Real Estate Math

Real Estate Math: Finance, Appraisal & Math Real estate math questions appear on every TN salesperson exam — expect 8–10 national questions plus Tennessee-specific transfer tax problems. Mastering a small set of formulas and knowing *when* to apply each one is the difference between passing and retaking. --- ## The Foundation: Part / Rate / Whole Almost every real estate math problem reduces to one relationship: $$\text{Part} = \text{Rate} \times \text{Whole}$$ Visualize it as a triangle: cover the value you're solving for, and the remaining two tell you the operation. | You Need | Formula | |---|---| | Part (dollar amount) | Rate × Whole | | Rate (percentage) | Part ÷ Whole | | Whole (total/base) | Part ÷ Rate | This triangle drives commissions, LTV calculations, tax problems, and more. --- ## Commission Math A commission is the fee paid to a brokerage, calculated as a percentage of the sale price. Formula: Commission = Sale Price × Commission Rate ### Worked Example A home sells for $320,000. The total commission is 5%. The listing broker and buyer's broker split it 50/50. The listing affiliate broker earns 60% of the listing side. 1. Total commission: $320,000 × 0.05 = $16,000 2. Listing side: $16,000 × 0.50 = $8,000 3. Affiliate broker's share: $8,000 × 0.60 = $4,800 Work through each split *sequentially* — the exam loves multi-step commission questions. --- ## Tennessee Transfer Taxes Tennessee imposes two distinct taxes at closing. Know who pays each. | Tax | Rate | Who Pays | Formula | |---|---|---|---| | Deed (Recordation) Tax | $0.37 per $100 of sale price | Seller | (Price ÷ 100) × 0.37 | | **Mortgage…