Math on the New York real estate exam

Less math than people fear

Valuation and math is a small share of the salesperson exam. The calculations repeat, and a handful of formulas cover almost all of them. Once you can set each one up, these are some of the most reliable marks on the paper.

Commission

Commission is the sale price times the rate. The trap is the split: the total commission is often divided between two firms, then between each firm and its agent. Work through each split in order rather than multiplying all the rates at once in your head.

Percentages and change

Profit or loss as a percentage is the change divided by the ORIGINAL amount, not the new one. Many wrong answers divide by the wrong number.

Area

A rectangle is length times width. Irregular lots break into rectangles and triangles, and a triangle is half the base times the height. Watch the units: square feet and acres are not interchangeable, and a question will often ask for one after giving you the other.

Property tax

Tax is the assessed value times the tax rate. Rates come in different forms, so convert the rate before you multiply.

Proration

At closing, costs such as taxes are split for the days each party owned the property. Find the daily amount, then multiply by the number of days owed. The question tells you which method of counting days to use; follow it exactly.

Income property value

Value is net operating income divided by the capitalization rate. Rearrange the same relationship to find income or rate when the question gives the other two.

How to practice

Write the formula before you plug in numbers, every time. Most math mistakes on this exam are setup mistakes, not arithmetic ones.