000
$208,000 A 60% LTVR means that Heather is financing 60% of her purchase and putting down 40%. $520,000 x 0.40 (40%) = $208,000.
A buyer with a $242,000 loan has a monthly principal and interest payment of $1,317.66. If $1,033.54 is interest, what's the new principal balance after the first payment is applied? Topic: Real estate calculations Subtopic: Calculations for transactions $240,682.34 $241,672.12 $241,715.88 $241,976.21
$241,715.88 If $1,033.54 of the $1,317.66 is interest, that leaves $284.12 for principal. Subtract $284.12 from $242,000 for a new principal balance of $241,715.88.
A buyer with a $250,000 loan has a monthly principal and interest payment of $2,042.71. If $1,145.83 is interest, what is the new principal balance after the first payment is applied? Topic: Real estate calculations Subtopic: Calculations for transactions $247,957.29 $248,854.17 $249,103.12 $250,000.10
$249,103.12 If $1,145.83 of the total payment is interest, that leaves $896.88 to be applied to principal: $250,000 - $896.88 = $249,103.12.
If an appraiser has found the value of a property to be $250,000 using a cap rate of 10%, what was the property's net operating income? $10,000 $2,500 $25,000 $2.5 million
$25,000 The formula for determining value using the income approach is value = income/rate, which means that income = rate x value. When you multiply a percentage by a number, you're finding the percentage of that number, so 10% of $250,000 is $25,000.
Joaquin sold his house for $327,600. He bought it several years ago for $139,900 with a $100,000 loan. The loan balance when he sold it was $73,400. What was Joaquin's equity? $114,300 $187,700 $214,300 $254,200
$254,200 Joaquin's equity was $254,200. Subtract the loan balance from the market value of the home to find the equity ($327,600 - $73,400).
Katherine purchased a property for $255,000, borrowing $242,250. The assessed value of the property is $249,700. The property appraisal came in at $257,000. Which of these amounts is used in calculating the transfer tax? $242,500 $249,700 $255,000 $257,000
$255,000 Transfer tax is calculated based on the purchase/sales price ($255,000).
Henry submits an offer on a condo and includes an earnest money check for 10% of his offer, which the seller accepts. Later on at closing, he brings a cashier's check for $34,450 (comprising the remaining half of his 20% down payment and $7,950 in closing costs). What's the condo's purchase price in whole dollars? $132,500 $265,000 $344,500 $88,333
$265,000 Subtract the closing costs from cashier's check amount ($34,450 - $7,950=$26,500) for half of down payment. The total DP was double this ($53,000). Next, divide $53,000 by 20% (to find purchase price ($53,000 ÷ .2=$265,000). Purchase price is $265,000.
A seller wants to net $10,000 after the broker's commission of 6% and a loan balance of $250,000 are paid. For how much does the property need to sell? $250,000 $265,957 $276,596 $650,000
$276,596 To calculate this, start with 100% minus a 6% commission, which is 94% or .94. Take $250,000 plus $10,000 and divide this amount by .94.
The daily property tax rate is $1.23 and closing is August 31. Assuming the buyer owns the property on closing day, and the seller hasn't made any payments, what will the seller owe at closing using the calendar year proration method? Round to the nearest whole dollar. $151 $242 $298 $449
$298 The seller owns the property for 242 days of the year, and 242 days × $1.23 = $297.66, or $298 if rounded to the nearest whole dollar.
A buyer is purchasing a property for $400,000. His loan-to-value ratio is 80%. The lender also charges a one-point loan origination fee. How much is the loan origination fee? $3,200 $3,600 $4,000 $800
$3,200 An 80% LTV ratio means the buyer is financing 80% of the purchase price. Eighty percent of the purchase price is $320,000, and one point, or 1%, of this amount is $3,200.
Jeffrey has accepted an offer of $310,000 for his house. The buyer is making a $50,000 down payment, and the buyer's appraisal came in at $300,000. On what number will the buyer's lender base the loan-to-value ratio?
$300,000 Lenders use the lesser of the sales price or appraised value.
