Alabama Real Estate Exam Math: Commission, Proration & Cap Rate

Math questions appear throughout Alabama's 140-question exam. Here are the key formulas with worked examples.

Commission Calculations

Example: Property sells for $310,000. Commission is 6%, split 50/50. Listing agent earns 55% of listing side. - Total: $310,000 × 0.06 = $18,600 - Listing side: $9,300 - Agent: $9,300 × 0.55 = $5,115

Net to Seller: Seller wants $225,000 net after 6% commission. - Sale Price = $225,000 ÷ 0.94 = $239,361.70

Proration

Alabama exams typically use a 360-day year (12 months × 30 days). Confirm on each problem.

Example: Annual taxes $3,600. Closing April 30. Taxes paid in arrears. - Daily rate: $3,600 ÷ 360 = $10/day - Seller's days (Jan 1–Apr 30): 4 months × 30 = 120 days - Seller's credit to buyer: 120 × $10 = $1,200

Capitalization Rate

Example: Apartment generates $52,000 NOI. Cap rate is 8%. - Value = $52,000 ÷ 0.08 = $650,000

Loan-to-Value

Example: Purchase price $260,000. Down payment $39,000. - Loan: $221,000 - LTV: $221,000 ÷ $260,000 = 85% → PMI required

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