Question 1
A home sells for $385,000 with a 6% commission. The listing brokerage keeps 50% of the commission and pays the rest to the buyer's brokerage. The listing agent's split with her broker is 70% to her. How much does the listing agent earn?
Real estate math formulas for the exam
Most exam math is one of a dozen formulas. Learn which number goes where, then check the units: acres, mills, points and days.
| One acre | 43,560 square feet (memorize it) |
|---|---|
| One mile | 5,280 feet |
| One point | 1% of the loan amount |
| One mill | $1 per $1,000 of assessed value |
Money and commission
- Commission = price × rate. Split it from the top: total, then each brokerage's side, then the agent's share.
- Price needed for a net = (net + costs) ÷ (1 − commission rate).
- Net to seller = price − commission − payoff − other seller debits.
Loans
- Loan = the lower of price and appraisal × LTV.
- Points = loan × number of points %.
- First month's interest = balance × annual rate ÷ 12.
Value and tax
- Value = NOI ÷ cap rate. NOI = effective gross income − operating expenses.
- Value = rent × gross rent multiplier.
- Tax = assessed value × rate. 65 mills is 0.065.
- Cost approach value = cost new − depreciation + land.
Prorations
Daily amount = yearly amount ÷ 365 or 360, as the question says. Multiply by the days each party owns. The question also says who owns the closing day.
Try 4 questions
Question 2
A buyer pays $380,000 with an 80% loan and is charged 2 discount points. What do the points cost?
Question 3
An apartment building has potential gross rent of $96,000 a year, a 5% vacancy and collection loss, and operating expenses of $31,200. Similar buildings sell at a 8% capitalization rate. What is its value by the income approach?
Question 4
A rectangular lot measures 660 feet by 330 feet. How many acres is it?
Next step
Questions people ask
How many square feet are in an acre?
43,560. Pearson VUE says it is not provided at the test center, so memorize it.
Can I use a calculator on the real estate exam?
In Texas, Pearson VUE's handbook recommends a silent hand-held calculator. Florida allows one at test centers and builds one into the online exam. California lists calculators among items not allowed in its exam room. Check your state's candidate rules before test day.
What is the formula for the price a seller must ask to net a set amount?
Divide what the seller needs (net plus costs) by what she keeps after commission. For a 6% commission, divide by 0.94.