A seller wants to break even after the broker's commission of 5% and loan balance of $300,000 are paid. At what price must the house sell? $150,000 $300,000 $315,789 $450,000
$315,789 In order to calculate this, start with 100% minus a 5% commission, which is 95% or .95. Take $300,000 and divide this amount by .95.
Giant Industries has a $674,232 gross operating income, operating expenses of $329,129, and other expenses totaling $38,719. What is the net operating income? $306,384 $345,103 $383,822 $635,513
$345,103 gross income- operating income (not other expenses
A buyer with a $350,000 loan has a monthly principal and interest payment of $2,102.36. If $1,801.23 is interest, what's the new principal balance after the first payment is applied? $340,987.46 $347,897.64 $348,198.77 $349,698.87
$349,698.87 If $1,801.23 of the $2,102.36 is interest, that leaves $301.13 for principal. Subtract $301.13 from $350,000 for a new principal balance of $349,698.87.
A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. What's the total amount the borrower will pay back over the life of the loan?
$367,687.80 To find the total amount paid back, multiply the monthly payment ($2,042.71) by the total number of payments (180 = 12 payments/year x 15 years). The total paid back is $367,687.80.
Hamish makes an offer on a loft in the city for $424,900 with a 10% earnest money deposit. The seller agrees, so Hamish secures an 80% loan. He needs to set aside funds for the mortgage tax as part of his closing costs. The rate in his area is $0.115 per $100. Calculate the mortgage tax Hamish will pay. Topic: Real estate calculations Subtopic: Calculations for transactions $390.91 $439.77 $488.64 $97.73
$390.91 Calculate the loan amount first: $424,900 x .80 = $339,920. Then calculate the tax: $339,920 x 0.00115 = $390.91.
Ezra's listing sold for $100,000. His commission rate was 4%, and the property appraised at $95,000. What's Ezra's commission before splits or sharing with the cooperating agent? $1,900 $2,000 $3,800 $4,000
$4,000 Commissions are based on sales price, not appraised value or list price, and 4% of $100,000 is $4,000.
How much would a lot that is 400 feet wide by 500 feet long cost at $900 per acre? $2,200 $3,060 $4,132 $4,500
$4,132 Find the area of the lot by multiplying 400 by 500 (this equals 200,000 sq feet). Convert the area to acres by dividing 200,000 by 43,560 (the number of sq feet in an acre). Multiply this number by $900 per acre.
Dale and Barbara, your buyer clients, aren't thrilled about the current interest rates on home loans. They opt to pay two discount points to their lender to bring down their monthly payment. They're financing $235,000 on their new $400,000 home, so how much can they expect to pay for points at closing? Topic: Real estate calculations Subtopic: Basic math concepts $2,350 $3,300 $4,700 $8,000
$4,700 A point is 1% of the loan amount. Dale and Barbara's loan is $235,000, and they're paying two points (2%) at closing, which comes to $4,700 ($235,000 × 0.02).
The Walton family got a great deal on their new home. They bought it for $101,295, and it appraised at $187,000. Using an assessment ratio of 25%, what is the assessed value of their new home?
$46,750 Assessed value is based on the appraised value of the home. So, in this case, $187,000 × 0.25 = $46,750.
A townhouse is purchased for $475,000. If the transfer tax is $2.00 on the first $1,000. and $0.10 for each additional $100., how much are the transfer taxes? $474 $4,742 $476 $49.40
$476 The first $1,000 is $2.00. The transfer tax for the remaining $474,000 will multiplied by .001 ($0.10 for each additional $100). So the total transfer tax will be $476 ([$474,000 x .001] + $2).
Lenore makes a 95% offer on a townhouse that's listed at $285,000 and includes an earnest money deposit for 10% of her offer, which the seller accepts. She brings to closing a cashier's check for $35,025 comprising the balance of her 20% down payment and closing costs. What's the amount of her total down payment? $35,025 $54,150 $57,000 $62,100
$54,150 Lenore's offer is $270,750 which is 95% of the list price ($285,000 x .95 = $270,750 ). Her total down payment is 20% of her accepted offer of $270,750, which is $54,150 (or $270,750 x .2).
