Get out the calculator for real estate computations

Computations: the action of mathematical calculation. Title closing: a right or claim of ownership to a property, the end of an event. Real estate brokers and sales associates must understand (perceive the intended meaning) closing statements and be capable of computing various simple arithmetic problems to be solved (find an answer to for effectively dealing with) in arriving at the figures entered at the closing statement provided to the contracting (written agreement concerning sales) parties (buyer/seller).

Fractions: a numerical quantity that is not a whole number
Decimals: relating to a system of numbers and arithmetic based on the number ten, tenth parts, and powers of ten.
Percentages: a rate, number, or amount in each hundred.

Arrears: pay at the end of the month. Money that is owed and should have been paid earlier. Overdue.
Credit: borrowed. To obtain goods before payment in trust you will pay in future.
Debit: deduct. Recording the amount owed, listed on the left hand side of an account. Or remove from a customer's account as a payment for service. Opposite of credit -- a payment made or owed.
Preclosing inspection:

A Pre Closing Inspection For a Home Purchase
Should Not Be a Quick Walk Through!
The buyer takes s and assumes ownership of the home at the closing. 

Profit: money you make over what you spent. A financial gain. esp. the difference between the amount earned and the amount spent in buying, operating, or producing something. 

Prorate: allocate, distribute, or assess pro rata. Bonuses are pro rated over the life of a player' contract. 

Title closing: walk through, inspections, mortgage, appraisals, all done now you are transferring the ownership from one owner to another owner.

Calculate real estate math: determine the amount or number of something mathematically. Math: abstract science of numbers, quantity, and space. 

Sales commission: your percentage of money made for selling a seller's property to a buyer. Exchange of commodity for money -- an amount of money, typically a set percentage of the value involved, paid to an agent in a commercial transaction. 

Percentage of profit or loss: an amount of money lost by a business or organization: when a property is sold for more than the purchase price. Subtract the purchase price from the net sale. Divide the profit amount by the purchase price. % profit. Loss would be purchase price under net sale price - and dividing the loss by the purchase price to get a -%.

(Calculate the percent of profit or loss given the original cost of the investment (net), the sale price (purchase), and the dollar amount of profit or loss. Profit or loss amount found by subtracting the purchase price from the original investment.

This ratio is known as an operating expense ratio and is expressed as a percentage. For instance, if a business has $100,000 per year in gross revenue and $25,000 per year in operating expenses, it has an operating expense ratio of $25,000/$100,000 or 25 percent.

When a whole unit or number is divided into equal parts, each of the parts is a fraction (and a percent of a whole number). If 1 city block is divided into 2 parts, then that city block is 1/2 or 50%/50%.

When dealing with fractions, the number below the line is the denominator. The figure representing the total populations of terms which statistical values are expressed. Denominator is the total parts of the whole unit. In the city, large town, example, each block, area bounded by 4 streets, was 1/2. The lower number is the total number of equal parts of in the equation. {} {} {} {} buildings. 1, 1/4, 2/4, 3/4. 1/2 is 2/4. 

The number above the line is the numerator (shows how many of the parts indicated by the denominator are taken) 2 out of 3 2/3 or 3/3 1. 3/4 you are talking about 3 of the 4 equal parts, or 4/4 you are talking about 4 equal parts or 1 equal part. 

Changing a fraction to a decimal: make or become different. 1/4 = .25 = 25%. The line separating the numerator from the denominator means division. (LINE: ON A MAP, A CURVE CONNECTING ALL POINTS HAVING A SPECIFIED COMMON PROPERTY). Change a fraction into a decimal number 1/2 = .5 = 50%. 

Changing a decimal to a percentage: move the decimal point two places to the right and add the %. 0.5 is 50%. 0.15 is 15%. 1.50 is 150%. 1.150 is 115%. 

Changing a percentage to a decimal: place the point two places to the left of the %. 115% is 1.15. 150% is 1.5. 

34% = .34
63% = .63
150% = 1.5
350% = 3.5
3% =.03
7-1/2% = 1/2 = .5, 7.5% = .075

Assume the price is $130,000. Calculate the commission. $9,750? Yes! So Type sale price into calculator: 130,000 and multiply by decimal (percentage commission) .075. 

Decimal place values: 
Places to the right of a decimal:
. tenths, hundredths, thousandths, ten-thousandths, hundred-thousandths, millionths, ten-millionths, hundred-millionths.
Places to the left of a decimal:
One, tens, hundreds, thousands, ten thousands, hundred thousands, millions, ten millions, hundred millions.

