UNIT 14—REAL ESTATE RELATED COMPUTATIONS AND CLOSING OF TRANSACTIONS

You can expect to see six questions on the end-of-course exam and six questions on the state exam from this unit.

Learning Objectives

After successfully completing this unit, you will be able to
• compute the sales commission,
• calculate the percent of profit or loss, given the original cost of the investment, the sale price and the dollar amount of profit or loss,
• define settlement and title closing,
• list the preliminary steps to a closing,
• prorate the buyer’s and seller’s expenses,
• calculate the dollar amount of transfer taxes on deeds, mortgages and notes,
• allocate taxes and fees to the proper parties and compute individual costs,
• explain the normal closing statement entries,
• explain the major sections of the Closing Disclosure, and
• demonstrate ability to read and check the Closing Disclosure for errors.

Key Terms

arrearspreclosing inspection
creditprincipal
debitprofit
level payment planproration

Overview

This unit covers many basic computations that you’ll encounter during your real estate career, including real estate commission calculations and how to calculate the percentages of profit and loss. You’ll also learn how to calculate the transfer taxes on deeds and mortgages. The unit will also help you understand the steps leading to a real estate sale closing, as well as understand the Closing Disclosure.