Section 5: Real Estate Math

Property taxes on a home are $3,600 per year. What is the value of the property if the tax rate is $2 per $100 of value on an assessment of 45% of fair market value? a. $180,000 b. $300,000 c. $400,000 d. $500,000

c. $400,000

An investor bought a 20-unit apartment complex for $700,000. The units rent for an average of $1,250 per month. The annual operating expenses are $220,000. What is the investor's rate of return? a. 13.2% b. 12.7% c. 11.4% d. 10.3%

c. 11.4%

An apartment has gross annual income of $25,000. Operating expenses average $1,250 per month. The property is valued at $125,000. What is the rate of return? a. 6.5% b. 7% c. 8% d. 8.5%

c. 8%

A purchaser agrees to buy a house for $47,000, obtaining a 90% loan. The buyer makes an earnest money deposit of $2,500. If attorney fees are $225, how much will the buyer need to bring to closing? a. $2,425 b. $4,700 c. $44,500 d. $47,000

a. $2,425

Real estate taxes are assessed on the basis of the calendar year but are actually paid on June 30 of each year. The annual taxes are $2,340. If the property sells and closing is on March 15, what is the settlement sheet entry for the proration of the taxes? a. Credit to buyer: $487.50 b. Debit to buyer: $487.50 c. Credit to seller: $481.00 d. Credit to buyer: $481.00

d. Credit to buyer: $481.00

A property sells for $150,000. The buyer will make a 20% down payment and pay the lender three points. How much will the buyer pay for points? a. $900 b. $3,600 c. $4,500 d. None of the above

b. $3,600

Tom built a 28' by 140' rambler, with garage. The average cost of construction was $11.25 per square foot. What is the total cost of the house? a. 441,000 b. 63,250 c. 44,100 d. 4,410

c. 44,100

A borrower took out a $250,000 loan with a monthly payment of $1,324.05 (P&I). The principal portion of the first monthly payment was $300.38. What was the interest rate of the loan? a. 4.17% b. 4.75% c. 5.0% d. 14.4%

c. 5.0%

An apartment house owner receives $4,800 per year net income from his investment of $60,000. What is his annual rate of return on this investment? a. 8.0% b. 7.2% c. 6.0% d. 5.0%

a. 8.0%

A lot measures 105' square. Zoning requires a front setback of 30', rear setback of 25', and side setbacks of 15'. What is the maximum square footage, of a single story structure, that could be built on this property? Draw a picture. a. 3,750 b. 4,500 c. 5,600 d. 11,025

a. 3,750

What is the annual interest rate on a loan of $25,500 if the interest payments are $956.25 semiannually on the full loan amount? a. 7.5% b. 7% c. 6.5% d. 6%

a. 7.5%

A seller wants to net $350,000 from the sale of her home. The listing broker will receive a 5% commission. The closing costs are estimated at $7,500. At what price must this home sell to achieve this goal? a. $380,319 b. $376,316 c. $375,921 d. $379,840

b. $376,316

Which of the following would result in the highest tax for a property assessed at $88,000? a. $3.05 per $100 b. 31.5 mills c. 0.0305 per $1 d. $31.48 per $1,000

b. 31.5 mills

A 50-unit apartment complex rents for an average of $1,800 per unit per month. The vacancy factor is 6%. Operating expenses run 55% of effective gross income. What would be the value of this apartment complex when using an 11% capitalization rate? a. $4,153,000 b. $3,829,000 c. $3,557,000 d. $3,245,000

a. $4,153,000

Annual taxes on a home are $1,800. The home is sold with a closing date of August 21st. Property taxes are based on a calendar year but are paid in one installment on July 1st. Assuming a 30-day month, 360-day year, and the buyer paying for settlement date, what would be the proration at settlement? a. Buyer pays the seller $650 b. Seller pays the buyer $650 c. Buyer pays the seller $250 d. Seller pays the buyer $250

a. Buyer pays the seller $650

A property sells for $80,000 and is assessed at 70% of market value. The county tax rate is $4 per $100. What is the annual property tax? a. $3,200 b. $2,240 c. $320 d. $224

b. $2,240

An investor purchased a home for $350,000 and paid all cash. After expenses, the investor netted $1,950 per month by renting out the house. What rate of return did the investor earn on this investment? a. 5.6% b. 6.7% c. 7.5% d. 8.1%

b. 6.7%

Fred and Wilma are buying a house for $185,000. They have put up a deposit of $10,000 and will be obtaining a loan for 80% of the purchase price. Their closing costs will be $3,500. How much cash will they need to bring to closing? a. $30,500 b. $23,500 c. $40,500 d. None of the above

a. $30,500

A home is purchased for $350,000. The home will be assessed at 80% of this price. The tax rate will be 15 mills. If the lender requires the property taxes and insurance to be paid into an escrow account, what will be the monthly payment to the escrow account for property taxes? a. $350.00 b. $420.00 c. $437.50 d. $467.25

a. $350.00

A salesperson sells property, listed by another broker, for $84,500. If the listing broker is to receive 50% of the 6% commission, how much will the salesperson receive if he earns 40% of his broker's share? a. $1,014 b. $1,521 c. $2,535 d. $5,070

a. $1,014

A house that is valued at $210,000 is assessed at 75% of market value. The tax rate is $8.50 per $1,000 of value. What is the annual tax liability on this home? a. $1,338.75 b. $1,785.00 c. $2,489.50 d. $3,159.75