The purchase price of the home Leroy is buying is $300,000. He's putting $100,000 down and is paying three discount points. How much will this cost? $2,000 $4,000 $6,000 $9,000
$6,000 Each point is 1% of the loan value. The amount of Leroy's loan is $200,000, so each point is $2,000 ($200,000 × 1%, or .01). He's paying three points, for a total of $6,000 ($2,000 × 3).
A buyer is purchasing a property for $500,000. He has a down payment of $50,000 and is financing the rest. What's the amount of the loan origination fee if the lender charges one-and-a-half points?
$6,750. The amount paid for points = loan amount × number of points. The buyer is financing $450,000 ($500,000-$50,000). Multiply the loan amount of $450,000 by 1.5% (or 0.015) to get $6,750.
Roland's farm land is assessed at 1.5 million dollars and the improvements for $500,000. At a tax rate of 4 mills, how much are Rolan's monthly taxes? $6,667.00 $667.00 $8,000.00 $80,000.00
$667.00 Assessed value + improvements = total value of $2,000,000. Multiply 2 million by 4 (mills/millage rate) then divide by 1000 = $8,000 in annual taxes. Divide $8,000 by 12 to give you the monthly tax amount ($8,000 ÷ 12 = $667.00).
You're working with a buyer who's purchasing a home that appraised at $80,000. The buyer is obtaining a 90% loan, and the lender will charge a one-point origination fee at closing. How much will the loan origination fee be? $712 $720 $728 $800
$720 $80,000 x .9 = $72,000 (loan amount), and 1% of $72,000 = $720
Joyce just closed on a condo for $366,900 and put down 20% to obtain an 80% loan and avoid having to pay for private mortgage insurance. How much equity does she have in her condo? $146,760 $220,140 $293,520 $73,380
$73,380 condo price x put down loan. $366,900 x 0.20 (20%) = $73,380.
A seller you're working with still owes $50,000 on his mortgage but wants to net $20,000 after the mortgage and 7% commission are paid. What is the minimum for which the house must sell? $75,269 $79,645 $89,900 $90,645
$75,269 Net to seller = sale price x (100% - commission rate) ‒ amount to pay off mortgage: $50,000 + $20,000 = $70,000 / 0.93 = $75,269
A parcel of land measures one half mile by 3,000 feet. If price per acre is $4,200, what's the list price for this parcel? $1,527,273 $752,066 $756,000 $763,560
$763,560 Area = length x width. One mile = 5,280 feet. The area of this parcel is 7,920,000 s.f. ([5,280 ÷ 2] x 3,000). One acre = 43,560 s.f. The parcel is 181.8 acres (7,920,000 ÷ 43,560). So, the list price is $763,560 ($4,200 x 181.8).
Buyer Maria and seller Doug are closing on June 1. Maria's mortgage loan is $927.86, and $871.86 will go to interest in the first month. Maria will have to pre-pay interest for June using the 360-day proration method. If Doug owns the closing day, what Maria's prepaid interest cost be at closing?
$842.74 Calculate the daily interest rate for 30 days ($871.86 ÷ 30 = $29.06). Because Doug owns the closing day, Maria will pre-pay interest for 29 days, June 2 - 30, so $842.74 ($29.06 x 29).
A 4-bedroom, 4-bath 4,875 square feet house was listed at $445,000. Andreas, the seller, accepted an offer that was 95% of the listing price. What price per square foot did he get for the house? $45.64 $82.15 $86.72 $93.00
$86.72 Area = 4,875 square feet Price = $445,000 First, we have to divide the price of the house by the area, to obtain the price per square foot: Mathematically speaking: $445,000 / 4,875 square feet = $91.2 per square foot (original price) Now we have to multiply it by the offer in decimal form (95/100 =0.95) $91.2 x 0.95 = 86.72 per square foot He gets $86.72 per square foot.
Gary has an 80% LTVR on his new $318,000 townhome with an annual interest rate of 4.125%. What's his interest payment the first month?