2.53 (ones to the left) tenths and hundredths to the right.

 
Working with decimals: having paid employment, engaged in manual labor, activity involving mental or physical effort in order to achieve a purpose or result. such activity as a means of earning income. Divide a whole number by a decimal: 41,500 / 1.25 = 33,200. 

Sale commission: paid to an agent in a commercial transaction: if the broker has been to list and sell the property for a seller -- advertise for sale or advertise in the MLS. Seller hires agents to sell then seller pays the commission. If the buyer-brokerage agreement exists then the buyer may be responsible for the commission. The commission is agreed upon in the listing contract or the buyer brokerage agreement. 

Example of a commission calculation: A property is listed and sold by the same sales associate. Broker's listing agreement says that 6-1/2% of commission is to be paid on the sale price. A sales associate for the firm sells the property and is to receive 55% of the 6-1/2% sale commission. How much will the sales associate earn after the $62,000 sale.

62000 x .065 = $4,030. Now 55% of $4,030 is 4030 x .55 = $2,216.50

More frequently, a property is listed with one brokerage company and sold by another brokerage through the MLS. Members of the MLS *who are also members of their local REALTOR* make an offer of cooperation, process of working together to the same end. When another brokerage sells the listing, it will receive a portion of the total commission, that was specified by the listing brokerage.

A BLA specifies a 7% commission paid on sale price. 50-50 split between listing and selling office. Property sells for $100,000.00. Calculation is 100,000 x .07 = 7000/2 (for 50/50 split) is 3500. So Commission per half of 50 is $3,500.00. Selling is commission is shared between broker of selling office and the sales associate who works for the broker at the selling office who listed the property. Same is true for the listing office and sales associate who listed the property for the brokerage company. Negotiate your commission with your broker. Take into account the associates selling experience and production. A partner or colleague in business or at work. Knowledge or skill acquired by such means over a period of time. Total amount of something that is listed and sold. 

So if the sales associate receives 60% of the commission, then.........--:
A broker's listing agreement specifies a 7% commission is to be paid on the sale price. The MLS agreement specifies a 50-50 split between the listing and selling offices. If the property sells for $100,000, how much commission is earned by the listing and the selling offices? 
______________________________________________________________________
Let's assume that the sales associate receives 60% of the total selling office commission. How much commission did the sales associate earn on the previous example? How much did the broker receive for the same transaction?
Step 1: Calculate the sales associate's split of the selling office commission.
              $3,500 selling office commission × .60 split = $2,100 sales associate's commission
Step 2: Calculate the broker's split of the selling office commission.
              $3,500 selling office commission × .40 split = $1,400 broker's commission
 (So if the 50/50 split includes 2 offices and you take home 50% of the commission, then split the commission 60/40 with your employing broker/boss, then 60% of the 50% of the total commission is yours).

Today, 100% commissions are popular, a sales associate receives 100% commission. Instead of splitting the commission, the sales associate pays the employing broker office fees. A broker who lists a property at a higher than normal value may agree to a graduated scale commission. This provides an incentive to get the seller the best price possible.

A broker has a listing with a seller. They agree to a graduated sales commission. Commission is 5% of first $200,000 ($10,000), 6-1/2% on the next $100,000 ($6,500),  and 8% on the amount over $300,000. What is total commission of property sell $325,000. ($2,000) 10,000 + 6,500 + 2000 = $18,500.

Profit is how much you make over and above your cost. Profit may be expressed as an amount, or as a percent of your cost. Formula for profit - mathematical relationship or rules expressed in symbols. The amount made on the sale / the total cost = percentage profit. Formula for loss is the amount lost on sale / total cost = percentage loss.

For example, a lot cost $8,000 and sold for $10,000, yielding a $2,000 profit. What is the percentage of profit?  Profit -- for you -- divide how  much you made by what you spent $2,000/$8,000 = .25 25%

For example, a lot cost $10,000 and sold for $8,000, resulting in a $2,000 loss. What is the percentage of loss? 20% loss. subtract sold for for what you had in it. divide the loss by what you had in it = loss.

For example, a lot sold for $6,000, making a 25% profit. What was the cost of the lot???

