Quick Reference
Real Estate Math Formulas Cheat Sheet
The real estate exam has 10–15 math questions. Here are all the formulas, organized by topic, with the key relationships you need to recognize immediately.
Commission Formulas
Commission = Sales Price × Commission Rate
Sales Price = Commission ÷ Commission Rate
Commission Rate = Commission ÷ Sales Price
Agent's Share = Broker's Commission × Agent Split %
Reverse (net to seller): Sales Price Needed = Desired Net ÷ (1 − Commission Rate)
Loan & Value Formulas
LTV = Loan Amount ÷ Appraised Value × 100
Loan Amount = Appraised Value × LTV%
Down Payment = Purchase Price − Loan Amount
Monthly Interest = Loan Balance × Annual Rate ÷ 12
Monthly Principal = Monthly Payment − Monthly Interest
Investment Formulas
Cap Rate = NOI ÷ Value × 100
Value = NOI ÷ Cap Rate
NOI = Value × Cap Rate
GRM = Sales Price ÷ Gross Monthly Rent
Sales Price = GRM × Gross Monthly Rent
Cash-on-Cash Return = (NOI − Annual Debt Service) ÷ Cash Invested × 100
Tax & Proration Formulas
Assessed Value = Market Value × Assessment Ratio
Annual Tax = Assessed Value × Mill Rate ÷ 1,000
Daily Rate (365-day): Annual Amount ÷ 365
Daily Rate (360-day/banker's year): Annual Amount ÷ 360
Proration Amount = Daily Rate × Number of Days
Seller's Net & Points
Seller's Net = Sales Price − All Costs (mortgage payoff, commission, closing costs)
Sales Price Needed = Desired Net ÷ (1 − Total Cost %)
1 Discount Point = 1% of Loan Amount
Points Cost = Loan Amount × Number of Points × 0.01
Math Tips for Test Day
What is the T-Bar / IRV method?
IRV stands for Income, Rate, Value. Draw a T: Income on top, Rate and Value side by side below. Cover the unknown: if covering Value → Income ÷ Rate. If covering Rate → Income ÷ Value. If covering Income → Rate × Value. Works for commission, cap rate, LTV, and GRM problems.
How do I remember 360-day vs 365-day proration?
Some states and proration types use a 360-day 'banker's year' (12 months × 30 days). Others use the actual 365-day year. The exam question will typically specify which to use.