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A seller tells you that he/she wants to net a certain selling
price AFTER paying the real estate commission.
Example:
Kitty is selling her house. She wants to net $40,000 for her
house after Broker Tom is paid 6% commission. Broker Tom needs to know what the
sale price would have to be in order for Kitty to net $40,000 after paying his
commission.
The first step is to calculate seller Kitty’s percentage of
the net sales price.
This is easy if you think of it this way:
Broker Tom gets 6% of the selling price, so seller Kitty gets
94% of the selling price.
100% (of the full selling price) minus the broker's __%
leaves _______% for the seller.
In this case:
100% (of $40,000) minus the broker’s 6% leaves 94% for the
seller.
40,000 ÷ 94 % = 42,553.19
Remember to DIVIDE. The sales price would have to be HIGHER
than the net amount. In order to arrive at a higher number, you would divide the
whole number (net sale price) by the percentage (94%.)
Example:
Broker Tom sells the property for $42,553.19. He is paid a commission of 6%, which means that
Kitty gets 94% of the selling price.
42,553.19 x 94 % = 40,000
When a whole number is divided by a percentage, you will get
a larger number than you started with.
Example:
100,000 ÷ 10% = 1,000,000
10% is less than one, so when you divide by a number less
than one, you get a larger number.
It takes 1,000,000 dimes make $100,000 dollars!
There are ten dimes in a dollar, so DIVIDE 1/10 into 100,000
(100,000 ÷ .10) to get 1,000,000.
Percentage means
"parts per 100".
So, 15% is 15 parts per 100 or 15/100's.
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When you divide a smaller number by a larger number, your
answer will be a “percentage”. A “percentage” is a number that is
less than one.
Example:
15 ÷ 30 = .5
If you have to divide 15 apples between 30 people, it is
obvious that each person would have to receive less than one apple.
In this case, each of the 30 people would get 1/2 or 50% of
an apple.
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Interest is usually a “percentage”, or a number less
than one.
Total Interest ÷ Loan Amount = ___% of interest
Example:
Sam pays $6,000 interest in one year on a $50,000 loan
balance. His interest rate is 12%.
6,000 ÷ 50,000 = .12 or 12%.
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To convert a decimal into a percentage:
move the decimal
point two places to the right and add a %
Or
multiply the decimal by 100 and add a %.
Example
.869 is 86.9%.
(Multiply .869 x 100 = 86.9)
.14 is 14%
(multiply .14 x 100 = 14%)
.01 is 1%
(multiply .01 x 100 = 1%)
But what if there are not two places to the right of the
decimal point?
Example
.5
In this case, just add an extra zero as shown below:
.50 x 100 = 50%
.5 is 50.0%
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Example:
What is nine percent of $133,000?
a. $1,197
b. $11,790
c. $11,970
d. $1,477
The answer is
c.
$11,970
Look out! Answer b. $11,790 has the
same numbers as the right answer!
Most calculators have a Percentage Key marked with a
"%" sign. If you know how to use this key, it makes doing percentage
problems easier.
Multiply $133,000 by 9%:
(use the % key)
133,000 x 9% = 11,970
Or, if you do not use the % key, calculate:
133,000 x .09 = 11,970
Example
Lenny wants to calculate 5% of 60,000 without using the
percentage key. He would need to change 5% into a decimal:
.05 x 60,000 = 3,000
If he used the percentage key, he would enter this into the
calculator:
5 x 60000 % = 3,000
Lenny would not need to convert the 5% into a decimal because
the calculator does it for him when he used the "%" key.
Try these examples:
5.55% of 75,000 = ___
5.55 x 75000 % = 4,162.5
74.3% of 3,333 = ___
74.3 x 3333 % = 2,476.419
Exercise:
Solve each of the above using the calculator's percentage
key. Develop a habit of using this key to simplify your calculations and avoid
making keystroke mistakes.
The same principles apply when you divide by a
percentage. Using the % key on your calculator will make your calculations much
easier.
To divide 53,000 by 9% using the percentage key, you would
enter:
53000 ÷ 9 % = 588,888.88
If you do not use the % key, enter:
53000 ÷ .09 = 588,888.88
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The Franklin’s want to get $198,500 for their house after
the real estate broker is paid a 5% commission. In order to get this amount, at
what price must the house have to sell?
a. $208,947.36
b. $208,425.00
c. $188,575
d. $280,947
$280,425
The answer is: a. $208,947.36
d. $280,947 is WRONG. Look out for similar numbers in wrong order!
