John A. Yoegel

Cheat Sheet / Updated 10-02-2023

Taking a state real estate exam is necessary for becoming a licensed real estate agent. Every state requires real estate agents to have a license — and to take and pass a state examination to get that license. You need to cover a lot of ground in preparation for the test, but your efforts are well rewarded by a fun, exciting career.

Article / Updated 07-10-2023

Licenses for real estate brokers and salespersons are granted by each state. Every state has its own laws governing real estate procedures, practices, and license law. This article gives you a list of issues (in alphabetical order) that you need to find out about in your own state before you take the real estate exam. Real estate laws can be extremely specific from one state to another and are ever-changing either by legislative action or court decree. So, as you’re researching these topics in your home state, try to get the most current and complete information you can find. Often you can go online to get your state’s latest version of its real estate license law. You can be assured that there will be questions on the exam based on what’s in that law. You also need to consult your prelicensing course textbook, handouts, and the instructor. Agency law Agency law, simply stated, is the law that governs the relationship between a client and an agent, in this case a buyer or seller and you their real estate agent. Every state has its own version of how it defines the relationship between a broker/salesperson and a client (the person represented by a broker/salesperson). Of all the state-specific exam information, agency law is perhaps the most complicated and the most important. Look for what your state has to say about the following topics: Agency disclosure Buyer agency Buyer agency agreements Dual agency Listing agreements (including net listings) Transactional or facilitating brokerage Any other types of permitted or prohibited agencies in your state Fair housing In essence, the goal of fair housing laws is to prevent discrimination in housing sales and rentals. Most fair housing laws come from the federal government. Many states, however, and some municipalities, have supplemented the federal regulations with their own. The local rules and regulations usually are stricter than the federal rules. In the case of two different laws covering the same thing, the stricter law applies. Check out: Protected classes: Federal fair housing laws cover a number of groups. You need to check out additional groups that are protected by fair housing standards in your state. For example, sexual orientation may be a protected class in your state even though it’s not a protected class in the federal law. Exceptions to the exceptions: Some municipalities may not permit the same exceptions to the rules that the federal government does. Additional prohibited activities: Federal law is pretty complete in addressing prohibited activities, but check out any supplemental state or local laws. License law Every state has its own procedures for obtaining and maintaining a real estate license. Find out everything you can about your state’s licensing law. Something as minute (and silly, in my opinion) as knowing the fee for filing a change of address has been asked on exams. So, study your state’s law carefully. You probably can check out your state license law online, and you may get a copy of it when you take your prelicensing course. Limitations on land use A variety of local governmental controls govern how you use your property. Questions you may want to ask about local regulations include the following: What board or agency adopts and amends the zoning ordinance? What board or agency grants variations (variances, special permits) from the zoning ordinance? What local procedures are required for approval of a subdivision and who or what board or agency gives the approval? What are the statutory time limits for protesting deed restriction violations? Are any statewide historic preservation programs or environmental review laws in effect? Does your state require you to know something about construction? Money stuff Money makes the world go round, including the world of real estate. A few things that you may want to check out in your state with respect to money issues include: State-sponsored mortgage loan or guarantee programs that may make money available to homebuyers under favorable conditions like lower-than-normal interest rates Special incentive, rebate, or exemption programs for property taxes, such as a senior citizen tax exemption How you protest your property tax assessment Ownership rights, forms, and theories You may want to check out the following ownership issues in your home state: The applicability of the following terms in your state: community property, curtesy, dower, and homestead Whether your state recognizes the right of survivorship in joint tenancy Whether the terms town house and condominium mean the same thing If your state is a title theory, lien theory, or intermediate theory state Whether your state uses tenancy by the entirety or some other form of ownership specific to married couples Property disclosure The general fiduciary duties (the overall responsibilities of an agent to a client) regarding disclosure of information to your principal or client (the person an agent represents) are pretty standard from state to state. The issue of what must be disclosed to the customer, which in most cases is the buyer, can vary. As an agent, you may want to check out the following responsibilities of an agent as well as an owner with respect to disclosure: Latent defects Material defects Stigmatized property Megan’s Law Disclosure procedures Penalties Special environmental hazards, such as earthquake prone areas Tenants’ rights and rent control Check out any laws in your state that specifically guarantee certain protections to tenants in rental buildings. If any are in effect, they may be on a state level or an individual municipal level. These types of laws can cover anything from placement of window guards and other security features to notification about rent increases. Pay particular attention to the number of units a building must have for the laws to apply. The other thing to check out is whether your state or any municipalities in your state have laws that control rental rates and rent increases. I’m not talking about public housing here but rather control over rents in privately owned rental buildings. Check out what the rules are and to what buildings or tenants they may apply. And be aware that even within the same state, two ways for controlling rents may be in effect—one in the cities and one in the suburbs. Transferring ownership involuntarily Two state-specific factors to check out regarding the loss of property against your will are: The statutory time period needed to claim adverse possession or prescriptive rights against someone else’s property. The laws of descent, which govern the distribution of your estate if you die intestate (without a will). Because as an agent you may help heirs dispose of real estate that they’ve inherited, many states want you to know something about these laws. Transferring ownership voluntarily Voluntary transfer of property ownership is the area where you’ll be spending most of your time after you get your real estate license. Perhaps the most important item you need to check out for the exam and for practical purposes is to what extent you’ll be involved in the legal side of things. In some places, real estate agents handle most, if not all, of the work in actually transferring ownership of the property from one person to another. In other parts of the country, attorneys pick up the ball right after an offer is accepted on a piece of property. Regardless of your role in the actual ownership transfer process, some of the specific things that you need to check out for your state’s exam include: The type of deed most commonly used. Requirements for a valid deed. These can vary a little from one state to another. The type of property description most commonly used in a deed. The use of title insurance, abstract of title, or other systems for certifying marketable title to the property. Who pays what closing costs? Who owns the property on the day of closing? Who’s responsible if the property is destroyed while under contract for sale? Whether property transfers commonly close in escrow. With respect to property descriptions, you folks who live in states that came along after the original 13 colonies should know something about how to calculate area and locate property in the rectangular survey system, as well as the other property description systems.