Profit is inside cost. So, 100% of cost + 25% = $6,000 sale price.
125% = $6,000 selling price
6,000/1.25 = $4,800.
        100% cost + 25% profit = $6,000
        125% = $6,000 selling price
        $6,000 selling price ÷ 1.25 = $4,800 cost

For example, a lot sold for $10,000, representing a 20% loss. What was the cost of the lot? 
     100% - 20% = $10,000
        80% = $10,000
        $10,000 selling price ÷ .80 = $12,500 cost

100% - 20% = 80%.

80% = 10,000.

10,000 / .8 = 12,500.

For example, a lot sold for $6,000, making a 25% profit. What was the cost of the lot???

125%

6000 / 1.25 = 4800

For example, a lot sold for $10,000, representing a 20% loss. What was the cost of the lot?

100 - 20 = 80.
10,000 / .8 = $12,500.

Amount made on the sale ÷ total cost = percentage of profit.

If two brokers split the 6% commission 50-50 on a property that sold for $150,000, each broker should receive $4,500. $150,000 × .06 = $9,000. $9,000 × .50 = $4,500.

______________________________________________________

Prorate buyer's and seller's expenses. Find out how much they are going to have to pay. Use the 30-day method, or the 365-day method. A particular form or procedure for accomplishing or approaching something. All real property exchanges conclude with a transfer of title. At the title closing the seller delivers to the buyer the title and the buyer delivers the money. The date and time of the closing will show in the sale contract. There are things to accomplish between signing the contract and title closing: achieve or complete something:

1) achieve the mortgage application -with intention to finance the property, contract lists amount of time until time is up to submit a loan application, and a clause that says financing contingency that if your loan is denied the contract can be cancelled.

2) achieve the property survey - are there encroachments? what is the exact size? what is the exact location?

3) achieve the appraisal - lender will order an appraisal to ensure risk absent and use the property as collateral. verify the value for tax and investment reasons.

4) achieve the title insurance - existing encumbrances? any liens or judgments? what do public records say is the condition of the title? simultaneous issue of owner's policy and lender's policy.

5) achieve the closing documents - a closing agent (title company or attorney) prepares closing documents.

6) achieve the property inspections - certified property inspector looks at mechanicals and structurals. concerned with termites? any wood rot?

7) achieve the pre-closing inspection - buyer walks through with associate to look in person. seller take anything? everything still look and work good?

Closing statements: broker responsible for: monies, deposits, drafts, mortgages, conveyances, leases, & more documents entrusted by the seller or buyer. The closing agent will prepare and deliver complete and accurate closing statements to buyer and seller plus summary that reconciles all debits and credits involved.

Closing documents: explain and verify entries. Make clear by describing in more detail. Make sure that is true and accurate. Entry: the action of taking up the legal right of a property.  Examine and review the HUD statement to explain each entry. Sales associate attends closing with buyers and sellers to resolve anything unresolved.

To prorate means to divide various charges and credits between buyer and seller. Every sale contract should specify date and time of prorating items. Prorated items should be itemized before midnight of the closing date. Buyer is charged for property tax on day of closing. Buyer is charged assumed interest on day of closing. Buyer credited with any rental income earned on day of closing. Day of closing may be charged to the seller. In that case seller is charged with an additional day. Why prorate?

1) Rent
2) Property tax paid in arrears
3) Interest on mortgage paid arrears

All items are to become credit (reimbursed) or debit (charged) to either buyer or seller because item applied to both.

30-day prorate method
"Statutory month method"
All months have 30 days. 
Statutory year is 360 days.
Divide by 12 to know cost per month.
Divide by 30 to know cost per day. 

For example, the closing date is July 23. The annual property taxes are $3,400 and have not yet been paid. How much is the seller to pay the buyer for the days the seller owned the property? 
 The day of closing is charged to the buyer.  
3,400/12 months is 283.30 a month (Jan Feb Mar Apr May Jun (x6 = 1,699) + 23 days, 9.44x23 = 207.68. 1,699 + 207.68 = 1906.68. or 1907.