a. $1,338.75

A rental home recently sold for $342,000. It rents for $1,800 per month. A nearby home rents for $1,500 per month. What would you expect this nearby home to be worth? a. $285,000 b. $275,000 c. $300,000 d. $185,000

a. $285,000

A parcel of land that measures 750 feet by 900 feet would contain how many acres? a. 15.5 acres b. 23.5 acres c. 14 acres d. 27 acres

a. 15.5 acres

Fred and Ethyl are building a new house which measures 65' x 35' and has a construction cost of $115 per square foot. The garage will measure 20' x 24' and has a construction cost of $50 per square foot. What will be the total cost of the project? a. $235,195 b. $261,625 c. $285,625 d. $301,495

c. $285,625

The real estate taxes for the calendar year are $1,290 and have been paid. The property sells and closing takes place on June 10. When the taxes are prorated, which of the following is the correct settlement sheet entry? a. $573.34 credit to the seller b. $573.34 credit to the buyer c. $719.58 credit to the buyer d. $719.58 credit to the seller

d. $719.58 credit to the seller

A lot measures 100 feet wide at the street and 150 feet deep from the street to the back property line. Local zoning standards call for a 30' front setback, 15' side setbacks, and a 20' back setback. The footprint of any house built on this lot could occupy a maximum of how many square feet? a. 15,000 b. 10,200 c. 8,400 d. 7,000

d. 7,000

An office building producing a gross annual income of $45,000 is purchased for $225,000. If the only expense is an 11.5% interest payment on a $200,000 term loan, what is the owner's rate of return on equity? a. 9.7% b. 20.0% c. 22.5% d. 88.0%

d. 88.0%

A borrower takes out $175,000 30-year, fixed-rate loan at 4.5% interest. The monthly payment is $886.70. What would be the total interest paid if the loan is held until maturity? a. $319,212 b. $288,155 c. $161,322 d. $144,212

d. $144,212

A seller wishes to net $30,000 on the sale of his house after paying the balance of $6,000 on his loan, expenses of $472, and a broker commission of 6%. What is the price of the house? a. $30,478 b. $32,423 c. $38,660 d. $38,800

d. $38,800

An investor is considering the purchase of a duplex. He plans to pay all cash. If he believes he can net $1,500 per unit per month after expenses, he can pay up to what amount for the duplex if he wants to receive an 8% rate of return on his investment? a. $225,000 b. $375,000 c. $400,000 d. $450,000

d. $450,000

If the seller of a house agrees to pay the broker a 6% commission on the first $10,000 and 3.5% commission for all money received over that amount, what was the sale price of the house if the broker collected $946.50 in commissions? a. $9,900 b. $19,900 c. $15,775 d. $21,550

b. $19,900

Use the amortization table to solve this problem. Per $1,000 of loan amount: Rate 15 years 20 years 25 years 30 years 9% 10.15 9.00 8.40 8.05 9.5% 10.45 9.33 8.74 8.41 10% 10.75 9.66 9.09 8.78 Lenders are offering 15-year loans at 9% or 30-year loans at 10%. If a homebuyer wants to borrow $158,000, what is the difference in the monthly payment for these two types of loans? a. $266.76 b. $216.46 c. $196.42 d. $166.96

b. $216.46

Z purchases a vacant lot for $28,000 and constructs a house on the lot at a cost of $250,000. Later Z wants to sells the property and make 3% profit on the land and a 30% profit on the house. What is the least amount that Z could sell the property for and realize his desired profit? a. $278,000 b. $353,840 c. $358,340 d. $369,740

b. $353,840

On a loan balance of $15,625 the next monthly payment will include $112.90 to be applied to interest. What is the interest rate of the loan? a. 7.22% b. 8.67% c. 10.24% d. 11.53%

b. 8.67%

A lot measuring 250' x 609.84' is sold at a price of $5,000 per acre. What was the selling price? a. $52,460 b. $27,500 c. $17,500 d. $15,500

c. $17,500

What is the present balance of an 8.75% loan if the next monthly interest payment is $1,531.25? a. $133,984 b. $175,000 c. $210,000 d. $476,100

c. $210,000

A seller wants to net $275,000 from the sale of his home. He has an existing mortgage with a loan balance of $78,500 and the closing costs are expected to be $6,500. If the listing broker is receiving a 6% commission, how much must the home sell for in order to meet his objective? a. $376,064 b. $377.553 c. $382,979 d. $391,311

c. $382,979

Ward and June need to borrow $150,000 to purchase a house. They are debating between a 15-year loan at 3.75% and a 30-year loan at 5%. The 30-year loan has a monthly payment of $805.23 (P&I) while the 15-year loan has a monthly payment of $1,090.83 (P&I). Which of the following statements is correct regarding the total interest paid if the loans were to be held for their full term? a. The total interest paid on the 30-year loan exceeds the total interest paid on the 15-year loan by $93,533. b. The total interest paid on the 15-year loan exceeds the total interest paid on the 30-year loan by $93,533. c. The total interest paid on the 30-year loan exceeds the total interest paid on the 15-year loan by $102,816. d. The total interest paid on the 15-year loan exceeds the total interest paid on the 30-year loan by $102,816.

a. The total interest paid on the 30-year loan exceeds the total interest paid on the 15-year loan by $93,533.

A salesperson pays the broker a desk fee of $600 income per month and earns a commission of 1.5% for each side (buyer or seller) of a transaction which the salesperson represents. If the salesperson has a goal of netting $9,000 per month, the salesperson would have to have "sides" totaling ___ to achieve this objective. a. $300,000 b. $320,000 c. $600,000 d. $640,000

d. $640,000