Article / Updated 07-10-2023

Among some other math questions on the Real Estate License Exam, you will be expected to find the assessed property value. The word assessed really means to assign or give a value to something. The assessed value is not necessarily the actual dollar value of the property. A municipality may, for example, assess property at 50 percent of its market value. Market value is the price the property would bring in a fair and open sale on the real estate market. The assessed value is the value of the property that is used for real estate tax purposes. The percentage that is used to calculate the assessed value is called an assessment ratio. To find the assessed value of any given property, you simply use this formula: Market value x assessment ratio (expressed as a decimal) = assessed value Say that the market value of a property is $200,000. In the community that assesses at 50 percent of market value, the assessed value is $100,000. $200,000 (market value) x 0.50 (50 percent assessment ratio) = $100,000 (assessed value) If you take the same property in a community that assesses at 70 percent of market value, the assessed value is $140,000. And if you go to a community that assesses at 100 percent of market value, the assessed value obviously is $200,000. To apply this fairly on a purely mechanical or mathematical basis, the key is that each municipality uses the same assessment ratio for all the properties within its jurisdiction. To fully appreciate how this works, you need to understand that the taxation of property is about equity and not objective value. If you and your friend own property that has the same market value, you should both be paying the same amount of taxes. And because taxes are based on assessed value, the assessed values of each of your properties should be the same. And if your properties have different market values, then the assessed values should be proportionally different, and so should your taxes. Calculating the assessed value of a property based on its market value and the assessment ratio is one of the types of calculations you may have to do on your state’s real estate exam. Property Market Value Assessed Value A $200,000 $100,000 B $300,000 $150,000 C $400,000 ? Properties A and B are being assessed fairly, because each of them is being assessed at the same assessment ratio of 50 percent. Remember the assessment ratio is calculated by dividing the assessed value by the market value. For Property C to be fairly assessed, you multiply the assessment ratio times the market value. $400,000 x 0.50 (50 percent) = $200,000 assessed value As you see, for the assessed values to be proportionally fair, it doesn’t matter what the market values are for properties in a given municipality as long as the assessed value is calculated using the same percentage. Going one step further, as you look at the assessed values in the example, because taxes are based on assessed value, Property C will pay twice as much in taxes as Property A. And that’s fair because Property C is worth twice as much as Property A.