$874.50 The loan amount is $254,400 ($318,000 x .8). The first month's interest is $874.50 ([$254,400 x .04125] ÷ 12).
A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. If $1,145.83 is interest, how much is applied to principal? $1,145.83 $2,042.71 $896.88 $916.67
$896.88 Monthly payment - interest paid = principal amount paid. If $1,145.83 of the total payment is interest, that leaves $896.88 to be applied to the principal ($2,042.71 - $1,145.83 = $896.88).
Alistair bought a townhouse for $285,900. He got a 90% loan and the lender charged him 3-1/2 discount points. How much did Alistair pay in discount points? $1,000.65 $10,006.50 $9,005.85 $9,585.00
$9,005.85 The sales price is $285,900, and 90% of that (aka our loan amount) is $257,310. The discount amount is 3-1/2 points, (.035) multiplied by $257,310 = $9,005.85.
If you have an 800-square-foot rectangular building and it sells for $75,000, that equates to ______ per square foot. $187.50 $46.88 $60.50 $93.75
$93.75 To calculate price per square foot, divide price by square feet.
Phyllis bought a beach townhouse for $475,000 and put down $50,000 in earnest money. At closing, she paid $150,000, the balance of her intended down payment. The mortgage tax in the area is $.35 per $100 (or portion thereof). Calculate what Phyllis will pay for the mortgage tax.
$962.50 Explanation: Given the following : Cost of beach townhouse = $475,000 Amount payed in earnest = $50,000 At closing = $150,000 Tax fee = $0.35 per $100 Total down-payment = $(50,000 + 150,000) = $200,000 Amount being taxed = $(475,000 - 200,000) Amount being taxed = $275,000 Total tax paid : ($275,000 / $100) × $0.35 2750 * $0.35 = $962.50 = $962.50
A rental property owner purchased a property for $400,000 and pays $36,000 in ownership expenses, plus $30,000 in operating expenses. The owner would like to achieve an ROI of 8%. What's the minimum annual rent that would accomplish this? Topic: Leasing and property management Subtopic: Setting rents and lease rates (Broker only) $38,880 $71,280 $98,000 You can't determine this from the information provided.
$98,000 Minimum rent = Operating expenses + Owner expenses + ROI Margin. ROI margin is the owner's initial investment x ROI. In this example ($400,000 x .08 =$32,000). 32,000+36,000+30,000=$98,000. The minimum rent to achieve the owner's goals is $98,000.
How would you calculate the transfer tax if it's $0.35 per $1,000 of the sales price ($400,000)? (400,000 ÷ 1,000) x 35 (400,000 ÷ 1,000) x .35 400,000 ÷ 35 x 1,000 400,000 x .35 x 1,000
(400,000 ÷ 1,000) x .35
Bonnie is calculating the square footage of a listing. The upper level of the home is 450 square feet. The main floor is 1,200 square feet, including an unfinished laundry area that's 225 square feet. The 1,200-square-foot basement is finished. Bonnie's MLS system disregards below-grade square footage. What square footage will Bonnie mention in her MLS listing and marketing materials?
1,425. Only finished above-ground space should be counted in Bonnie's MLS listing. That means the square footage of the upper floor plus the main floor (minus the unfinished laundry area). Bonnie should report 1,425 square feet (450 + 1,200 - 225).
The Smithwicks, your buyer clients, obtained a 90% loan on their new $400,000 home. At closing, they paid $6,150 for points at closing. How many points did they pay? .017 .02 1.7 1.71
1.71 A point is 1% of the loan amount. The Smithwicks' loan is $360,000 ($400,000 x .90), and they paid $6,150 for points at closing. Divide the cost in points by the loan amount to get the number of points they paid: ($6,150 ÷ 360,000 = 0.0170833, or 1.71).
Alan and Kate want to build a 5,000-square-foot ranch-style home on two acres of land they just bought. Once the house is built, how many acres of undeveloped land will remain? 0.88 acres 0.89 acres 1.86 acres 1.89 acres
1.89 acres One acre is equal to 43,560 square feet, so their parcel is 87,120 square feet (43,560 x 2). Subtract the house's 5,000 square feet from that, and you get 82,120 square feet. Divide that by 43,560, and you end up with approximately 1.89 acres.