365 day method
divide 365 into annual cost, then divide number of days into annual cost. For example, using the same information as in the previous example,
      $3,400 ÷ 365 days = $9.315 per day. So $3,400 on a 365-day plan is $9.31 per day. x 203 days = $1809. The exact number of days owed by the seller are as follows:
      January 31 + February 28 + March 31 + April 30 + May 31 + June 30 + July 22 = 203 days
      $9.315 per day × 203 days = $1,890.945, rounded to $1,890.95 (debit seller; credit buyer)

Prepaid rent
Any rental income collected in advance belongs to the new owner as of the closing date. Not existing before, made, introduced, discovered recently for the first time. Unused portion of advance rent belongs to the buyer. The total rent amount should be divided by the number of days involved in the rental period and allocated on a daily basis.
For example, assume that a property rents for $1,250 per month. The closing date is on the 21st day of a 30-day month. The method of prorating is as follows: On the closing statements, credit the buyer with $416.67 and debit the seller $416.67. The $833.33 was earned by the seller before closing and is not mentioned on either closing statement.

Property taxes are paid in arrears. (end of tax year not after Christmas before new years).  " To apportion the property taxes fairly, they are prorated on the basis of a 365-day year. The total tax assessment is divided by the number of days in a year to determine the tax cost per day. Then the property tax chargeable to the seller, on departure from the property, is calculated by multiplying the tax cost per day by the number of calendar days before title is conveyed. The resulting amount is entered on the seller's closing statement as a debit. It is also shown on the buyer's closing statement, but as a credit. The buyer's share of property taxes is not reflected on either closing statement because the tax bill is not settled at closing. The buyer pays the entire year's property tax after November 1, which includes the amount paid to the buyer by the seller."

For example, the closing date is April 15. The annual property taxes are $2,283.44. The day of closing is charged to the buyer. The proration is calculated as follows: If the closing occurs late in the year (November or December) and the seller has already paid the taxes for the year, the buyer will reimburse the seller for the remainder of the year. Thus the buyer will be charged a debit for taxes for the days remaining in the year, but the seller will receive a credit for the same amount.

Mortgage Interest on Assumed Mortgages

Mortgage payments are made every month once a month. Interest is paid at the end of the period (in arrears or, in other words, after having the use of the money). It is therefore charged to the seller up to the date of closing. This item is prorated in the same manner as property taxes. Interest is figured from the last date for which interest was paid. The exact number of days in each month is used, and interest is figured on a daily basis.
      mortgage balance × annual interest rate ÷ 12 months = month's interest
      month's interest ÷ days in month = daily rate
      daily rate × days interest is owed = prorated interest

 

  mortgage balance × annual interest rate ÷ 12 months = month's interest

 month's interest ÷ days in month = daily rate

daily rate × days interest is owed = prorated interest 

To prorate means to divide various charges and credits between buyer and seller. Prorating is usually required when rents are paid in advance; property taxes are paid in arrears (that is, at the end of the period for which payment is due); and interest on mortgages is paid in arrears (the usual practice). 

Calculate the transfer tax on deeds, mortgages, and notes. (legal document signed an delivered regarding the ownership of property or legal rights). Buying at a store, buying a coffee, buying a shirt requires paying sales tax, so buying property at closing you pay tax. Three state taxes that apply to deeds, mortgages, notes associated with the transfer and ownership of real property. 

State documentary stamp tax on deeds: an organized political community under one government. Official pieces of printed material. Distinctive impression. Tax a compulsory contribution to state revenue levied by the government of workers income ad business profits or added to the cost of some goods, services, and transactions. So three taxes on real estate transaction paid at closing are the stamp tax:

State requires payments on deeds. State doc. stamp tax on every $100 is $.70 and $.60 in Miami-Dade only. Also, less than $100 is $.70 per $100. $.70 stamp tax no matter if you pay cash, get financing, or combine cash with financing. State doc. stamp tax is based on full purchase price. Stamp tax is a one time stamp tax at closing. 

For example, if a home sells for $71,200, the documentary stamp tax on the deed will be as follows: $71,200 / 100 to find out how many hundreds are in $71,200 = 712. So then $712 x .7 = $498.40 stamp tax. If the hundred doesn't divide evenly, the $.70 is still paid for any amount over the multiple number. 

For example, if the purchase price in the above example had been $71,250, the state "doc stamp" tax on the deed would be increased by $.70 (to $499.10) because the purchase price was $50 more than an even increment of $100. So 71200/100=712x.7=489.4+.7=499.10. :)

The seller must deliver a recordable deed. A deed cannot be recorded until the stamp tax is paid so either the seller needs to pay in advance and then get reimbursed from buyer or negotiate with the buyer to pay the stamp tax. If the buyer refuses the seller still has to pay. On normal sales or exchanges, the doc stamp tax is shown as a debit to the seller on the closing statement. Can either be amount owed or money withdrawn from a bank account. Credit is to obtain goods before paying, or entry recording amount received. Debit: amount owed. Credit: amount received. 