Article / Updated 06-09-2023

Real estate agents can work in a number of places after passing the Real Estate License Exam. In some cases real estate training can provide good background for jobs that may not require a real estate license. Independent brokerages and national franchises The vast majority of real estate agents are employed as salespersons working for independent brokers. An independent broker may have more than one office and be affiliated with a multiple listing system, which enables brokers to share information about properties that are for sale. Many independent brokers have chosen to affiliate themselves with national franchises. These arrangements vary from a fair amount of control and standardization from the franchise’s headquarters to an extremely independent operation in which the local broker pays a fee paid to maintain an affiliation with the national franchise. The benefits of franchise affiliations often are related to the nationwide exposure they provide through major advertising. Franchises frequently provide access to the training programs they require their salespeople to complete. Of course, you definitely need a real estate license to work at a brokerage. Corporations (in and out of the real estate world) The sole purpose of some companies is to buy properties and then lease them out. These are real estate investment companies working for themselves. They may build on and then hold their properties or buy properties with existing structures. These companies may need people to locate properties to invest in, or they may need property managers. As long as you’re working for the company and managing properties it owns, you may not legally need a license to do the work; however, you need to find out whether any of your state’s regulations require a license under those circumstances. On the other hand, if the company provides real estate property management services to other people or companies, a license is more likely to be required. In addition, large corporations, particularly those with significant space or location needs, sometimes hire in-house real estate people. These jobs can involve leasing office or retail space for the company or buying land to locate company facilities. Depending on the company, you may find yourself leasing office space for a new company operation, buying a piece of property to locate a new gas station or fast-food restaurant, or negotiating with someone for an oil/gas lease. Although real estate training is good background for these jobs, a real estate license more than likely is unnecessary from a legal perspective, but may be desired as a job qualification. Business with builders When you’re working with a builder, your job may range from finding land for the builder to build on to selling the houses or other buildings the builder may construct. The main distinction that determines whether you need a license when working with a builder is whether you’re working for that one builder as an employee, in which case you most likely do not need a license. You most likely need a license when working for one or more builders for a fee as an independent contractor. When working with a builder you may find yourself working as an on-site salesperson. You may be spending plenty of time at the building site, showing people new homes or working with them as they select a design and special features or options for the new home the builder will build for them. Government Local, county, and the federal government often hire people to perform real estate services. Typically, large governments employ people to maintain records, sell surplus property, buy property for various purposes, and obtain easements. As a government employee you are most likely exempt from needing a real estate license. People directly employed by one owner to handle their real estate transactions are generally exempt from license requirements, just as you would be if you sold your own house. In this case the employer is the government. In some states there is a specific exemption in the license law for government employees doing real estate work as part of their job. Note that government jobs that deal with real estate are fairly specialized and not widely available. Real Estate appraisals Appraising is a field that’s related to but distinct from a career in real estate brokerage. Although the knowledge you gain in coursework and experience as a broker or salesperson is useful in appraising, a separate license and education are required to become an appraiser. An appraiser’s job is to estimate the value of a piece of real estate in a variety of circumstances. The vast majority of appraisals are done for mortgage-loan purposes. Lenders hire appraisers to estimate the values of properties as a basis for the loans that the lenders extend to buyers. Check here for more information about the appraisal career field. Home inspections Many buyers have the homes they’re considering inspected by home inspectors before buying them. Although you don’t need a real estate license to be a home inspector, some states provide for the licensing of home inspectors. You can get more information about this career field at the National Association of Home Inspectors website.

Article / Updated 06-06-2023

Prepare for your real estate license exam by studying the precise meanings of words used for property that's conveyed or transferred voluntarily — through a number of means. Property can also be lost involuntarily through the forces of nature, law, or the government. And finally — in fact, very finally — property is usually transferred after you die. Become familiar with these real estate words for giving up and losing property: Dedication: When you dedicate property, you essentially give it up voluntarily to the government. An example is a developer giving up streets in a subdivision. Public grant: A public grant of land is just the opposite of dedication; the government actually is giving property to private individuals. Adverse possession: When someone uses your property for a long period of time, you may end up losing the property or having your rights to the property restricted. Avulsion: Avulsion is the sudden loss of land by an act of nature like a landslide. Erosion: A little like avulsion, erosion is the gradual loss of land by an act of nature, like property lost along the bank of a river. Partition: A partition is a legal proceeding to divide property owned by two or more people.

