Essential Real Estate Math Formulas You Need to Know
Real estate math questions account for 10-15% of your licensing exam. While this might seem daunting, the good news is that you only need to master a handful of formulas.
Commission Calculations
The most common math question type. Remember the commission triangle:
Formula: Commission = Sale Price Ă— Commission Rate
Example: A home sells for $350,000 with a 6% commission. What is the total commission?
- $350,000 Ă— 0.06 = $21,000
Property Tax Prorations
Calculate the buyer's and seller's share of property taxes at closing.
Formula: Daily Rate = Annual Tax Ă· 365
Loan-to-Value Ratio (LTV)
Formula: LTV = Loan Amount Ă· Property Value Ă— 100
Area Calculations
Square Footage: Length Ă— Width
Acres: Square Feet Ă· 43,560
Tips for Math Success
- Memorize the formulas - Create flashcards
- Practice daily - Do 10 math problems per day
- Show your work - Helps avoid careless errors
- Use the calculator - Don't try to do complex math in your head