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NC Real Estate Exam Math: The Formulas to Know, With Worked Examples
Chris Groves, Licensed Broker.
Real estate math is one of the nine topics in Broker Ready NC, and it's the one people tell me they dread most. The good news is that exam math is a short list of repeatable setups. Learn the setup once and most questions become plug-and-solve.
I'm Chris Groves, a licensed Broker in North Carolina and South Carolina. This is a study guide, not an NCREC publication. Check the current candidate handbook for what calculators and formats are allowed on test day.
1. Net to seller (the one that fools people)
The trap is taking the commission off the net. The commission comes off the sale price, so you divide.
Formula: Sale price = Net to seller ÷ (1 − commission rate)
Example: A seller must net $180,000 after a 6% commission and no other costs. $180,000 ÷ 0.94 = $191,489 (rounded). Answer choice $190,800 is the trap: that's $180,000 × 1.06.
2. Commission splits
Work it in order: total commission, then the firm split, then the broker's share.
Example: A $300,000 sale at 5%, split 50/50 between firms, and the listing Broker keeps 70% of their firm's side. $300,000 × 0.05 = $15,000. Half is $7,500. 70% of $7,500 is $5,250.
3. Loan-to-value (LTV) and down payment
Formula: Loan = Price (or appraised value, whichever is lower) × LTV
Example: Price $250,000, appraisal $245,000, 90% LTV. The lender uses $245,000, so the loan is $220,500, and the buyer brings $29,500 to close the gap to the price (before closing costs).
4. Prorations
Find the daily rate, count the days, and decide who owes whom. Use the method the question states (a 365-day year or a 360-day "banker's" year).
Example: Annual taxes of $2,190, paid in arrears, closing on March 31, seller owes through closing day, 365-day year. $2,190 ÷ 365 = $6 per day. January through March 31 is 90 days, so the seller credits the buyer $540.
5. Area and price per square foot
Example: A lot is 120 feet by 200 feet. 120 × 200 = 24,000 square feet. An acre is 43,560 square feet, so that's about 0.55 acre.
6. Percent change and appreciation
Formula: (New − Old) ÷ Old
Example: Bought at $200,000, sold at $230,000. $30,000 ÷ $200,000 = 15% gain.
7. Capitalization rate (value from income)
Formula: Value = Net operating income ÷ Cap rate
Example: NOI of $24,000 at an 8% cap rate is a $300,000 value.
How to practice
Reading formulas isn't the same as solving them under time pressure. In Broker Ready NC you can pick the Real Estate Math topic and loop it. Every question explains why the right answer is right and why the traps are wrong. You get 5 free questions a day, and Pro is a one-time $49.99 for all 311 questions across 9 topics, plus Drive Mode, which reads questions aloud so you can study on your commute.
Next steps
- Start with how to pass the NC broker exam for a full study plan.
- Already passed? Read what new NC Brokers need after the exam.
- See every study tool and kit in the G&G shop.
Broker Ready NC practice questions
Talk with Chris or call (828) 490-9271.
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