Article / Updated 06-06-2023

The Real Estate License Exam will expect you to have a basic grasp on real estate professions. You’d think that simply knowing what the main players do in a real estate business is pretty obvious, but because of the terminology they share, the distinctions between the players gets a little muddled. Here are quick descriptions of players in the real estate game. Real estate agent: This generic term pretty much refers to anyone who has a real estate license. Real estate broker: This person is the key player. Most states require you to have a broker’s license to perform certain activities like sell houses for other people. Real estate salesperson: Salespeople are allowed to perform all the activities that the state requires a real estate license for. However, a salesperson cannot work independently; he must work under a licensed broker. Associate broker: This person has a broker’s license but chooses to work under another broker rather than opening his own business. Regardless of whether you take the exam for a broker’s or salesperson’s license, your state’s exam writers expect you to know the basics of who a broker is and what a broker does. So regardless of the exam, you should know the material that follows. Brokers A real estate broker is the person in the real estate business who’s primarily responsible for various activities on behalf of the public. Every state has a state real estate license law, usually just called the state license law. The state license law governs these two primary factors in the real estate business: A general list of activities that can be performed only by someone holding a real estate license The requirements for obtaining a real estate license The state license law may specifically address what real estate agents must do during the course of their activities, which includes things like presenting all offers to a seller as soon as possible. A real estate broker is someone who is authorized by the state to perform a certain list of activities on behalf of someone else and collect a fee for doing so. A broker is often called a real estate agent, which is correct in the sense that the broker acts on behalf of someone else (a client). The license law provides a list of activities that can be performed only by someone having a broker’s license. Although specific activities may vary from one state to another, the list of activities requiring a broker’s license generally includes negotiating real estate transactions, including sales, leases, and exchanges. A licensed salesperson or associate broker may perform these activities but only under the supervision of a broker. You usually can do any of the previously mentioned activities on your own behalf without having a real estate broker’s license. In other words, you can sell your own house by yourself without being licensed. The implication is that you also can help someone else like a family member sell a house themselves without a license as long as you don’t collect a fee, but remember the gift of a fancy restaurant meal can be considered a fee. You definitely need a real estate license if you want to collect fees for your work. Salespeople A real estate salesperson is someone who either works as an employee for a real estate broker or more typically as an independent contractor paid by commission. Generally speaking a real estate salesperson is someone who can do all of the activities that a broker can do on behalf of a client, but must do so under the authority and supervision of a broker. Referring to a real estate salesperson as a real estate agent is somewhat accurate. The salesperson sometimes is viewed as a subagent of the broker but, in fact, has the same obligations as the broker with respect to a client. In general you become a salesperson first, spend a number of years learning the business, and then become a broker. Of course, you can remain a salesperson for your entire career. Though unusual at this time, in at least one state, broker is the only type of license available. Associate brokers Some states have an intermediate level of licensing that is called an associate broker. An associate broker has all the qualifications of a broker but doesn’t want to operate his own real estate business. Associate brokers choose to work under the licenses of other brokers just like salespeople. Be sure to find out how your state refers to this level of licensing and what the qualifications are. License law You need to go over your state’s real estate licensing law in detail. Some questions about the law undoubtedly will be on your state exam. Although you need to become familiar with your state’s law in its entirety, pay special attention to the following: Qualifications for real estate licensees-broker and salesperson and associate brokers Requirements for getting the various licenses License fees and other fees associated with licensing Continuing education requirements Special requirements after you get your license, such as requiring a broker to maintain a place of business Exemptions from licensing, such as for attorneys Activities that require a real estate license include Standards of conduct and acceptable practice either with respect to the law and/or a code of ethics Enforcement and disciplinary actions for license law and standards violations