State doc. tax on notes is not the same as state doc. tax on deed. Tax on notes is required for all executed notes or all notes to pay money. A note is a brief record or facts written. A note is a document that certifies a certain thing. Tax rate for stamp tax. doc on notes is $.35 per $100. Also, over $100 get another $.35. State doc. stamp tax on notes is paid on all new and assumed mortgages. Tax is due when the note is executed and when the mortgage is assumed, the borrower pays the stamp tax on notes. 

For example, a home sold for $90,000. The buyer paid $10,000 cash, assumed a recorded mortgage of $55,000, and created a new second mortgage in the amount of $25,000. The documentary stamp tax on notes resulting from this transaction would be as follows. If you pay cash for the property you don't pay on a note, because you don't owe any money. So $10,000 cash is not included. Added mortgages on notes: $80,000 / 100 = 800 x .35 = $280. 

 So far the buyer is paying $779.10 on stamp tax docs. 

State intangible tax on new mortgages. Not represented by a physical object and of a value not precisely measurable. State requires payment of an intangible tax before the mortgage is recorded regardless of when the mortgage was executed. An assumed mortgage does not get taxed again -- state intangible tax on new mortgages. The deed or assumption document must identify the page number where the assumed mortgage was recorded (in the county record book). The tax rate for intangible state tax on new mortgages only (not assumed) is $.002 (two mills) per dollar. State intangible sales tax is paid once, and therefore recorded once. When a mortgage is recorded it signifies the intangible tax has been paid to the clerk of the circuit court. or to the county comptroller. A controller (used in the title of some financial officers).

For example, use the figures from the previous example. The intangible tax on the new second mortgage would be as follows:
      $25,000 × $.002 = $50 tax on second mortgage

 So now the buyer owes $829.10. The intangible state stamp tax is paid by the lender (mortgagee/owner of the mortgage) but sometimes the borrower (mortgagor) loaner, will pay the intangible tax in an agreement for approval of the loan. Thus, the tax is normally shown as a debit to the buyer on the closing statement.

Rescission: cancellation or repeal of a law, order, or agreement.  

SNI: Stamp, note, intangible. Stamp: $.70 on $100. Note $.35 on $100. Intangible $.002 on $1 of debt.

For example, to illustrate the application of all three of the previous state taxes, suppose a property sold for $79,950. The buyer paid $15,000 cash down and arranged for a $64,950 mortgage loan. The state taxes on this transaction would be as follows

Stamp 799 x .7 = 559.30 + .7 = 560

Note $227.50

Intagible $129.90.

Total $917.40.

Allocate taxes and fees to proper parties and compute individual costs. Distribute for a particular purpose. Suitable. Calculate.

Preparing the documents.
The person who signs the documents pays the fee for its prepping. So the seller (grantor) pays for the deed and the buyer (grantee) pays for the note and the mortgage. The charges are shown in the debit column for each individual party to pay. The buyer's statement doesn't show the sellers deed fee and the seller's statement doesn't show the buyer's mortgage and note fee.

Recording the fees.
The legal instruments that were signed (signed at closing) should be recorded to state new ownership and debt status. The person who wants the document recorded pays the fees. The grantee (buyer) wants the deed recorded, so pays the deed recording fee. Even though the grantor (seller) paid for the prep. of the documents to an attorney. Only the payee of the service gets the debit amount on the statement.

Broker's commission.
The person employing the broker pays the broker. Paying the broker is the "broker's commission." The broker's commission appears in the statement as a charge for whoever employed the broker. The non-employing broker does have this charge filled in in the line and does not pay the broker.

Abstract Continuation or Title Insurance.
Existing in thought or as an idea but not having a physical or concrete existence -- dealing with ideas rather than events -- make a written summary of. The action of carrying something on over time. Legally, the seller doesn't have to show you an abstract of title, title insurance, or an opinion of the title unless you say in the contract that you will provide the abstract, insurance, and opinion. Title insurance protects the lender and the buyer. A lender wants the title insurance, not the title abstract. A buyer's interest is protected by purchasing title insurance. Title insurance charges are negotiable. Maybe 50/50 with seller or 33.3/33.3/33.3 with seller, lender and buyer.

