Real Estate Math
A Nevada broker has a desk fee arrangement. The agent pays $500/month and keeps 100% of commissions. The agent closed 8 deals at an average commission of $5,000 each. What is the agent's net income for the year?
A$34,000✓ Correct
B$28,900
C$40,000
D$28,000
Explanation
Total commission = 8 x $5,000 = $40,000. Annual desk fee = $500 x 12 = $6,000.
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Key Terms to Know
Gross Rent Multiplier (GRM)
A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Math Concepts
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