Article / Updated 04-25-2023

The rectangular survey system, often referred to as the government survey system, is based on a system of lines that form rectangles and squares throughout the United States. The first sets of lines respectively are called principal meridians, which run north and south, and baselines, which run east and west. The principal meridians and baselines are based respectively on lines of longitude and latitude. You’re likely to see at least a few questions on the real estate license exams on calculating the area of part of a section, and you’ll also see questions about terminology and some of the measurements that the rectangular survey system uses. You may even see a question or two about the numbering system used for sections. Because the rectangular or government survey system was instituted when the United States was a new country, it was used to describe most of the land west of the original 13 colonies, so most of you are likely to see some questions about this system. Longitude and latitude are imaginary lines that divide the earth through the north and south poles (longitude) and run parallel with the equator (latitude). Principal meridians, baselines, and where they intersect (cross each other) are used as the basis for formulating property descriptions in this system. They are the starting points for describing a property’s boundaries. The following is a list of helpful terms: Quadrangles: The basic squares of land of the rectangular survey system, quadrangles (also government checks, or just checks) are 24 miles square (that means each side is 24 miles long) and are delineated by a principal meridian and a baseline. Quadrangles have an area of 576 square miles, more or less, and are divided into 16 townships. Townships: The divisions of a quadrangle, townships, are six miles square (six miles on each side) and are delineated by township lines. Townships have an area of 36 square miles, more or less, and are each further divided into 36 sections. Sections: The divisions of a township, sections, are one mile square and have an area of one square mile, or 640 acres. Sections can be divided in several ways, but basically for purposes of the United States Geological Survey (USGS), they are divided in quarter sections. Quarter sections: The divisions of a section, quarter sections, are formed by dividing a section into fourths that are delineated by their direction from the center of the section (northwest—NW, northeast—NE, southeast—SE, and southwest—SW). Quarter sections have an area of 160 acres. Half sections: Half section is a description of any two abutting quarter sections within a section, usually accompanied by a directional notation indicating the half of the section in which the two quarter sections are located. Half sections have an area of 320 acres. So, there can be the north, south, east, or west half section. Because of the curvature of the earth, the lines in the government survey system are only theoretically straight. Imagine trying to draw straight lines on a rubber ball. Although the lines start out the same distance apart, they get closer together as you get near one or the other end of the ball. Correction lines and guide meridians were established to correct this problem in the government survey system. Correction lines occur at every fourth township line or every 24 miles north and south of the baseline. The guide meridians occur every 24 miles east and west of the principal meridian. An area bounded on two sides by guide meridians and on the other two sides by correction lines is called a government check, check, or quadrangle, which is 24 miles square, meaning each of its boundaries is 24 miles long. A government check represents an area that measures 576 square miles. Remember that although these correction lines and guide meridians are the way the government deals with the issue of the earth’s curvature, it isn’t the way the government survey system describes land. In reality, because of this earth curvature issue, many sections and townships vary from their exact area measurements. A system of fractional sections and government lots are parts of standard practice to account for these discrepancies. So how does the system describe land? Using principal meridians and baselines as points of reference, land areas are divided by two kinds of lines, township lines and range lines. Township lines, which run east and west, parallel to baselines, are horizontal parallel lines that form township tiers. Think about two lines running from left to right across this page about an inch apart. The range lines run north and south parallel to the principal meridians. These range lines form ranges. Think about two more lines running up and down the page on top of the first two lines, also about an inch apart. You got it: Tic tac toe. Where the two range lines and two township lines intersect, they form a township. Now, the way it really works is for this page to be filled with the lines going up and down and right to left so that you have many townships. The township is the basic unit of measurement in the rectangular survey system. The area created by the intersection of a township line and a range line is a township. The townships are consecutively numbered by their location within the intersection of multiple range lines and township lines. The boundary of each township is 6 miles long, so a township contains 36 square miles and is described as being 6 miles square. These townships are not the same as political subdivisions. Each township is further divided into 36 sections of one square mile each, or 640 acres, by horizontal and vertical section lines. Sections also are numbered consecutively. Section 1 within any township is always located at the upper right or northeast corner of the township. The numbering then moves from right to left across that first upper tier. The numbering continues directly beneath the sixth section, except that it progresses from left to right on the second tier. The numbering changes directions in the third tier from right to left. In other words, after section number 6, it drops down to 7 on the next tier then goes left to right to number 12. Then the numbering drops down to 13 and goes right to left again and so forth: Each section of 640 acres can be divided into halves and quarters called, get this, half sections and quarter sections. These divisions mean just that. For instance, a quarter section always contains 160 acres, or a fourth of the total 640 acres in a section. Specific directional references are needed in the actual description to locate a particular piece of property, but for finding out how large a particular piece of property is, only the fractions matter. Each half or quarter section can be further subdivided into halves and quarters. So, you can refer to the south (S) 1/2 of the northwest (NW) 1/4 of a section in a township, for example. (The figure below shows a variety of divisions in a quarter section.) Figuring out the size of a piece of property, which sometimes is called a parcel, is simple, if you keep in mind that you’re always dealing with a section of 640 acres. Putting the above description into words is half of a quarter section. Doing the math, it’s 1/2 × 1/4 × 640 = 80 acres. A full rectangular survey system property description might read: The SW 1/4 of the NE 1/4 of the NW 1/4 of Section 6, Township 4 South, Range 5, East of the Third Principal Meridian. (This description refers to a 10-acre parcel of land.) The description probably would include the state and county in which the property is located and use abbreviations. So, in the example above, Township 4 South would be T4S. Whenever properties have irregular boundaries, the land may be further described using one of the two other systems described in this section.

