Real Estate Calculations

Jimmie the Gent is interested in property valued at $450,000. Jimmie will qualify for a $375,000 loan. However, Jimmie refuses to purchase if his LTV would fall under 80%. Is Jimmie likely to purchase the property?
Select one:
A.
yes, the LTV is within Jimmie's range
B.
no, unless Jimmie qualifies for another $2,000
C.
yes, so long as Jimmie qualifies for another $10,000
D.
no, unless Jimmie qualified for another $10,000
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Jimmie the Gent is interested in property valued at $450,000. Jimmie will qualify for a $375,000 loan. However, Jimmie refuses to purchase if his LTV would fall under 80%. Is Jimmie likely to purchase the property?
Select one:
A.
yes, the LTV is within Jimmie's range
B.
no, unless Jimmie qualifies for another $2,000
C.
yes, so long as Jimmie qualifies for another $10,000
D.
no, unless Jimmie qualified for another $10,000
First, determine the LTV on property valued at $450,000 on a $375,000 loan. Then, compare Jimmie's minimum LTV with the LTV in question.
$375,000/$450,000 = 0.83 or 83%.

The correct answer is: yes, the LTV is within Jimmie's range
Murphy is going to buy 2 parcels of land. One piece of land contains 3.5 acres and a second is one-half a square mile in area. If the price is $2,000 per acre, what would Murphy have to pay for both parcels?
Select one:
A.
$7,000
B.
$628,540
C.
$647,000
D.
$777,560
First, determine the cost of the first parcel as follows:
3.5 acres x $2,000 per acre = $7,000.
Next, understand that 1 sq. mi. = 640 acres. Now, apply these figures as follows:
640 acres / 2 = 320 acres in the 2nd parcel;
320 x $2,000 = $640,000 for the 2nd parcel;
$7,000 + $640,000 = $647,000.
Therefore, Murphy had to pay $647,000 for both parcels.

The correct answer is: $647,000
Harry the Homeowner purchases a new home, financed with a conventional, amortized loan for $67,000. The interest rate on the loan is 8% payable over 30 years. Harry's first monthly payment is $500. What is the loan balance after Harry's first payment?
Select one:
A.
$60,000.00
B.
$64,557.34
C.
$65,088.46
D.
$66,946.67
First, you must calculate the annual interest as follows:
$67,000 x 0.08 = $5,360.
Next, calculate the monthly interest rate as follows:
$5,360/12 = $446.66.
Next, deduct Harry's monthly payment from the monthly interest:
$500 - $446.66 = $53.34.
Now, we know that $53.34 of Harry's monthly payment is applied toward his principal. Therefore:
$67,000 (loan amount) - $53.34 (first month's principal deduction) = $66,946.67.

The correct answer is: $66,946.67
Real estate taxes for each fiscal year are due on June 30th. The seller hadn't yet paid taxes because the property sells and closes on April 15th (before the bill is due). If the annual property taxes are $2,580, what is the settlement sheet entry for the proration of taxes??
Select one:
A.
Credit to buyer: $2042.50
B.
Debit to buyer: $2042.50
C.
Debit to seller: $537.50
D.
Credit to seller: $537.50
The buyer will get a credit since taxes for the year have NOT been paid. When the bill comes, the buyer will be in possession of the property and will have to pay the full amount, though he has only lived there for 2-1/2 months (1/2 Apr, May, and June). As such, the seller is DEBITED (charged) and the buyer is CREDITED for the previous months:
Monthly Taxes = $2,580 / 12 = $215
Buyer's total taxes = $215 x 2.5 = $537.50
Reimbursement = $2,580 - $537.5 = $2,042.50 credit to buyer
The seller would have a debit for the same amount, but that is NOT one of your choices.