A small duplex sold for $550,000. Each unit can gross $2,500 in monthly rent for the owner, and there are no additional income sources from the property. What's the GRM? 100 110 200 220
110 To find the GRM, divide the sales price by the gross monthly rent, remembering that there are two units, so a total monthly rent of $5,000. So, $550,000 ÷ $5,000 = 110.
A 20-unit apartment building sells for $5 million. The property can bring in $400,000 in annual gross income. What is the gross income multiplier (GIM)? Topic: Valuation and market analysis Subtopic: Estimating value 0.125 125 1.25 12.5
12.5 Calculate GIM by dividing the $5 million sales price by the $400,000 gross annual income: $5 million ÷ $400,000 = 12.5.
Sebastien's four-story home includes a 400-square-foot unfinished bonus room on the top floor, an upper level with 850 square feet, a main level with 1,450 square feet (which includes a garage that's 500 square feet), and a finished basement that's 900 square feet. The MLS system in Sebastien's area includes below-grade square footage. What square footage will be reported on his MLS listing?
2,700 Sebastien should exclude the unfinished bonus room and the garage and add the remaining area (850 + (1,450 - 500) + 900).
If a property's income value is $200,000 and it's earning a net operating income of $40,000, what is the cap rate?
20% To calculate cap rate, divide the income by the property value. The formula for this is rate = income / value. $40,000 / $200,000= .20 (20%)
A buyer anticipates a house payment of $1,000 per month, with monthly homeowner association fees of $150. The buyer also has a car payment of $400 per month. If the buyer earns a monthly gross income of $5,000, what's the housing ratio?
23%. The housing ratio is 23%: ($1,000 + $150) / $5,000 = .23 x 100 = 23%. Add monthly payment with association fees, then divide that number by monthly gross income to get the ratio.
A buyer anticipates a house payment of $1,000 per month, with monthly homeowner association fees of $150. The buyer also has a car payment of $400 per month. If the buyer earns a monthly gross income of $5,000, what is the total debt ratio?
31% The buyer's total debt ratio is 31%. Debt to income ratio equals the total of monthly debt obligations ÷ monthly gross income x 100 (($1,000 + $150 + $400) / $5,000 = .31 x 100 = 31%).
How many acres are in a parcel described as, "The NE 1/4 SW 1/4 Section 3, Township 4S, Range 2W of the 6th PM"?
40 This legal description defines a quarter-quarter section, which is 40 acres. Alternatively, multiply the two fractions' denominators (4 × 4) and divide into 640 (640 ÷ 16 = 40).
The Gatlins' lender tells them they can afford a monthly payment of $1,830 on their new home loan. What interest rate are the Gatlins getting if this is an interest-only loan with a principal balance of $349,000? 0.524% 5.24% 6.29% 6.39%
6.29% Annual payment ÷ loan balance = interest rate. $1,830 x 12 to get the annual payment of $21,960. Then divide the annual payment by the loan amount: $21, 960 ÷ $349,000 = .0629, or 6.29%.
Jared has a 70/30 split with his brokerage firm, and his firm has a 50/50 split with cooperating brokerages. Last month, he was paid $12,239.50 in commissions from his home sales, which totaled $538,000. What is Jared's brokerage's commission rate? 2.3% 3.8% 6.5% 7.6%
6.5% Jared was paid $12,239.50, which is 70% of the amount paid to his broker as commission. That makes his firm's commission $12,239.50 ÷ .70 = $17,485. Multiply that by two for the total commission the firm grossed, since it's shared 50/50 with a cooperating brokerage (the brokerage that brings the buyer to the sale), giving you $34,970. Then divide by the total sales amount for the brokerage's commission rate: $34,970 ÷ $538,000 = 0.065, or 6.5%.
Glenn is purchasing a home for $400,000. The property appraised at $415,000 and Glenn is financing $300,000. What's the loan-to-value ratio?