Article / Updated 12-29-2021

Every teacher with whom you’ve ever taken a class has told you that the way to successfully pass an examination is to prepare for it. Maybe that’s all they said, leaving you hanging, or maybe they gave you a few hints. But here's a detailed plan for getting ready to take the exam. The plan is based on steps characterized by the letters in the acronym PREPARE. Each of the letters represents a separate step in getting ready for the real estate exam. In some cases, each step is made up of several smaller steps. If you follow these steps and put some reasonable time into mastering the material, you give yourself an excellent chance at passing the state real estate license exam the first time you take it. Provide You need to provide yourself with every opportunity to pass the exam. But, I bet you’re asking, “How do I do that?” Keep the following in mind for test success: Get information about the state exam. No matter whether you’re planning to take the salesperson or the broker exam, you need to find out what subjects, both general and state-specific, are on the test. You also want to find out about the exam’s format, the number of questions on it, and the amount of time you have to complete the test. It may be obvious, but find out where and when the exam is given and how to get there. Remember to check out what you need to bring to the exam (and what you may not bring). Whenever you require special arrangements (for example, if you have a disability or need to bring food into the exam because of a medical condition), find out about that, too. So where can you get all of this info? Try contacting your prelicensing course instructor, your state licensing agency, or the testing company that’s been hired to administer the exam. Take enough time to study. Regular study, instead of cramming at the last minute, consistently seems to be the best way to approach material like this. What’s more, when you leave your studying to the last minute and some emergency develops (believe me, one usually does), you lose out on what little study time you have left. You don’t have to be fanatical about keeping regular study times and hours. You may want to study half an hour or an hour every night and two or three hours on Saturday or Sunday. The point is, put in regular time during a longer time frame so you can grow more comfortable with the material, including state-specific material, and the textbook for your prelicensing course. A quiet place to study. Although having a quiet place to study may seem obvious, it’s worth its own note. Do what you have to, including going to the library if necessary, to crack the books in peace and quiet so you can concentrate and get the most out of your study time. Review Reviewing means that you’ve already read the material, which is what I’m assuming here. After you identify specific subject areas on the state exam you plan to take (either the salesperson’s exam or the broker’s), you need to spend time studying that material. Then it’s time to review the information, and don’t worry about what you need to review or how. Vocabulary and terms Vocabulary is critical on all real estate exams, especially the salesperson’s exam. If you like copying information as a way of studying, you can make a list of terms and their definitions, or prepare a three-by-five file card for each term. Don’t forget to put a little notation on the corner of each card to indicate what general subject the term relates to. Doing so helps you remember the material in context. Or you can carry the card idea one step further and prepare flashcards. Write a term on one side of the card and the definition on the other side. Then you can either have somebody quiz you or quiz yourself. State license law All states have their own real estate license law material, which usually covers more than just how to get a real estate license. It often provides rules and regulations regarding certain business practices in the conduct of a real estate business. It will usually also cover enforcement of standards and disciplinary measures for real estate licensees. This material may be available in hard copy from the state licensing agency or downloadable from the state licensing agency’s website (try an online search for your state’s site), or it may be given to you if you’re required to take a course before taking the exam. Read the material several times, noting those items like license requirements, fees, and business practices. State-specific items In addition to reviewing the general information, make sure that you find out about and review information that you know is unique to your state. You get this information in whatever course you’re required to take. For those of you in states that don’t require a course, if the information is going to be on the exam, it’s probably available in whatever booklet or other exam preparation material is provided by your state real estate licensing agency. Evaluate As you prepare for the state exam, you continually need to evaluate how well you’re mastering the material. Answer some practice and review questions. Go over the answers and then reread the material giving you trouble. Most people have limited amounts of time to devote to studying. Reviewing the real estate exam information enables you to focus your time on the material with which you’re having the most trouble. After reviewing the material in areas where you’re weakest, you can take the review-question exams again, if you like. Practice After you review the material, evaluate your weak and strong points, and review the material again, it’s time for a final run-through. Whenever you can schedule two hours or so, sit down with a piece of paper and the writing tool of your choice and take a practice exam. Score yourself, and go over the answers to the ones you get wrong. If something isn’t clear, review that information. And don’t stop there. Do it again on another day with another practice test. If your scores still are low, review the material again and then go back on another day and take the practice tests again. You need to be able to find out the length (number of questions) of the state exam and the amount of time you’re allowed to complete it. You can use that info to take a self-timed practice exam that simulates the conditions of the real thing. Arrive Someone once said that 80 percent of success is showing up. To ensure that you arrive safely to take your state exam, in good humor, on time, and in the right place, you need to find out where and when the exam is scheduled and how long it takes to get there. With that information in hand, you need to get directions to the exam site (no winging it) and find out if you’re likely to encounter any long waits to getting into the exam and if people routinely are turned away because of overcrowding at the test site. (You can get this information by calling your state licensing agency.) These factors may vary from one exam site to another, especially if your state offers the exam at more than one location. If your state administers the exam in several locations, pick one that’s most convenient for you, which may mean a little farther away but easier to get to or with better parking. When I took my broker’s exam, I chose to drive farther away to a suburban location instead of taking public transportation to the test site in the city. Do whatever makes you more comfortable and leaves plenty of time to be early. If you live far away from the exam site, consider arriving in the area the night before the exam and staying over. Relax Relaxation part one: Relax the night before the exam. Don’t study. Go see an early movie, rent a video, eat a light supper, read a non-real-estate book, and get to bed early. If you regularly meditate, jog, or take long walks, the evening before the exam is a good time for enjoying that kind of activity. Prepare everything you need for the next day, and have it ready to go. Relaxation part two: Try to stay relaxed on the day of the exam. Eat a light, nourishing breakfast. Get to the test site in plenty of time, and follow the instructions to get a seat. If you can, close your eyes for a few seconds, take a few deep breaths, and remember that no one knows this stuff better than you do. Now sit down and feel yourself relax into the moment of actually taking the exam. Relaxation part three: Stay relaxed during the test. You may get caught up in the moment, starting to rush and feel pressured. Every 15 or 20 questions, sit up straight, close your eyes, and take one or two deep breaths. Flex your shoulders and hands, and then begin again. Enjoy I know what you’re thinking: “How can anyone ever enjoy taking a test?” You’ve studied. You’ve reviewed. You’re relaxed. In short, you’re prepared. In your mind you’ve already passed the exam and are making money working in real estate, maybe even having your own brokerage business in time. I hope you’re getting the picture. Taking and passing the test certainly is a challenge, but it’s one that with the right preparation (which you now have), you can easily meet. You’re ready, and your real estate career awaits you.

