Math Practice Handout – CBG School of Real Estate

let's take a look at your math practice sheet the first question says a lot in the subdivision was being sold for five dollars per square foot it was 80 feet wide and 120 feet deep how much did this lot cost this question is trying to get at the square foot of a lot because we know each square foot cost five dollars so if we draw out our lot and I would always recommend drawing out items on the test you have enough scrap paper to use on the test draw at all your math so this particular lot is 80 feet wide by 120 feet deep if I multiply my width times my depth I get 9600 square feet again that is the area of the lot now each one of those square feet sold for five dollars so if I multiply that times five dollars per square foot I come up with $48,000 problem number two on our math practice says household for fifty-five thousand the total commission received by the broker was $3,300 what was the rate of commission if I look at this problem I have the key components of a tea I have a smaller number a larger number and a percent or rate so I'm going to use my tea formula to figure this problem out my smaller number goes on the top which is the commission paid my larger number goes on the bottom and I can use these two to figure out the percent or the rate so I divide the thirty three hundred dollars by the fifty five thousand dollars and that gives me point zero six or six percent the third problem on the math practice says a property with 4,000 and Commission was sold in a cooperative basis the brokers accrete agreed to split the Commission equally the listing broker had expenses of $350 and the selling broker had expenses of $450 how much Commission will each broker receive well if you look at the problem it's trying to make you think that it's more difficult than it really is they agreed upon a split in the Commission and the total Commission was $4,000 that means that each broker got 2,000 and Commission the expenses do not affect how much each broker received so the answer for this one is $2,000 question number four on your math practice says mrs. light wants to net $60,000 on the sale of her home and her broker will charge a seven percent commission to obtain her net price what must be the gross selling price of the house this is a T formula because we have a percent IRR rate and we have a smaller number or a larger number there's something special about this particular problem though this is what we call a seller net problem and in order to make a seller net problem work we need to invert the Commission or the percentage then when I say that I mean we need to take the Commission which in this case is 7% subtracted from a hundred which gives us 93 percent or 0.93 which is the number that I'm going to put in my rate section now this problem really revolves around what the seller wants to put in their bank account after they pay for all their expenses the only expense we have here is the Commission which we are adjusting for by flipping or inverting our rate we know the seller wants to net sixty thousand dollars so now I need to decide is that the larger number or the smaller number since the 60 thousand dollars is the amount after the Commission is paid that makes it the smaller number it goes on top so in order to find the sales price of the house we need to divide the sixty thousand dollars net by 0.93 and if we do that you'll come up with sixty four thousand five hundred and sixteen dollars again this is what we call a seller net question anytime you see something to the question 5 on practice says a seller net it 46,000 $150 after closing expenses of $350 and a 7% Commission what was the sales price so again a t formula also we see right away it since the seller netted forty six thousand one hundred fifty dollars so that makes this a seller in that question with the seller net we've already learned that we need to invert our commission so if we take one hundred percent subtract out seven percent that gives us ninety-three percent or 0.93 this goes in the rate part of our formula we have a new dimension here though we have expenses of $350 the seller net question is trying to take into account all the expenses to see what the seller will have in their pocket at the end of the transaction so to make this work I need to add what the seller wants to receive to the expenses that they will incur outside the commission which means that my adjusted net is forty six thousand five hundred dollars this is still the smaller number so it will go on top so I take my forty six thousand five hundred dollars adjusted net and I divide it by the point nine three which will help me get the sales price forty six thousand five hundred dollars divided by 0.93 gives me a sales price of fifty thousand dollars question six on the math practice says a broker listed a home for 150,000 and sold it for 95 percent of the list price if the home listed it a 6% selling commission and the split was 55% to the listing broker and 45% to the selling broker how much did the selling broker receive this isn't that complicated of a problem other than we need to break it down into his component parts we can't figure out how much the selling broker received until we figure out what the total Commission was and we can't figure out the total Commission until we figure out what the sales price is because Commission is based on sales price not list price so again break it down into parts part number one is that the home sold for 95 percent of list price so if the list price was a hundred and fifty thousand we multiply that times 0.9 five and we get a sales price of one hundred forty two thousand five hundred dollars now we can use that sales price to calculate our Commission we know that the Commission is six percent so we move the $142,500 into our second formula we multiply it times the 6% Commission and we get a total commission of eight thousand five hundred and fifty dollars again that's total Commission and this total Commission is based off of the sales price and we use the sales price multiplied times the Commission rate to get the total Commission so you can see there's a relationship between all three of those now we need to take the total Commission from that formula and we need to look at the part that the selling broker is going to receive the problem says the selling broker is going to receive 45% or point four five of the eighty-five fifty total Commission so if I multiply those two together I get three thousand eight hundred forty seven dollars and fifty cents which is the final answer to my question again the problem once broken down into parts isn't that complicated you just need to figure out what parts do I need and work it in steps in order to get to your final results

34 thoughts on “Math Practice Handout – CBG School of Real Estate

  1. I just saw this video since I am studying for the OREA, this is for Ontario Real Estate Association, I am not in USA, however, Math is the same in any country. I am confused, shouldnt I just multiply 7% of $60.000 so I would sell the house for that price and the amout after the commission would be to the seller?

    Thanks, Marcia -Ontario, Canada

  2. So confused! Your Donaldson math circle video you state the lower left is your % and lower right is whole amount and the top is your part/target. You seem to be doing it different with in this net example….

  3. Thank you so much for your videos! I was so lost with the all the different formulas that was taught in my classroom studies but your formula was my savior! I answered ALL the state math questions and got the answers so clearly and quickly! Thank you. I passed on the first try!.. YEAH!!

  4. Can you show me? A commercial building that occupies an area 52 feet by 28 feet can be replaced at a cost of $34.90 per sq foot. The total accrued depreciation on the buildings estimated to be at 25 percent of the replacement cost. Current value of the land on which the building stands is $6,300. According to the cost approach, the indicated value of the property is Approximately?

  5. EXCELLENT RESOURCE. AS AN inactive ASSOCIATE BROKER, THE COMMISSION HAS THIS WONDER SOURCE OF INFORMATION TO KEEP INACTIVE   REALTORS UP TO DATE, CURRENT IN THE INDUSTRY. AFFORDED THE LUXURY OF A ONE YEAR SABATICAL TO STUDY THE CURRENT TRENDS AND ACHIEVE A TOTALLY GREEN BUSINESS, THE GOVERNMENT , ESPECIALLY THE 900 OR S0 SELF SACRIFICING COMMISSION MEMBERS HAVE GIVEN THEIR BEST. PLEASE ACCEPT AND UTILIZE THESE CUTTING EDGE RESOURCES TO PUT Maryland ON THE TOP……TOP SERVICE. GOVERNOR Hogan and COUNTY EXECUTIVE STEVE SHUE have given their best to our State, helping Home Owners Protect their families, and especially their HOMES, during times of Severe Weather and changing climate Disasters. Please follow the excellent Leadership of these two "Elected Officials" and we will all have better lives!                                      Cheryl Care

  6. At 2:55 in reality, after receiving the $2000 in commission and subtracting their expenses out of pocket, the bottom take home is $1650.00, and $1550.00. Every penny counts.

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