75% Lenders use the lesser of the sales price or appraised value to calculate the loan-to-value ratio (LTV). This results in LTV of 75% ($300,000/$400,000).
What's the rate of capitalization of a property generating net property income of $25,000 per year that's valued at $312,500? 10% 12% 6% 8%
8% The capitalization formula is value = income ÷ rate of capitalization. To determine rate of capitalization, divide Income by value ($25,000 ÷ $312,500 = 8%).
How many acres are in a parcel described as, "The S 1/2 NW 1/4 Section 3, Township 4N, Range 2W of the 6th PM"? 160 20 40 80
80 This legal description defines half of a quarter section. A quarter section is 160 acres. Half of that is 80 acres. Alternatively, multiply the two fractions' denominators (2 × 4) and divide into 640 (640 ÷ 8 = 80).
Margie needs to know the square footage for the first floor of the condo her client is interested in buying. The kitchen is 10 feet by 15 feet, the living/dining combo is 20 feet by 25 feet, and the office and bedroom are each 10 feet by 10 feet. What's the total square footage? 2,200 square feet 3,000 square feet 750 square feet 850 square feet
850 square feet Find the area of each room to get its square footage, then add the square footage of all four rooms. Kitchen = 150 sq. ft.; living/dining = 500 sq. ft.; office = 100 sq. ft.; and bedroom = 100 sq. ft. = 850 square feet.
A property's rental income for the month was $16,000 and expenses were 40% of that income. The property's owner has a $5,000 monthly mortgage payment. What would the cash flow report show for the month? Topic: Leasing and property management Subtopic: Setting rents and lease rates (Broker only) A monthly cash flow of $4,600. A monthly cash flow of $5,000. A monthly cash flow of $9,600. You can't determine this from the information provided.
A monthly cash flow of $4,600. The cash flow report shows actual income received and expenses paid. It also accounts for owner expenses, such as the mortgage payment. Our cash flow is $4,600 ($16,000 - $6,400 - $5,000). If the operating expenses and mortgage payment exceeded income, we would've had a negative cash flow (meaning we're spending more than what the property is bringing in).
Doughboy signs a contract to purchase a cattle farm. His mortgage broker charges 2 points. How much will Doughboy pay if the loan amount if $600,000?
Answer: $12,000. A points means that one percent 1% of the amount of the mortgage loan. $600,000 x 2% (.02) = $12,000. (Since it's 2 points, it refers as 2%. Multiply loan amount by 2% to find out how much he needs to pay. Answer is $12,000.)
Allison, an agent, sells a home for $750,000. The commission rate is 5% with 3% going to Allison's brokerage and 2% to Dawnelle, the agent who brought the buyer. Allison keeps 60% of her brokerage's fee. How much will Allison earn from the sale?
Answer: $13,500. 1. $750,000 x (.05)5% = $37,500 (total commission). (To find a total commission, multiply commission rate by the number of selling home.) 2. $750,000 x (.03)3% = $22,500. (To figure out Allison's share, multiply selling home number by 3% commission rate.) 3. $22,500 x 60%= $13,500. (Since Allison is keeping 60%, multiply amount of share by 60%, therefore she earns $13,500 from the sale.)
A house sold for $950,000 with a sales commission rate of 7.5%. The listing broker received 50% of the total commission and the selling broker received 50%. How much would the selling salesperson receive if the selling broker kept 60% and gave 40% to the salesperson?
Answer: $14,250. Sales price x commission rate = Total commission. 1. $950,000 x 7.5%(.075) = $71,250. (First, to find out the total commission, multiply sold price by number of commission rate.) 2. $71,250 x 50%(.5) = $35,625. (To find listing/selling brokers commission, multiply the number of total commission by 50% (.5) which that's how much the broker received.) 3.$35,625 x 40% (.4) = $14,250. (40% was given to the sales person, so multiply the amount that brokers has received by 40% (.4). A complete answer is $14,250.)
A small studio sold for $160,350. The amount was 9% more than the original cost of the studio. The original cost of the studio was?
