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Questions and Answers
A real estate broker is due a payment for their services. What is this payment known as?
A real estate broker is due a payment for their services. What is this payment known as?
- Commission (correct)
- Interest
- Point
- Principal
What does 'point' mean in the context of real estate finance?
What does 'point' mean in the context of real estate finance?
- 1% of the loan amount (correct)
- 0.1% of the loan amount
- 10% of the loan amount
- A fixed fee determined by the lender
In real estate, what is the primary use of percentages?
In real estate, what is the primary use of percentages?
- Calculating commissions, interest, appreciation, and depreciation (correct)
- Assessing property value for insurance purposes
- Calculating property taxes only
- Determining zoning regulations
What three components are needed to calculate commission earned?
What three components are needed to calculate commission earned?
For a property valued at $200,000 with an annual appreciation rate of 5%, what is the property's value after one year?
For a property valued at $200,000 with an annual appreciation rate of 5%, what is the property's value after one year?
A property is purchased for $300,000 and depreciates at a rate of 2% annually. Using the formula provided, what is its value after one year?
A property is purchased for $300,000 and depreciates at a rate of 2% annually. Using the formula provided, what is its value after one year?
A borrower takes out a mortgage for $250,000 and is charged 2 points at closing. How much does the borrower pay in points?
A borrower takes out a mortgage for $250,000 and is charged 2 points at closing. How much does the borrower pay in points?
How many square feet are contained in an acre of land?
How many square feet are contained in an acre of land?
In real estate, what does 'front foot' refer to?
In real estate, what does 'front foot' refer to?
How many square meters are there in a hectare?
How many square meters are there in a hectare?
What is the term for the total income from a property before any expenses are deducted?
What is the term for the total income from a property before any expenses are deducted?
Which of the following best describes 'net income'?
Which of the following best describes 'net income'?
What real estate calculation does the following formula apply to? commission earned = final sales price x commission rate
What real estate calculation does the following formula apply to? commission earned = final sales price x commission rate
What is the 'principal' in the context of a loan or investment?
What is the 'principal' in the context of a loan or investment?
Which of the following defines 'interest' in financial terms?
Which of the following defines 'interest' in financial terms?
If a loan is for $300,000 and carries a 3% interest rate, what is the annual interest owed?
If a loan is for $300,000 and carries a 3% interest rate, what is the annual interest owed?
A commercial property generates $100,000 in gross income annually but has operating expenses totaling $35,000. What is the net income of the property?
A commercial property generates $100,000 in gross income annually but has operating expenses totaling $35,000. What is the net income of the property?
What is the future value of a $150,000 property after 5 years, appreciating annually at 4%?
What is the future value of a $150,000 property after 5 years, appreciating annually at 4%?
A piece of equipment valued at $50,000 depreciates at a rate of 10% each year. Using the formula provided, what is its value after 3 years?
A piece of equipment valued at $50,000 depreciates at a rate of 10% each year. Using the formula provided, what is its value after 3 years?
A real estate agent sells a property for $450,000 with a commission rate of 2.5%. How much is the commission earned?
A real estate agent sells a property for $450,000 with a commission rate of 2.5%. How much is the commission earned?
A property owner divides a 5-acre parcel into smaller lots. How many square feet is the entire parcel?
A property owner divides a 5-acre parcel into smaller lots. How many square feet is the entire parcel?
A developer purchases a lot with 200 feet of frontage at a price of $5,000 per front foot. What is the total purchase price of the lot?
A developer purchases a lot with 200 feet of frontage at a price of $5,000 per front foot. What is the total purchase price of the lot?
An investor wants to buy a 2-hectare piece of land. How many square meters is the land?
An investor wants to buy a 2-hectare piece of land. How many square meters is the land?
A property is listed for $600,000 and sells for $570,000. If the commission rate is 3%, how much commission would the real estate agent make?
A property is listed for $600,000 and sells for $570,000. If the commission rate is 3%, how much commission would the real estate agent make?
What is the annual interest owed on a loan with a principal balance of $400,000 and an annual interest rate of 4.5%?
What is the annual interest owed on a loan with a principal balance of $400,000 and an annual interest rate of 4.5%?
A property is valued at $350,000, and it increases by 6% each year. What is the value of the property after one year?
A property is valued at $350,000, and it increases by 6% each year. What is the value of the property after one year?
A piece of equipment valued at $60,000 depreciates at a rate of 8% each year. What is its value after 2 years?
A piece of equipment valued at $60,000 depreciates at a rate of 8% each year. What is its value after 2 years?
