Unit 14: Math & Closing
Real Estate-Related Computations and Closing of Transactions
14
6 exam questionsHigh Priority
Closing costs, prorations, commission calculations, and math problems.
Quick Explanation
5 min readReal estate math is critical for the exam. Key formulas: Commission = Sale Price × Rate; NOI ÷ Cap Rate = Value; LTV = Loan ÷ Value. Prorations divide costs between buyer and seller at closing. Always show your work step by step.
Key Points — What Matters for the Exam
1
Commission = Sale Price × Commission Rate2
Cap Rate = NOI ÷ Value (or Value = NOI ÷ Cap Rate)3
LTV = Loan Amount ÷ Appraised Value4
Proration = dividing costs based on days of ownership5
Transfer tax (doc stamps on deed) = $0.70 per $100 of sale price6
Intangible tax on new mortgage = $0.002 per $1 of loan7
Doc stamps on note = $0.35 per $100 of loan amountMemory Trick
For cap rate problems: NOI ÷ Rate = Value. Think 'NOI over Rate gives Value.' If you know 2 of the 3, you can find the third.
Common Trap Answers — Don't Fall For These
Transfer tax (doc stamps on deed) = $0.70 per $100 — NOT $1.00
Intangible tax is on the MORTGAGE amount (not sale price)
Prorations: use 30-day months or 360-day year as instructed
Key Terms for This Unit (1)
Proration
Dividing costs (taxes, rent, HOA fees) between buyer and seller at closing based on ownership days.