Liens.
A right to keep possession of property belonging to another person until a debt owed by that person is discharged. Seller is solely responsible for all existing liens prior to closing. The seller must have all liens settled prior to the closing or the buyer must be fully aware of the liens and the seller and buyer reach an agreement on how to dispose of the existing liens.

Closing statements.
A total purchase price shows as a credit to the seller and a debit to a buyer.
Entries for new and assumed mortgages are entered on both the buyer and seller statements because seller and buyer are involved with the financing. So a new or assumed mortgage is a credit to the buyer and a debit to the seller.
A new mortgage from a nonseller source such as a bank or credit union, and binder deposit (earnest money or good faith deposit) is a credit to the buyer. Seller gets no entry on the new mortgage from nonseller source or earnest money or good faith deposit. Good faith deposit and earnest money is a credit to the buyer, even though they are own money.
Unpaid property tax is credit to the buyer and debit to the seller (prorating gives same dollar amount every month).
Prorated items (property taxes, assumed loan interest) that are paid in arrears, for property tax between Jan 1 and Oct 31. "seller days" calculate proration).
Prorated items paid in advance "buyer days" calculate proration
Single entries are debit to the party paying.

Cash reconciliation statement.
Money in coins or notes, as distinct from checks, money orders, or credit. Make financial accounts consistent. A document setting out items of debit and credit between a bank and a customer == official account of facts, views, or plans. The broker or closing agent prepares the cash reconcilation statement once the seller and buyer closing statements are signed meaning complete. Cash reconciliation shows the buyer debit (money deposited by the buyer), and balance due at closing. Cash reconciliation statement shows the amount due to the seller at closing, the broker commission, and the expenses chargeable to each party. Normally the person made out the closing statement prepared the checks and disburses. Instruct the buyer and seller to sign closing statement after examining all documents.

Rules of thumb
https://static.knowledgehub.com/assets/2f/3c/WorkOrganizerforClosingStatements.pdf

Seller and borrower cash at settlement totals are not the same. Seller and buyer totals are not supposed to balance. Seller and buyer have unique credit and debit items and totals.

Preparation of the deed is a debit to the seller.
Prorated advance rent is a debit to the seller and a credit to the buyer.
The total purchase price is a credit to the seller.
Earnest money deposit is a credit to the seller.
Prorated property taxes credit to the seller and a debit to the buyer.

Profit is the amount you make above cost.
Preclosing inspection is final walk through with associate make sure.
Prorate means dividing various debits and credits between buyer and seller. Proration is shared expense.
Property taxes paid in arrears.
Property tax calculated 365-day.
Unpaid property tax are credit to buyer and debit to seller.
Proration same dollar amount each entry.
Seller days prorate in arrears.
Buyer days prorate in advance.
Rental income collected in advance belongs to new owner as of date of selling.
Advance rental income is credit to seller and debit to buyer.
Buyer days are used to prorate items paid in advance.
Seller days are used to prorate items paid in arrears.
Doc. stamp tax deeds $.70 per $100.
Doc. stamp tax note $.35 per 100.
Doc. stamp tax intangible $.002 per $1.

An investor incurred a 20% loss when she sold a 10-acre parcel (Tract A) for $150,000. She also owns a 25-acre parcel (Tract B) for which she paid $300,000. How much must the investor sell Tract B for if she wishes not only to recover the loss from Tract A but also to realize a 20% profit on the investment in Tract B? The answer is $397,500. The solution is Tract A: 100% - 20% = 80%; 80% = $150,000 sale price; $150,000 ÷ .80 = $187,500 cost; $187,500 cost - $150,000 sale price = $37,500 loss from Tract A. Tract B: $300,000 cost + 20% profit = $300,000 × 1.20 = $360,000 sale price; $360,000 sale price to make a 20% profit + $37,500 loss from Tract A = $397,500 target sale price for Tract B.

A man owned ⅜ of a property. He was paid $60,000 as his share of the proceeds from the sale of the property. What was the total selling price of the property? The answer is $160,000. The solution is part ÷ rate = whole (total sale price); $60,000 part ÷ .375 rate = $160,000 total sale price.

An investor purchased three 200-foot lots on a lake for $700 per front foot each. The investor then subdivided the lots into six lakefront lots, which he then sold for $91,000 each. What was his percentage of profit on the sales? The answer is 30%. The solution is 3 lots × 200 feet = 600 front feet; 600 front feet × $700 per front foot = $420,000 cost of lots; $91,000 lot sale price × 6 lots = $546,000; $546,000 - $420,000 = $126,000 profit; $126,000 profit ÷ $420,000 cost = .30 or 30% profit.

