North Carolina Real Estate Exam Math: Deed of Trust, Commission & Proration

Math appears on every North Carolina exam. Here are the key formulas and worked examples specific to the NC exam.

Commission Calculations

Example 1: A home sells for $375,000. Commission is 5.5%, split 50/50 between brokerages. The listing broker's associate earns 55% of the listing side. Calculate the associate's earnings.

Total commission: $375,000 × 0.055 = $20,625
Listing side: $20,625 ÷ 2 = $10,312.50
Associate share: $10,312.50 × 0.55 = $5,671.88

Example 2: A seller wants to net $290,000 after a 6% commission. What price must the home sell for? - Sale Price × 0.94 = $290,000 - Sale Price = $290,000 ÷ 0.94 = $308,510.64

Proration (North Carolina)

North Carolina exams typically use a 365-day year for proration.

Property Tax Example: Annual taxes are $3,650. Closing date: August 15. Taxes are paid in arrears.

Daily rate: $3,650 ÷ 365 = $10/day
Days seller owned (Jan 1 to Aug 15): 31+28+31+30+31+30+31+15 = 227 days
Seller's proration credit to buyer: 227 × $10 = $2,270

HOA Dues Example: Annual HOA dues: $1,800. Closing: March 31. Dues paid in advance Jan 1. - Daily rate: $1,800 ÷ 365 = $4.93/day - Days remaining after closing: April 1 – Dec 31 = 275 days - Seller's credit to buyer (prepaid dues): 275 × $4.93 = $1,356.16

Deed of Trust vs. Mortgage

North Carolina uses a deed of trust instead of a traditional mortgage. This is conceptually tested (not math), but you need to know the parties:

Trustor (borrower): The person who borrows money and conveys title to the trustee
Trustee: Holds legal title until the loan is paid
Beneficiary (lender): Holds the promissory note; benefits when the loan is repaid

When the borrower defaults, the trustee can conduct a non-judicial foreclosure (power of sale) — faster than judicial foreclosure in mortgage states.

Capitalization Rate

Example: A duplex in Charlotte generates $2,400/month per unit. Annual operating expenses are $12,000. Market cap rate is 6%.

Annual gross income: $2,400 × 2 × 12 = $57,600
NOI: $57,600 - $12,000 = $45,600
Value = NOI ÷ Cap Rate = $45,600 ÷ 0.06 = $760,000

Loan-to-Value and Down Payment

Example: A buyer qualifies for a maximum 95% LTV loan. They're purchasing a home at $285,000. What is their minimum down payment?

Loan: $285,000 × 0.95 = $270,750
Down payment: $285,000 - $270,750 = $14,250 (5%)

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