Real Estate Math Formulas
| Formula | Calculation |
|---|
| Commission | Sale Price × Commission Rate |
| LTV Ratio | Loan Amount ÷ Property Value × 100 |
| DTI Ratio | Monthly Debt ÷ Gross Monthly Income × 100 |
| Down Payment | Sale Price × Down Payment % |
| Loan Amount | Sale Price − Down Payment |
| Tax Proration | Annual Tax ÷ 360 × Days Seller Owned |
| Rent Proration | Monthly Rent ÷ 30 × Days |
| Profit/Loss | Sale Price − Purchase Price − Expenses |
Banker's year = 360 days (30 days/month). Use 365 if not specified as banker's year.
Agency Relationships
| Type | Who Represented | Notes |
|---|
| Seller's Agent | Seller only | Full fiduciary duty to seller |
| Buyer's Agent | Buyer only | Full fiduciary duty to buyer |
| Dual Agent | Both | Requires written consent; limited duties |
| Designated Agency | Each gets own agent | Two agents from same brokerage |
| Transaction Broker | Facilitates only | No full fiduciary duties; some states only |
OLDCAR — Fiduciary duties: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Care.
Fair Housing Act
7 Federal Protected Classes:
- Race
- Color
- National Origin
- Religion
- Sex (includes gender)
- Disability (physical and mental)
- Familial Status (families with children under 18)
Steering = directing to/from neighborhoods by protected class. Blockbusting = inducing sales by suggesting minorities moving in. Redlining = refusing services based on neighborhood demographics. All ILLEGAL.
Listing Types & Deed Types
| Listing Type | Description |
|---|
| Exclusive Right to Sell | Broker earns commission regardless of who sells — most common |
| Exclusive Agency | Owner can sell without paying commission if they find buyer |
| Open Listing | Multiple brokers; only the selling broker earns commission |
| Net Listing | Seller gets fixed amount; agent keeps excess (illegal in many states) |
| Deed Type | Warranties |
|---|
| General Warranty | Covers all history; strongest protection |
| Special Warranty | Covers only seller's ownership period |
| Quitclaim | No warranties — transfers whatever interest grantor has |
| Bargain & Sale | Implies ownership but no express warranties |
Contract Timeline & Financing Types
Offer → Acceptance → Inspection → Appraisal → Financing → Closing
| Loan Type | Key Facts |
|---|
| Conventional | Not gov't-backed; 20% down avoids PMI; strong credit needed |
| FHA | Gov't-insured; 3.5% min down; MIP required; lower credit scores OK |
| VA | Veterans only; no down payment; no PMI; VA funding fee |
| USDA | Rural areas only; no down payment; income limits apply |
TRID: Loan Estimate within 3 days of application. Closing Disclosure 3 days before closing.
Key Disclosure Requirements
- Material defects — any known issue that affects value or use
- Lead paint — required for homes built before 1978 (federal)
- Death on property — varies by state (stigmatized property)
- Sex offenders nearby — varies by state; agents should direct to Megan's Law sites
- Environmental hazards — mold, radon, asbestos, underground tanks
- HOA disclosures — CC&Rs, fees, financial statements
- Agency disclosure — who the agent represents (required at first substantive contact)
- Dual agency consent — written consent required before proceeding
When in doubt, DISCLOSE. Non-disclosure of material facts = license risk + legal liability.
Property Ownership & Key Tax Rules
| Ownership Type | Survivorship | Equal Shares? | Key Fact |
|---|
| Joint Tenancy | YES — right of survivorship | Must be equal | Requires TTIP: same Time, Title, Interest, Possession |
| Tenancy in Common | NO — passes to heirs | Can be unequal | Default form of co-ownership; most common |
| Community Property | Depends on state | 50/50 | 9 states; property acquired during marriage |
| Fee Simple | N/A | N/A | Highest form of ownership; no restrictions |
1031 Exchange: Defer capital gains by reinvesting in like-kind property. Rules: identify replacement within 45 days; close within 180 days; use qualified intermediary.