Answer: $147.110 When the question is talking about a percentage that is greater than or less then, we take that percentage and add it to a 100%. 1. 9% + 100% = 109% (1.09) (Add 100% to the given number of percentage, then change to decimal number.) 2.%160,350 / 1.09 = $147.110. (Question is asking for it's original cost of the studio. So, divide sold cost by 1.09. $147.110 is the original cost.)
Similar properties to Ray's property that are in the area have an average gross rent multiplier of 13. Ray's property brings in $1,000 a month. What is the estimated value of his property?
Answer: $156,000. Price/Rent= GRM (Gross Rent Multiplier) Annual GRM typically between (5 to 20) Monthly GRM typically between (80 to 140) Since the given GRM is 13 in the question, it represents Annual GRM. 1. Price/Rent=GRM x / $1,000 = 13 (Plug in the given numbers to formula.) 2. $1,000 x 12 = $12,000. (Multiply rent by 12 which represents for a year.) 3. x / $12,000 = 13 (Rearrange division to multiply to find x.) 4. 13 x $12,000 = $156,000 (Total answer is as shown.)
Mr. Fixit wanted to remodel his business, so he got a loan of $4,300, at a rate of 6% interest. He paid this loan off in 8months. Knowing this, what was the total amount of interest Mr. Fixit paid?
Answer: $172. Loan x Interest rate = Annual interest. 1. $4,300 x .06(6%)= $258. (To figure this problem out, first take the loan amount multiplied by the interest rate.) 2. $258 / 12 = $21.50. (Since, $258 is an annual number, they are asking about 8 months, we need to convert it to a monthly number then multiply by 8.) 3. 8(months) x $21.50 = $172. ($172 is how much he'll pay.)
A homeowner sold his house for $230,000. This selling price represented a 15% profit over what he had originally paid for the house. What was the original price of the home?
Answer: $200,000. When the question is talking about a percentage that is greater than or less then, we take that percentage and add it to a 100%. 1. 15% + 100% = 115% (Add a number that is representing a profit with 100%.) If looking for a smaller number than original, divide the number by 115%. If looking for a bigger number than original, multiply the number by 115%. 2. $230,000 / 115%(1.15) = $200,000. (Then, divide the 115% with a number of house selling price, we know that number of house he sold is greater than original one. So, since original number is smaller, we divide and get a final original price of the home.)
Carol negotiated for a $30,000 loan with $200 monthly payments and a 9% interest charge. What is her monthly interest payment?
Answer: $225. This question is tricky, $200 monthly payment you can ignore that number, because question is asking for monthly interest payment. So, $200 is not helpful. 1. $30,000 x .09(9%) = $2,700 (First, multiply the loan amount by number of interest charge to find out annual interest pay.) 2. $2,700 / 12 = $225. (Then divide the total number of annual interest by 12 for 12months in a year, and the answer will be $225.)
Syd is considering the purchase of an apartment building. The annual rental income is $750,000. If Syd wants a 25% return, what should he offer for the building based on the capitalization rate?
Answer: $3,000,000. The Capitalization Rate is the annual expected dollar return that an investor can expect to receive on a yearly basis and is the main method to compute te present value of an income producing property. $750,000 / 25% (.25) = $3,000,000. (To compute the present value of the property, simply divide the annual rental income number by expected return rate amount. $3,000,000 is how much he needs to offer for the building.)
A home just sold for $400,000. What will the seller net after 7% commission is deducted?
Answer: $372,000. Sales price x (100% - % commission)= Net to seller. 1. $400,000 x (100% - 7%) = N.T.S (Plug in the given numbers to the formula.) 2. 400,000 x 93%. = N.T.S 3. 400,000 x 0.93 =$372,000.
If Steve's mortgage loan balance is $150,000 and the interest rate is 5%, how much annual interest will Steve pay?
Answer: $7,500. Loan balance x Interest rate = Annual interest. $150,000 x .05 (5%) = $7,500. (To fine annual interest, just simply multiply loan balance by interest rate.)
Francine takes out a mortgage on a commercial office building that she purchases. The mortgage amount is $500,000. The interest rate is 6%. The bank tells her that she must open an escrow account and deposit 3 months worth of interest into the account at closing. How much is the deposit?