Article / Updated 03-11-2021

Prepare to review some of the math associated with mortgages. In these calculations, one important term to know is amortized loan, which means that each payment on the mortgage is a combination of principal and interest so that at the end of the mortgage term you have nothing left to pay. How necessary is having a financial calculator for real estate work or for the state exam? A financial calculator is helpful and makes life easier if you know how to use it. As for the state exams, a simple inexpensive calculator does just fine. In fact, you can probably do most of the problems on your fingers and toes (if you have enough of them). How to Calculate Interest A few standard problems that you may find on an exam deal with mortgage interest and principal payments. Here are the likely possibilities. How to Calculate Annual and Monthly Interest All interest on mortgage loans is expressed as an annual interest amount, so if your mortgage interest rate is 8 percent, that’s the annual rate. But most mortgages are paid on a monthly basis, so you sometimes need to calculate how much interest you actually paid in one month based on that annual rate. First, look at an annual interest problem: You borrow $200,000 at 5 percent for 30 years in an amortized mortgage loan. How much interest will you pay the first year? Remember that in a mortgage loan, the interest rate is always quoted annually and is always based on the loan’s unpaid balance: Loan amount × interest rate = first year’s interest $200,000 × 0.05 = $10,000 The 30 years doesn’t matter. It’s extra information to confuse you. Now here’s a monthly problem with different numbers: You borrow $300,000 at 4 percent interest for 30 years in an amortized loan. What is the first month’s interest on the loan? Loan amount × interest rate = first year’s interest $300,000 × 0.04 = $12,000 annual interest You wind up with $12,000 for the first year’s interest. To figure out the first month’s interest, all you have to do is divide the first year’s interest by 12: First year’s interest / 12 months = first month’s interest $12,000 / 12 = $1,000 first month’s interest Note that this monthly interest calculation works this way only for the first month’s interest. Test writers may go further and ask you to calculate the second month’s interest. To answer the question, you need to know what the total monthly payment is, and the test writers will tell you. I’ll continue using the numbers from the previous problem. In this case, the monthly payment, which includes principal and interest, is $1,432 (rounded), information they have to give you. The question is how much is the second month’s interest payment: $1,432 (rounded) (monthly payment) – $1,000 (first month’s interest) = $432 (principal payment) $300,000 (loan amount) – $432 (first month’s principal payment) = $299,568 (loan balance after first month’s payment) $299,568 (loan balance after first payment) × 0.04 (annual interest rate) = $11,982.72 (interest owed for the next 12 months) $11,982.72 (rounded) (interest owed for the next 12 months) / 12 months = $998,56 (interest paid for the first month of that next 12-month period, which is, in fact, the second month of the loan term of the loan) What you need to remember here is that in an amortized loan, you’re only reducing the amount you owe by the amount of principal you pay each month and not by the amount of the total payment, because each payment includes interest and principal. How to Calculate Total Interest A type of interest problem that seems to confuse people is the calculation of total interest. Total interest is the amount of interest you pay during the entire life of the loan, assuming that you pay off the loan by making the payments within the required time frame. In general, banks provide these numbers to people, but you need to be familiar with this calculation because it is fair game on an exam. Say you borrow $300,000 at 5 percent for 30 years in an amortized mortgage loan. Your monthly payments are $1,610 (rounded). What is the total interest on the loan? Most people fool around with the 5 percent for a while, but you don’t need the percentage rate of the mortgage loan to work this problem. Watch this, because you’re not going to believe how easy it is: $1,610 (monthly payment) × 12 months × 30 years = $579,600 total payments during the loan’s 30-year term $579,600 – $300,000 (original loan amount) = $279,600 interest paid during the course of the loan Don’t forget that every amortized loan payment contains part principal and part interest. In this example in 30 years, you pay a total of $579,600 in principal and interest. So if you subtract the principal, or the amount you borrowed, what you have left is interest. It’s also a good demonstration of why you may want to pay that mortgage off as soon as possible. How to Calculate Monthly Payments Unless you use a financial calculator, you’re going to calculate mortgage payments using a mortgage table. These tables, which are arranged according to the percentage of interest and years of the mortgage term, provide the monthly payment to amortize, or pay off interest and principal, for a $1,000 mortgage loan. After you get that monthly payoff number, which sometimes is called the payment factor, you multiply it by the number of thousands of dollars of the mortgage loan (which you get by dividing the loan amount by $1,000). The factor for a 20-year loan at 6 percent is $7.16. What is the monthly payment for a $150,000 loan? $150,000 / $1,000 = 150 (units of a $1,000) 150 × $7.16 (factor to pay off $1,000) = $1,074 per month If you run into a problem like this on the exam, you’ll either get a sample of a mortgage table or be given the payment factor you need to solve the problem. You’ll have to remember the formula in the example. In the real world, that is, when you have your license and are working on your first million, printed mortgage tables, many online mortgage calculation sites, and financial calculators can make all this relatively simple.

