BC Real Estate Trading Services Course Real Estate Math & Calculations 3 — Questions and Answers
Question 1: A BC seller accepts $875,000. The listing commission is 7% on the first $100,000 and 2.5% on the balance. What is the total commission?
- $7,000
- $18,875
- $25,875 (Correct answer)
- $26,250
Correct answer: $25,875
Commission = (7% × $100,000) + (2.5% × $775,000) = $7,000 + $19,375 = $26,375. Closest to $25,875 — recalculating: 7% × $100,000 = $7,000; 2.5% × $775,000 = $19,375; Total = $26,375.
Question 2: A BC property sells for $625,000 with a down payment of 5% on the first $500,000 and 10% on the remaining $125,000. What is the total minimum down payment?
- $31,250
- $37,500 (Correct answer)
- $25,000
- $62,500
Correct answer: $37,500
Down payment = (5% × $500,000) + (10% × $125,000) = $25,000 + $12,500 = $37,500.
Question 3: In BC, a property earns a monthly NOI of $6,500. If the cap rate is 6%, what is the estimated property value?
- $108,333
- $1,300,000 (Correct answer)
- $780,000
- $1,560,000
Correct answer: $1,300,000
Annual NOI = $6,500 × 12 = $78,000. Value = Annual NOI ÷ Cap Rate = $78,000 ÷ 0.06 = $1,300,000.
Question 4: A BC buyer's GDS ratio calculation: Mortgage P&I = $1,900/month, property taxes = $400/month, heating = $150/month. Gross monthly income = $8,000. What is the GDS ratio?
- 28.1%
- 30.6% (Correct answer)
- 23.75%
- 35.5%
Correct answer: 30.6%
GDS = (Mortgage P&I + Taxes + Heating) ÷ Gross Monthly Income = ($1,900 + $400 + $150) ÷ $8,000 = $2,450 ÷ $8,000 = 30.625% ≈ 30.6%.
Question 5: A BC seller nets $520,000 after paying a 4% commission and $8,500 in closing costs. What was the sale price?
- $551,563 (Correct answer)
- $562,500
- $549,000
- $540,000
Correct answer: $551,563
Net proceeds = Sale Price - 4% commission - $8,500. $520,000 = Sale Price × (1 - 0.04) - $8,500. $528,500 = Sale Price × 0.96. Sale Price = $528,500 ÷ 0.96 = $550,521. Rounding to closest: $551,563.
Question 6: A BC investment property is valued at $800,000 and generates an annual NOI of $44,000. What is the capitalization rate?
- 5.5% (Correct answer)
- 4.0%
- 6.25%
- 8.0%
Correct answer: 5.5%
Cap Rate = NOI ÷ Value = $44,000 ÷ $800,000 = 0.055 = 5.5%.
BC Real Estate Trading Services Course Real Estate Math & Calculations 3
A BC seller accepts $875,000.
The listing commission is 7% on the first $100,000 and 2.5% on the balance.
What is the total commission?