Commission & Splits
Stopping at total commission when the question asks for the associate's share.
Multiply the sale price by the commission rate to find the total commission earned on the transaction.
The agent's share is the total commission multiplied by their split percentage with the brokerage.
When you know the commission earned and the rate, divide to find the original sale price.
Proration
Getting the credit direction backward, or using the wrong 360 vs. 365 day count the question specifies.
The Texas exam specifies whether to divide by a 360-day or 365-day year in each proration question. Use exactly what the question states.
Multiply the daily rate by the number of days owned in the proration period. The question tells you whether the day of closing belongs to the buyer or the seller.
Cap Rate & GRM
Using gross rent for cap rate or NOI for GRM. The exam separates gross from net.
The cap rate measures the rate of return on an income property based on net operating income.
Divide net operating income by the cap rate to estimate value using the income approach.
GRM is a quick comparison tool for income property. Use the gross rent the question gives (monthly or annual).
Property Tax
Applying the rate per $100 before subtracting the homestead exemption from appraised value.
Subtract applicable exemptions from the appraised value before applying the tax rate. Texas Comptroller guidance currently lists a $140,000 school-district residence homestead exemption, and local-option exemptions can also apply.
Texas property tax rates are commonly stated per $100 of taxable value. If a question uses mills, a mill is $1 per $1,000.
Area & Volume
Comparing price per acre to price per square foot before converting units.
Multiply length by width to calculate rectangular area.
There are 43,560 square feet in one acre (memorize this; it is not provided at the test center).
Divide the total price by the square footage to determine price per square foot.
Interest & Loan Costs
Annual interest equals the loan balance times the annual rate. Divide by 12 for a monthly figure.
One discount point equals 1% of the loan amount and is paid to buy down the interest rate.
Loan-to-Value (LTV)
Using asking price instead of appraised value or sale price, whichever is lower.
LTV measures how much of the value is financed. When the exam gives both price and appraisal, use the value it tells you to (often the lower).
The down payment is the difference between the property value and the loan amount.
Seller Net & Required Price
Using equity as seller net or forgetting that commission rises as required price rises.
Seller net is what remains after the loan payoff, commission, and seller closing costs are subtracted.
Required-price problems work backward. Remember that commission and some seller costs grow with the price.
Mortgage Qualifying Ratios
Mixing monthly and annual numbers or leaving taxes and insurance out of PITI.
Compares the housing payment (PITI) to gross monthly income.
Includes the housing payment plus other recurring monthly debt.
Profit, Loss & Equity
Treating appreciation, equity, and profit as the same number.
Equity is the owner's value position before selling costs. It is not the same as profit.
Appreciation measures value increase. Debt does not change the appreciation calculation.
Comparable Sales Adjustments
Adjusting the subject instead of the comparable, or reversing add and subtract.
Add when the comparable is inferior to the subject. You adjust the comparable toward the subject.
Subtract when the comparable is superior to the subject. The subject stays fixed.
Pair this reference with the 14-area study guide and the calculator hub. For more practice, use the math drill.