The correct answer is: Credit to buyer: $2042.50
A developer owns four parcels of land. He plans to sell one parcel for construction of an office building. The building plans will require 2 acres, which will include the actual building, landscaping, and parking. Which of the following is the smallest parcel that would accommodate this construction?
Select one:
A.
Parcel A: 83 feet x 950 feet
B.
Parcel B: 102 feet x 840 feet
C.
Parcel C: 120 feet x 860 feet
D.
Parcel D: 140 feet x 900 feet
First calculate the area needed for the construction:
2 acres x 43,560 (sq. ft. per acre) - 87,120 sq. ft.
Then calculate the square footage of each of the lots. 83 x 950 = 78,850; This lot is too small. 102 x 840 = 85,680; This lot is too small. 120 x 860 =103,200; This lot is large enough. 140 x 900 =126,000; This lot is large enough. The question asks which is the smallest lot that would accommodate the construction. Therefore, the answer is Parcel C.

The correct answer is: Parcel C: 120 feet x 860 feet
Taxes are $2,100 per year. The tax rate is $3.00 per $100. The assessed value of the property is 40% of the estimated market value. What is the market value of the property?
Select one:
A.
$70,000
B.
$90,000
C.
$157,000
D.
$175,000
First, use the tax information shown to determine the assessed value of the property.
$2,100 (taxes) / $3.00 (rate) x $100 = $70,000.
Next, use the assessed property value to find the market value of the property.
$70,000 (assessed value) / 0.40 (40%) = $175,000 market value.

The correct answer is: $175,000
Which of the following formulas is used to determine annual real estate taxes?
Select one:
A.
Sales Price multiplied by the Tax Rate
B.
Assessed Value multiplied by the Tax Rate
C.
Appraised Value multiplied by the Tax Rate
D.
Market Value multiplied by the Tax Rate
Annual taxes are calculated by this formula: Annual = Assessed value x Tax rate. Market value, sales price, and appraised value are determined by other elements.
The correct answer is: Assessed Value multiplied by the Tax Rate
A developer has 25 acres, which he plans to sub-divide into 1/2 acre building lots. Of the total tract, he must dedicate five percent for streets and 15% for recreation and open space. Each lot will sell for $19,560. What is the developer's potential income?
Select one:
A.
$978,000
B.
$789,375
C.
$782,400
D.
$391,200
- First, understand that the total number of acres to develop is 25.
- Next, deduct 20% (5% for streets, 15% for recreation), or 5 acres. Now, you know that the number of acres to sell is 20 (25-5).
- Then, multiply the 20 acres by 2 (because these are half acre lots), for a total of 40 lots.
- Finally, multiply 40 lots by $19,560 = $782,400. If you forget that these were 1/2 acre lots and multiplied by 20, you may have selected $391,200.

The correct answer is: $782,400
An agent was to receive 5% commission on a piece of property that listed for $30,000. How much commission would he receive if the owner reduced the selling price by 15%?
Select one:
A.
$1,275
B.
$1,380
C.
$1,500
D.
$4,500
Calculate the relevant information, as follows:
Amount reduced = $30,000 x 15% = $4,500
New Listed Price = $30,000 - $4,500 = $25,500
Commission = $25,500 x 5% = $1,275

The correct answer is: $1,275
The current value of Pete and Martha's home, minus the lot, is $125,000. What did Pete and Martha originally pay, assuming the home depreciated 6% per year for the past 10 years?
Select one:
A.
$310,560
B.
$312,500
C.
$355,000
D.
$376,655
First, calculate the total depreciation as follows:
6% per year x 10 years = 60% total deprecation.
Next, determine the percentage of the current value as follows:
100% original cost - 60% total depreciation = $125,000.
Finally, determine the original cost as follows:
$125,000 / 0.40 = $312,500.

The correct answer is: $312,500
A house sells for $54,000 and is assessed at $39,400. Annual taxes are calculated at $0.92 per $100 and are paid every 6 months. What is the semi-annual tax bill? Select one: A. $496.80 B. $363.40 C. $248.40 D. $181.24Assessed Value: $39,400 x 0.0092 = $362.48 annual taxes (12 months); $362.48 / 2 = $181.24 every 6 months. The correct answer is: $181.24Sara is purchasing a home. How much is Sara's down payment if she agrees to pay $80,000 for a house and wants to make a mortgage downpayment of 25%? Select one: A. $15,000 B. $20,000 C. $25,000 D. $30,000Determine Sara's down payment as follows: House cost x Percentage = Downpayment; $80,000 x 0.25 (25%) = $20,000. The correct answer is: $20,000