1. Divide 198,500 by 95%
198,500 ÷ 95% =
208,947.36
Or if you do not use the "%" on your calculator:
198,500 ÷ .95 =
208,947.36
How much is the commission on a $363,500 sale if the house is
listed at a 7 3/4% commission:
a. $27,262.50
b. $27,844.10
c. $28,171.25
d. $26,680.90
The answer is c.
$28,171.25
1. Multiply 363,500 by 7.75%
363,500 x 7.75% =
28,171.25
Or if you do not use the "%" Key on your
calculator:
363,500 x .775 = 28,171.25
The commission on a sale is 6% of the first $100,000, 5% of
the next $100,000 and 2% on any amount over this. The house sold for $500,000.
What was the commission on the sale:
$17,000
b. $16,000
c. $170,000
d. $160,000
e. $15,000
The answer is:
a. $17,000
The house sold for $500,000
1. To calculate the commission on the first $100,000:
100,000 x 6% = 6,000
2. Find the commission on the next $100,000
100,000 x 5% = 5,000
3.
Find the commission on the remaining $300,000
300,000 x 2% = 6,000
4.
Add the "stepped" commission amounts:
$6,000 1st $100,000
$5,000 2nd $100,000
$6,000 bal. $300,000
$17,000
Listing Agent Janet lists a property at 6% commission.
Selling Agent Chris brings a buyer and property sells $100,500. According
to their agreement, the Listing Broker is to receive 2% of the sales price and
the Selling Broker is to get got 4% of the sales price. Selling Agent Chris, is
licensed with Selling Broker Dana on a 50% split. In this case, how much money
did Selling Agent Chris make?
a. $6,030
b. $3,015
c. $2,010
d. $4,020
The answer is: c. $2,010
1.
Find out how much the selling sales associate's broker
received.
4% (was received by the selling
broker)
2. Divide the 4% in half (the
selling sales associate got half of what her broker received)
4% ÷ 2 = 2%
3. Multiply 2% by the sale's price
of the house
2% x 100,500 = $2,010
The annual interest rate on a loan is 8%. Six months interest
is $12,000. How much is the loan balance?
a. $300,000
b. $96,000
c. $960,000
d. $150,000
The answer is: a. $300,000
1. Find out what
one month's interest is:
(Divide $12,000 by 6 months to get one month's interest)
12,000 ÷ 6 = 2000
2. Multiply
$2000 times 12 months to get a year's interest (You want to figure interest per
year or per annum)
12 x 2000 = 24,000
3. Divide the interest rate (8%)
into the yearly interest ($24,000) to find the loan balance
24,000 ÷ 8% = 300,000
On a $50,000 loan, 7 months interest equaled $3,500. What is
the interest rate of the loan:
a. 12%
b. 12.5%
c. 11.5%
d. 9.125%
e. 12.75%
The answer is: a.
12%
1. Find out what
one month's interest is:
(Divide $3,500 by 7 months to get one month's interest in dollars)
3500 ÷ 7 = 500
2. Multiply $500 times 12 months to get a year's interest (You want to figure
interest per year or per annum)
12 x 500 = 6,000
3. Divide the loan amount ($50,000)
into the yearly interest ($6,000) to find the annual interest rate
6,000 ÷ 50,000 = 0.12
0.12 equals 12%
The taxes on a property are $855 a year. How much is this a
day:(Use a 360 day year like they will on the OREC exam)
a. $2.34
b. $2.38
c. $2.73
d. $2.43
The answer is: b.
$2.38
1. Divide $855 by 360 days:
855 ÷ 360 = 2.375
Round up to 2.38
Hint: This is a question to see if you can follow
instructions and use a 360-day year as shown in question.
David pays his first monthly payment of $600 on a new loan of
$88,000, which is amortized at 8% interest. How much of this $600 payment was
applied towards the principal balance?
a.