Answer: $7,500. Loan balance x Interest rate = Annual interest. 1.$500,000 x 6% (.06) = $30,000. (To find annual interest, multiply mortgage amount by interest rate.) 2. $30,000 / 12 = $2,500. (To find out monthly interest, divide annual interest by 12 since there is 12months in a year.) 3.$2,500 x 3 = $7,500. (Since question is asking about how much is deposit of 3months, multiply monthly interest by 3. $7,500 is the answer.)
If a borrower pays $1,650 interest per quarter on a straight note of $60,000, the interest rate would be?
Answer: 11.0% 1. $1,650 x 4 = $6,600 (Multiply paying interest amount by 4 which represents 4 quarters in a year.) 2.$6,600 / $60,000 = .11(11.0%) (To find out interest rate, divide $6,600 an annual amount by given number $60,000, then you'll get 11% as a answer.)
A property valued at $350,000 brings in $1,800 per month. What is the annual gross rent multiplier of this property?
Answer: 16 Price/Rent= GRM (Gross Rent Multiplier) Annual GRM typically between (5 to 20) Monthly GRM typically between (80 to 140) 1. $1,800 x 12 = $21,600 ( It's looking for annual, so multiply rent by 12 which represents for a year.) 2. Price/Rent=GRM $350,000 / $21,600 = 16 (Match numbers in place and the final answer is as shown.)
An individual borrowed $7,000 on a straight note at 9% interest. If the total interest paid on the note was $945, what was the term of the loan?
Answer: 18months. Loan x interest rate= annual interest 1. $7,000 x .09(9%) = $630. (To find out how much of interest is paid per year, multiply total borrowed amount with interest rate.) 2. $945 / $630 = 1.5 (years) (By dividing paid amount with a amount of interest rate, you'll get 1.5 which refers a 18 months. So, term of loan is 18months.)
A home requires a new fence around the entire square property. If the property is 30 feet by 80 feet, how many linear feet of fencing is required?
Answer: 220 linear feet. To compute linear feet, add the footage of all sides. 30 + 80 + 30 + 80= 220 linear feet.
Stephen sold his house and took back a note for $4,200 secured by a second deed of trust. The promptly sold the note for $2,730. This represents a discount of?
Answer: 35%. 1.$4,200 - $2,730 = $1,470. (First, to figure out how much is the discount amount, subtract first note number with second note number.) 2. $1,470 / $4,200 = .35 (35%) (Since the question is asking what percentage of amount is, so divide discount amount by the first note amount. 35% is the answer.)
Ursulo owns a greeting card shop with a value of $550,000. His mortgage is $110,000 and he owes $115,000 to his creditors. What is Ursulo's store's debt to equity ratio (rounded)?
Answer: 41%. 1. $110,000 + $115,000 = $225,000. (His mortgage) + (owed to creditors) = (Total debt). (To find a compute the debt to equity ratio, add all the remaining total debt amount.) 2. $225,000 / $550,000 = .409 (41%) (Divide number of total debt by the asset value of his shop. So, store's debt to equity ratio is 41%.)
If Susan's quarterly interest payments are $150 on a $12,000 loan, then what is her annual interest rate?
Answer: 5%. income %= ------------- investment To find a percentage, divide income by percentage. 1. $150 x 4 = $600. (First, we need to find how much Susan is paying annually. To find that, multiply her interest payment amount by 4 which there is 4 quarters in a year.) 2. $600 / $12,000 = .05(5%) ($600 is what Susan is paying for annually, to find an annual percentage rate, divide that amount with a loan amount to find the total annual interest rate. So, the answer is 5%.)
If an insurance policy with $250,000 in coverage costs $.75 per hundred dollars of coverage, what is the annual premium?
Answer:$1,875. 1.$.75 ÷ $100 = .0075 premium rate. (To find the rate, divide coverage cost by dollars of coverage.) 2. .0075 rate × $250,000 policy = $1,875 premium. (To find annual premium, multiply insurance policy number by the rate number.)