The buyers are purchasing an apartment building. Each of the five apartments rents for $825 per month. The closing is scheduled for July 15, and the rents were collected on July 1. What is the rent proration for this transaction, and to whom will the amount be credited? (Day of closing belongs to the buyer.) The answer is $2,262.10 credit to buyer. The solution is $825 rent × 5 apartments = $4,125 total monthly rent; $4,125 ÷ 31 days × 17 days due buyer = $2,262.097 or $2,262.10 credit to buyer.

A broker lists a property. A 6% commission is agreed to, and the listing is placed in the MLS. The sale commission is to be split as follows: 45% to the listing broker and 55% to the selling broker. A sales associate who works for a cooperating broker sells the property for $245,000. The sale associate's agreement with her employer calls for a 60% share of all commissions she brings to the company. How much is due to the sales associate? The answer is $4,851. The solution is $245,000 sale price × .06 rate = $14,700 total sale commission; $14,700 commission × .55 rate = $8,085 commission to selling office; $8,085 × .60 rate = $4,851 selling sales associate's split.

A warehouse measures 825 feet by 600 feet and rents for $130,000 a month. What is the rent per square foot per month? The answer is $0.26. The solution is 825 feet × 600 feet = 495,000 square feet; $130,000 rent ÷ 495,000 square feet = .262626 or $.26 per square foot.

The interest portion on the first monthly payment of a 30-year, 6% mortgage is $650. If the loan-to-value ratio is 80%, how much did the owner pay for the house?

The answer is $162,500. The solution is part ÷ rate = total; $650 × 12 months = $7,800 = part (the annual interest); $7,800 part ÷ .06 rate = $130,000 whole = loan amount; $130,000 loan (part) ÷ .80 rate = $162,500 purchase price.

You bought a house for $195,000. You gave a deposit of $25,000, assumed a recorded mortgage of $100,000, and signed a new second mortgage and note for $70,000. What are the total state taxes due as a result of this transfer of property? The answer is $2,100. The solution is $195,000 ÷ $100 increments = 1,950 taxable increments; 1,950 × $.70 rate = $1,365 doc stamps on deed; $100,000 ÷ $100 increments = 1,000 taxable increments; 1,000 × $.35 rate = $350 doc stamps on assumed mortgage note; $70,000 ÷ $100 increments = 700 taxable increments; 700 × $.35 rate = $245 doc stamps on new mortgage note; $70,000 new mortgage × $.002 = $140 intangible tax on new mortgage; $1,365 + $350 + $245 + $140 = $2,100.

A 30.25-acre parcel of land in Citrus County sells for $5,300 per acre. What is the documentary stamp tax on the deed?

The answer is $1,122.80. The solution is 30.25 acres × $5,300 per acre = $160,325 purchase price; $160,325 ÷ $100 increments = 1603.25 rounded up to 1604 increments; 1604 × $.70 rate = $1,122.80 documentary stamp tax on deed.

To get a mortgage loan of $98,500, a buyer has agreed to pay all state tax costs incurred by creation of the new mortgage. What is the total cost?

The answer is $541.75. The solution is $98,500 mortgage ÷ $100 increments = 985 taxable increments; 985 × $.35 = $344.75 doc stamps on mortgage note; $98,500 × $.002 rate = $197 intangible tax; $344.75 + $197 = $541.75.

You have a VA loan of $89,000 at 6% with a 30-year term. The monthly principal and interest payment is $533.60. What portion of the second month's payment will apply to amortization of the mortgage? The answer is $89.04. The solution is $89,000 loan amount × .06 rate = $5,340 annual interest ÷ 12 months = $445 interest month 1; $533.60 monthly payment - $445 interest = $88.60 principal paid month 1; $89,000 loan - $88.60 principal paid = $88,911.40 outstanding balance; $88,911.40 × .06 rate = $5334.684 ÷ 12 months = $444.557 or $444.56 (rounded); $533.60 month payment - $444.56 interest = $89.04 principal paid month 2.

How are unpaid property taxes entered on the closing statement?

The answer is credit to buyer and debit to seller. Unpaid property taxes will show as a debit to the seller for the number of days in the current year the seller occupied the property, and an identical amount will show as a credit to the buyer.