Real Estate Exam Math Formulas Cheat Sheet, Cheat Sheet of Real Estate Management

Download Real Estate Exam Math Formulas Cheat Sheet and more Cheat Sheet Real Estate Management in PDF only on Docsity! Real Estate Math Formulas Cheat Sheet 1 Real Estate Math Formulas Cheat Sheet Measurement Math: Area: Width x Depth Depth: Area / Width Width: Area / Depth Area of a Triangle: (Base x Height) / 2 Area of a Trapezoid: (Top L + Bottom L /2) x H 1 Acre = 43.560 SF 1 Section = 640 Acres ¼ Section = 160 Acres 1 Township = 36 Sections Volume: Length x Width x Depth Converting SF to Square Yards: Divide SF by 9 Calculating Size of a Parcel: EXAMPLE: How many acres are there in the S ½ of the SE ¼ of the SW ¼ of section 24, township 32 north, range 18 east? STEPS: 1. Ignore the text “section 24, township 32 north, range 18 east.” It doesn’t affect the answer. 2. Multiply all denominators together (the bottom number of the fraction): 2 x 4 x 4 = 32. 3. Divide 640 by that answer, 640 / 32 = 20 acres. ALWAYS use 640 in this step as there are 640 acres in one section. Area of a Trapezoid: Formula: ([Top Length + Bottom Length] / 2) x Height = Area Steps: 1. 5’ L + 11’ L = 16’ L 2. 16’ / 2 = 8’ L 3. 8’ L x 5’ H = 40 SF Converting SF to Acres: Total Square Footage / 43,560 = Number of Acres The “T” Method Part (small # or part) ÷ Don’t Forget! TGIF: Top Goes In First! Whole (BIG #) X Rate % Real Estate Math Formulas Cheat Sheet 2 Commissions and Seller’s Net Profit Total Commission Paid to Broker from Seller Total Commission Contract Price or Sales Price Listing Commission Rate % Contract Price (Sales Price) X Listing Commission Rate % = Total Commission Paid Total Commission / Contract Price (Sales Price) = Listing Commission Rate % Total Commission / Listing Commission Rate % = Contract Price (Sales Price) Salesperson’s Share of Commission Salesperson’s Commission Brokerage’s Share of Commission Salesperson’s Split % Brokerage’s Share of Commission X Salesperson’s Split % = Salesperson’s Commission Salesperson’s Commission / Brokerage’s Share of Commission = Salesperson’s Split % Salesperson’s Commission / Salesperson’s Split % = Brokerage’s Share of Commission Seller’s Net Profit Seller’s Net *Seller’s Net % is 100% minus the Listing Commission % the seller has agreed to pay the listing brokerage. It is the percentage of the sale that the seller keeps as profit. Sales Price or Minimum Listing Price Seller’s Net % (100% - Com %)* Sales Price (or Minimum Listing Price) x Seller’s Net % = Seller’s Net Seller’s Net / Listing % = Sales Price (or Minimum Listing Price) Seller’s Net / Sales Price (or Minimum Listing Price) = Seller’s Net % Proration Guidelines: PAID IN ADVANCE: Credit Seller, Debit Buyer Calculate the cost for time AFTER the closing date; Usually applies to property insurance. PAID IN ARREARS: Debit Seller, Credit Buyer Calculate the cost for time BEFORE the closing date; Usually concerns property tax payments. Who gets the DAY of CLOSING?  Paid in Advance: If seller gets the day of closing, do not include the day of closing in your count. If buyer gets the day of closing, include the day of closing in your count.  Paid in Arrears: If seller gets the day of closing, include the day of closing in your count. If buyer gets the day of closing, do not include the day of closing in your count. CALENDAR YEAR vs BANKER YEAR The question will state which type of year should be used to solve the problem. If the question doesn’t state which method to use, use the banker year method.  A calendar year consists of 365 days with varying calendar days per month.  A banker year consists of 360 days per year with 30 days per month. Real Estate Math Formulas Cheat Sheet 5 Calculations for Loans Origination Fee Origination Fee ÷ LOAN X Fee % LOAN X Fee % = Origination Fee Origination Fee / LOAN = Fee % Origination Fee / Fee % = LOAN Pre-Payment Penalty Pre-payment Penalty ÷ Principal Balance X Penalty Fee % Principal Balance X Penalty Fee % = Pre-payment Penalty Pre-payment Penalty / Principal Balance = Penalty Fee % Pre-payment Penalty / Penalty Fee % = Principal Balance Loan-To-Value Ratio (LTV %) Loan Amount ÷ *When given the appraised value and the contract price, use the LOWER of the two in your calculations.Appraised Value or Contract Price* X LTV % Appraised Value or Contract Price* X LTV% = Loan Amount Loan Amount / Appraised Value or Contract Price = LTV% Loan Amount / LTV% = Appraised Value or Contract Price Simple Annual Interest Annual Interest in $ Loan Amount Interest Rate % Loan Amount X Interest Rate % = Annual Interest in $ Annual Interest in $ / Loan Amount = Interest Rate % Annual Interest in $ / Interest Rate % = Loan Amount Real Estate Math Formulas Cheat Sheet 6 Discount Points A discount point is a fee paid by the mortgagor (borrower) to lower the interest rate on a mortgage. • One point COSTS 1% of the loan amount, BUT the original interest rate does not drop by one percent. One point DOES NOT EQUAL 1% of interest. • One point = 0.125% of interest, meaning the original interest rate will only drop by 0.125% per point purchased. 1 Discount Point: Point = Percentage of Interest COST: 1% of the loan 1 pt = 0.125% 5 pts = 0.625% EFFECT: Lowers the % rate 2 pts = 0.250% 6 pts = 0.750% by 0.125% 3 pts = 0.375% 7 pts = 0.875% 4 pts = 0.500% 8 pts = 1.000% Loan Amount x Number of Points in % = Discount Points in $ Discount Points in $ / Loan Amount = Number of Points in % Discount Points in $ / Number of Points in % = Loan Amount Amortization Tables Formulas: (Payment / Amortization Factor) x $1,000 = Loan (Loan amount / $1000) x Amortization Factor = Payment Amortization Factor: Interest Rate intersected with Term EXAMPLE: Monthly Payment per $1,000 on Fixed-rate, Fully-amortized Loans Rate 10-year term 15-year term 30-year term 40-year term 4% 10.125 7.397 4.775 4.180 5% 10.607 7.908 5.369 4.822 6% 11.102 8.439 5.996 5.503 7% 11.611 8.989 6.653 6.215 8% 12.133 9.557 7.338 6.954 *You do not need to memorize the amortization table. One will be provided to you during the exam.