$13.33
b. $586.67
c. $26.66
d. $39.99
The answer is: a. $13.33
1. Find out what
one year's interest is on an $88,000 loan at 8% interest:
$88,000 x 8% = $7,040 a year
2. Divide $7,040
by 12 months to get one month's interest:
7040 ÷ 12 = $586.6666
Round up to $586.67
3. Subtract the
interest due from the total monthly payment to get the amount that went towards
principal:
$600 - $586.67 = $13.33
Hint: You probably didn’t need a calculator to do
this because you were asked to find the first
month's principal.
Tony’s loan balance is $188,000. If the interest rate on
his loan is 12.5%, how much is one month's interest?
a. $1,253.33
b. $1,504.00
c. $1,958.33
d. $2,350.00
e. $1,598.33
The answer is:
c.
$1,958.33
e. $1,598.33 is WRONG. Look out for
transposed numbers
1. Find out what
one year's interest is:
Multiply $188,000 by 12.5%
188,000 x 12.5% = $23,500
2. Next: divide $23,500 (a year's interest) by 12 to find one
month's interest.
$23,500 ÷ 12 = $1,958.33
A lot measures 250 feet x 350 feet. How many square feet are
in the lot?
a. 87,500
b. 875,000
c. 8,750
d. 85,700
The
answer is:
a. 87,500
A
lot measures 250 feet by 350 feet. How many square feet are in the lot:
d. 85,700 is WRONG!! Look out for answers with the same
numbers as the right answer
1. Multiply 250 by 350
250 x 350 = 87,500
To get the area of a rectangle multiply the short side by the
long side. If all sides are the same length (for example, a square), then
multiply any side by any other side.
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There are 43,560 square feet in an acre. If a lot has
4,465,000 square feet, how many acres is it?
975.58
b. 97.56
c. 1,025.02
d. 102.502
The answer is: d. 102.502
c. is 1,025.02 WRONG. Look out for the decimal place!
1.
Divide 4,465,000 by 43,560
4,465,000 ÷ 43,560 = 102.502
An acre can be any shape, but it consists of 43,560 square
feet. SO, an area 2 feet wide and 21,780 feet long is an acre. (2 x 21,780 =
43,560).
Or, a lot that is 200 feet by 217.8 feet (200 x 217.8 =
43,560) is also an acre.
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How many square feet are there in a rectangular lot that
measures 1000' by 2300'?
a. 23,000,000
b. 2,300,000
c. 230,000
d. 5,280,000
The answer is: b.
2,300,000
a. is 23,000,000 WRONG!! Look out for decimal point
placement!
1.
Multiply 1000 by 2300
1000 x 2300 = 2,300,000
To get the area of a rectangle multiply the short side by the
long side. If all sides are the same length (for example, a square) then
multiply any side by any other side.
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If a lot is a rectangle and it has 30 acres in it and the
short side is 726 feet long, how long is the long side: (Remember an acre is
43,560 square feet)
a. 413
b. 2178
c. 180.37
d. 1800
The answer is: d.
1800
1. Calculate square feet in 30 acres.
30 acres multiplied by 43,560 (the square feet in an acre). 30
x 43,560 = 1,306,800
2. Divide 1,306,800 by 726 (the known side of the rectangle)
3. Multiply one side times the other side. This will equal
the square footage of the rectangle.
1,306,800 ÷ 726 = 1,800
To find the area of a rectangle multiply the short side by
the long side. If all sides are the same length (for example, a square) then
multiply any side by any other side.
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A lot forms a right triangle. The north/south side is 400
feet long and the east/west side is 600 feet long. You don't know how long the
diagonal side is. How many square feet are in the lot?
a. 75,000
b. 240,000
c. 120,000
d. 150,000
The answer is:
c.
120,000
1. Calculate the square feet in 400 x 600 foot lot:
Multiply 400 by 600
400 x 600 = 240,000
2. Divide 240,000 by 2 (a right triangle is one half of the area of the
rectangle)
240,000 ÷ 2 = 120,000
A right triangle is really just one half the area of a
rectangle.
To calculate the area of this right triangle
Find the area of the rectangle and
divide it in half.
400 x 600 = 240,000 ÷
2 = 120,000.
A+ Institute, by Dixie Randock,
Copyright 1997 - 2007. All rights reserved. Registered students of A+ Institute,
who have paid full tuition/fees may copy portions of this material for their own
non-commercial study use. Any other use or reproduction is forbidden.
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