Real Estate Calculations
Commission and net proceeds
Commission equals price times rate, then the firm splits with the licensee by agreed percentage. Seller net equals sale price minus loan payoff minus commission minus closing costs, adjusted for prorations. Prorations split at the closing date; taxes are commonly prorated on a 365-day year and rents on a 30-day month, but the contract controls.
Lending math
LTV equals loan divided by value or price, whichever is lower. Down payment is the difference. Per diem interest equals loan times rate divided by 365. Housing ratio compares PITI to gross monthly income; total debt ratio adds long-term obligations. Points are 1 percent of the loan each.
South Carolina items
There is no separate state real estate transfer tax of the kind other states impose; expect the deed recording fee of 1.85 dollars per 500 dollars of consideration, rounded up. Property tax uses assessed value, which is fair market value times the assessment ratio: 4 percent for an owner-occupied legal residence and 6 percent for other property; tax equals assessed value times millage divided by 1000. One acre equals 43,560 square feet, and 640 acres make a section.
Traps
- Using the sales price instead of the loan amount for points.
- Forgetting to convert mills to a decimal.
- Prorating to the wrong party on the closing day; the contract states who owns the day.
Worked example
A property sells for 412,000. Recording fee: 412,000 divided by 500 equals 824 units, times 1.85 equals 1,524.40 dollars. A 300,000 owner-occupied home assessed at 4 percent gives 12,000 of assessed value; at 250 mills the tax is 12,000 times 0.250, or 3,000 dollars.