A borrower takes out a mortgage for $200,000 and the lender charges 2 points at closing. How much does the borrower pay in points?
A borrower takes out a mortgage for $200,000 and the lender charges 2 points at closing. How much does the borrower pay in points?
A real estate agent sells a property for $800,000 with a commision rate of 3%. How much is the commission earned?
A real estate agent sells a property for $800,000 with a commision rate of 3%. How much is the commission earned?
What is the future value of a $200,000 property after 10 years, appreciating annually at 5%? FV = future value PV = present value a = appreciation rate n = number of years FV = PV x (1+a)^n
What is the future value of a $200,000 property after 10 years, appreciating annually at 5%? FV = future value PV = present value a = appreciation rate n = number of years FV = PV x (1+a)^n
What is the net income from a property that accumulates $200,000 annually, and has $40,000 in expenses?
What is the net income from a property that accumulates $200,000 annually, and has $40,000 in expenses?
A building valued at $1,000,000 has an annual depreciation of 3%. What is the value of the building after 5 years?
A building valued at $1,000,000 has an annual depreciation of 3%. What is the value of the building after 5 years?
A property valued at $300,000 increases in value by 4% annually. What is its value after 3 years?
A property valued at $300,000 increases in value by 4% annually. What is its value after 3 years?
A loan has a principal balance of $150,000 with an annual interest rate of 5%. What is the annual interest owed?
A loan has a principal balance of $150,000 with an annual interest rate of 5%. What is the annual interest owed?
How many acres are there in a parcel of land measuring 87,120 square feet?
How many acres are there in a parcel of land measuring 87,120 square feet?
What is the commission earned on a property that sells for $750,000 with a commission rate of 2.5%?
What is the commission earned on a property that sells for $750,000 with a commission rate of 2.5%?
A piece of machinery is valued at $25,000 and depreciates at 10% yearly. What is the value after 3 years rounded to the nearest dollar?
A piece of machinery is valued at $25,000 and depreciates at 10% yearly. What is the value after 3 years rounded to the nearest dollar?
A real estate agent sells a property for $900,000 with a commission rate of 3%. How much commission is earned by the agent?
A real estate agent sells a property for $900,000 with a commission rate of 3%. How much commission is earned by the agent?
What is the future value of a property initially valued at $400,000 after 5 years, with an annual appreciation rate of 4% ?
What is the future value of a property initially valued at $400,000 after 5 years, with an annual appreciation rate of 4% ?
Flashcards
Commission
Commission
A sum paid to a real estate broker for their services.
Point
Point
Equal to one percent of a loan amount.
Calculating Commissions
Calculating Commissions
The formula is: Final Sales Price x Commission Rate.
Calculating Interest
Calculating Interest
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Appreciation Formula
Appreciation Formula
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Depreciation Formula
Depreciation Formula
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Acre
Acre
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Front Foot
Front Foot
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Hectare
Hectare
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Gross Income
Gross Income
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Net Income
Net Income
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Principal
Principal
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Interest
Interest
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Study Notes
- Commission is a sum due to a real estate broker for services.
- A point is equal to 1% of a loan amount; for example, 1 point on a $100,000 loan is $1,000.
Calculating Commissions
- Percentages are used in calculating commissions.
- Calculations include the amount of commission earned, commission rate, and final sale price.
- Commission earned = final sales price X commission rate
Calculating Interest
- Used to determine how much money is owed on a loan.
- Interest rate is the cost of borrowing money.
- Amount owed on loan = principal balance x annual interest rate
Appreciation
- Property value appreciates by a percentage each year.
- Property value X % increase each year (expressed as a decimal with a 1 in front, like 1.03) = new property value
- FV = future value, PV = present value, a = appreciation rate, n = number of years
- FV = PV x (1+a)^n
Depreciation
- Property value depreciates by a percentage each year.
- Property value X % decrease each year (take % into a decimal and subtract it by 1 for example 1 -.05 =.95 which you would use as your number = property value
- FV = future value, PV = present value, d = depreciation rate, n = number of years
- FV = PV x (-d)^n
Points
- 1 point = 1%
Measurements
- An acre equals 43,560 square feet.
- Front foot refers to the length of a parcel facing a street.
- A hectare is equal to 10,000 square meters.
Income
- Gross income is the total income from property before any expenses are deducted.
- Net income is the result of subtracting expenses from income.
Principal and Interest
- Principal is a sum of money lent or invested on which interest is paid.
- Interest is a fee paid by the borrower of a loan as compensation for the use of money.
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