RE Math Part 2

A real estate sales associate's agreement with their broker gives the sales associate 60% of all commissions earned by the firm. If a property sells for $145,000 and the firm earns a 6% commission, what would be the sales associate's share?

• $3,480

• $5,220

• $8,700

• $9,870

Answer explanation

$145,000 x 0.6 commission = $8,700.

60% of $8,700 = $5,220.

A seller wants to net $50,000 after paying off a loan of $65,000 and a real estate commission of 5%. Which list price would give the seller his or her net?

• $106,500.96

• $120,750.27

• $120,950.54

• $121,052.63

Answer explanation

$50,000 (seller's net) + $65,000 (loan payoff amount) = $115,000 (total)

100% - 5% (commission rate) = 95% (or .95)
$115,000 (total) ÷ .95 = $121,052.63 (listing price)

A property was purchased for $140,000 and later sold for $156,500. Which represents the profit percentage earned in this transaction (rounded to the nearest whole number)?

• 9%

• 10%

• 11%

• 12%

• 13%

Answer explanation

Divide what is made by what is paid.
$156,500 (purchase price) - $140,000 (sales price)
= $16,500 (amount made).

$16,500 (amount made) ÷ $140,000 (amount paid) = .117857 or 12%

How much of the second loan payment would apply to principal if the loan was originally $175,000 at 6% over 30 years with a monthly payment of $1,049.21?

• $174.21

• $175.08

• $874.13

• $875

Answer explanation

Formula:
Principal x Rate x Time (in months) = Interest.

$175,000 (initial loan) x 6% (interest) = $10,500 (12 mo. interest)
$10,500 ÷ 12 = $875 (1st month interest)


$1,049.21 (payment) ‐ $875 (interest part) = $174.21 (1st mo. principal part).
$175,000 (original balance) ‐ $174.21 (principal paid) = $174,825.79 (new loan balance)


$174,825.79 (balance at start of 2nd mo.) x 6% = $10,489.55 (12 mo. interest)
$10,489.55 ÷ 12 = $874.13 (2nd month interest)
$1,049.21 (payment) ‐$874.13 (interest part) = $175.08 (2nd mo. principal part)

If an interest only loan has monthly payments of $825 and an interest rate of 5%, what was the original loan balance?

• $156,000

• $165,000

• $178,000

• $198,000

Answer explanation

$825 (monthly payment) x 12 months = $9,900 (1 year of payments)
$9,900 ÷ .05 (5% interest) = $198,000 (original loan balance)

A developer purchases a 65-acre tract to develop into lots of 8,500 square feet each. How many lots could be developed if roads total 900 feet in length and 30 feet in width and there is a common area of 400,000 square feet?

• 250.28

• 260.81

• 272.26

• 282.87

Answer explanation

65 acres x 43,560 sq. ft. per acre = 2,831,400 sq. ft.

900 ft. x 30 ft. = 27,000 sq. ft (roads)
2,831,400 sq. ft. (total) - 27,000 sq. ft. (roads) - 400,000 sq. ft. (common) = 2,404,400 sq. ft. (available for lots)

2,404,400 sq. ft. (available) ÷ 8,500 sq. ft. (each lot size) = 282.87 or 282 lots

Round down for the number of full lots

A lot measures 165 feet by 165 feet. If there are setbacks on all four sides of 10 feet, what square footage could be developed on this lot?

• 18,500

• 19,525

• 21,025

• 23,025

Answer explanation

165 ft. (side length of lot) ‐ 20 ft. (10 ft. setback x 2 for each end of side) = 145 ft. (usable side length).

145 ft. x 145 ft. = 21,025 sq. ft (available for development)

If the net operating income is $65,000 and the capitalization rate is 6%, which of the following would represent the value of this property?

• 756,733

• 1,083,333

• 1,115,986

• 853,067

Answer explanation

Income = Rate x Value

$65,000 = .06 x Y
Y = $1,083,333

A blind widow has a homestead exemption on a property with an assessed value of $48,000. If the total millage rate is 22 mills, her annual taxes would be:

• 484

• 586

• 756

• 1,056

Answer explanation

Annual taxes = Taxable value x Millage rate.


$25,000 (basic) + $500 (widow) + $500 (blind)
= $26,000 (total exemptions).

$48,000 (assessed value) ‐ $26,000 (exemptions)
= $22,000 (taxable value).

$22,000 (taxable value) x .022 (22 mills) = $484 (annual tax amount)

Additional Exemptions
- $500 for Widows.
- $500 for Blind People.
- $5,000 for Veterans.

Mary has purchased a home for $120,000 and obtained a loan from a local bank for 75% of the purchase price. She agreed to pay 2 discount points. Mary has placed $2,500 earnest money with the broker. How much money will Mary need at closing to complete the transaction?

• 31,800

• 30,000

• 29,900

• 29,300

Answer explanation

$120,000 x .75 = $90,000 Loan Amount.

$90,000 x .02 = $1,800 in Points (Every Point is 1% of Loan Amount).

$120,000 x .25 = 30,000 Down Payment
$30,000 Down Payment + $1,800 in Points
= $31,800 - $2,500.

Earnest Money = $29,300 Total to Bring to Closing