Article / Updated 03-11-2021

Because you'll be selling land and buildings as a real estate agent, for the real estate license exam, you need to know how to figure out what size they are. For the real estate license exam, all you really need to know is how to calculate the area and volume of land and buildings after you have the measurements. Area is the amount of space on a flat surface. Calculating the area means figuring out how large a flat space is. It may be determining the square footage of a house, the amount of carpeting or tile needed to cover the floor of a room, or the amount of wallpaper needed to cover a wall. (Remember a wall still is a flat surface.) Volume is the measurement of what it takes to fill up something. In real estate terms, calculating the volume of a warehouse, rather than just its floor area, is important when you're informing a potential buyer how much stackable space the property has. Calculating the Area of a Square or Rectangle A square is a four-sided figure on which each side is the same length. A rectangle is a four-sided figure where two sides opposite each other are equal. For example, a rectangle may have two sides opposite each other that are 150 feet long, and the two other sides opposite each other are 80 feet long. The formula for calculating the area of a square and a rectangle is the same. Length (L) × Width (W) = Area (A) Like most other calculations in this article, when calculating area, the units of measure must be the same. You have to multiply feet by feet, yards by yards, and so on. Furthermore, the answer to any area problem is always in square units. If you're multiplying feet by feet, your answer is in square feet. You have a square piece of property that measures 100 feet by 100 feet. How big is the property? 100 feet × 100 feet = 10,000 square feet Or, say you have a rectangular piece of property that measures 80 feet by 150 feet. What is the area? 150 feet × 80 feet = 12,000 square feet Notice in this second question the longer figure is the length. It really doesn't matter in a problem like this what you call each number. On a piece of land, the distance across the front of the property generally is referred to as the width, while the distance going from the street back is the length or depth. Sometimes a problem may refer to a front foot or front footage, or frontage, which usually is the same as the width of the property along the street. If you get a problem that simply states two measurements of a lot, say 100 feet by 200 feet, assume that the first number is the measurement across the front of the lot, namely the frontage or width. Figuring Out the Area of a Triangle A triangle is a three-sided figure where all the sides join together. Look up at the end of a peaked roofed house and you'll see a triangle. That triangle is called the gable end, and you may have to calculate the area to determine how much paint or siding is needed to cover it. The formula for the area of a triangle is 1/2 Base (B) × Height (H) = Area (A) Some of you may have learned this equation as Base (B) × Height (H) / 2 = Area (A) Similar to the way you calculate the area of a square or rectangle, when calculating a triangle’s area, don’t forget that all the units of measurement must be the same and the answer must be in square units. The height is a line that is perpendicular, or at a right (90-degree) angle, to the base. Say you want to paint your roof’s gable end. The width of the house at that point is 30 feet. The height of the gable is 12 feet. How many square feet are you going to have to paint? 0.5 × 30 feet × 12 feet = 180 square feet Calculating the Area of a Circle A circle essentially is a single line that curves around and meets itself. Pick up that quarter in your pocket, and you’ve got a circle. The diameter is a straight line drawn through the center from one side of the circle to the other, and the radius is half of the diameter. The formula to find the area of a circle is π × radius squared (r2) (To square the radius, you multiply the radius by itself.) π is the constant number 3.1416. Maybe you’re going to build a round patio. Or, if you live in farm country, you may have to rely on some of these calculations when determining the volume of a silo. You’re building a circular patio that’s 16 feet in diameter. How many square feet of patio block will you use? 3.1416 × 8 (squared) = A (area) 3.1416 × (8 × 8) = 201.06 square feet Figuring Out the Area of an Irregular Shape Unfortunately, many houses aren’t single squares or rectangles but rather are combinations of several squares and rectangles. A rectangular house with a small breezeway and attached garage is a good example of what I’m talking about. And the key to calculating the area of a house like this is that you have to divide the figure into squares and rectangles and occasionally even triangles, calculate the area of each individual figure, and then add them together. You can also come pretty close by using this technique to calculate the area of an irregular piece of land. Determining the Volume of Almost Anything The formula for calculating the volume of any six-sided figure involves calculating the area and multiplying it by the height. Why six sided? Most shapes that you may encounter in your real estate work will have six sides with opposite sides of equal dimensions. Think of a warehouse (the example that follows) or a nice concrete patio in your back yard. The first part of the formula looks like you’re finding the area of a flat surface. In the case of volume however you also want to account for the depth or height of the structure so the formula looks like this: Length (L) × Width (W) × Height (H) = Volume (V) Say you want to calculate the volume of a rectangular warehouse that measures 100 feet by 200 feet by 15 feet high. The equation would look something like: 200 feet × 100 feet × 15 feet = 300,000 cubic feet Length × width is the formula for calculating the area, but by multiplying that answer (called the product) by the third dimension, the height, you get the volume. Just like when you calculate area, the measurements must always be in the same units. With volume, the answer is always in cubic units. So, if all three measurements are in feet, the answer will be in cubic feet. In the case of a triangular-shaped object like an attic, in which the triangle’s height already is used to calculate the area, you multiply the area by the length of the attic. The whole formula is 1/2 Base (B) × Height (H) × Length (L) = Volume (V) Finally, suppose you need to find the volume of a cylindrical object like a silo on a farm. Once again, you just have to multiply the area of the silo’s base by the silo’s height. If you had a silo 20 feet in diameter and 30 feet high, what is the volume? π × radius squared (r2) × Height (H) = Volume (V) 3.1416 × (10 feet × 10 feet) × 30 feet= 9,424.8 cubic feet Remember, the area of a circle involves the radius, which is half of the diameter. (That’s why this example uses 10 feet instead of 20 feet.) In case you’re wondering about other shape figures, it's unlikely you'll have to deal with the volume of an octahedron (eight sides) or a tetrahedron (ten sides) or some other unusual shape building. The preceding formula should get you through the exam, your real estate career, and that patio you may want to build in your backyard.