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LESSON 6

 

Now that we know how to do things individually, we have to start getting used to combining several steps in the same question.DONíT PSYCH YOURSELF OUT!If you can do each step separately, thereís no reason you canít do multiple steps together in the same question.

 

Letís say we want to sell the following lot.

 

The lot sells for $18 per square foot and the seller pays a 6% commission.If the listing broker keeps 60% of the total commission, what was the dollar amount received by the selling broker?

 

First, we will have to break the lot into shapes that we have a formula for.There is no formula to calculate the area of an irregular shape.We can break this lot into a rectangle, a trapezoid and a triangle, as shown below.

 

 

The rectangle is 60í X 65í, which gives us 3,900 square feet.The right side of the property is 90 feet long.The first 65 feet is part of the rectangle, but the property line continues for another 25 feet (90 minus 65).That 25 feet is part of the trapezoid.On our trapezoid, we add the two parallel sides (Base 1 + Base 2), which are 60 feet and 30 feet, then we divide by 2 to get the average length of the two sides, and then we multiply by the height of 25 feet to find the area of that trapezoid.So 60 + 30 = 90.90 divided by 2 equals 45.

45 X 25 = 1,125 square feet.The triangle has a base of 30í and a height of 40í (really a frontage of 30í and a depth of 40í).30 X 40 = 1,200.1,200 divided by 2 equals 600 square feet.To get the total square footage of the lot, we just add the three amounts together.3,900 + 1,125 + 600 = 5,625 square feet.

 

Now that we have the square footage, we multiply that by the amount per square foot.

 

††††††††††† 5,625 X 18 = $101,250 (the total cost of the property)

 

Then we multiply that by 6% to get the total commission.101,250 X 6% = $6,075.

 

Now if the listing broker KEEPS 60%, that means the selling broker will get 40%, which is the amount we need (100% minus 60% equals 40%).

 

6,075 X 40% = $2,430, which is the answer to the complete question.

 

Once you get the hang of this, the entire problem can be done in 45 seconds.Look what we really did on our calculator:

 

60 X 65 = 3,900 (write 3,900 down on scrap paper)

60 + 30, divided by 2, times 25 = 1,125 (write 1,125 down on scrap paper)

30 X 40, divided by 2 equals 600

600 (already on your calculator) + 1,125 + 3,900 X 18 X 6% X 40% = 2,430

 

Another important lesson you need to learn is to PAY ATTENTION TO THE QUESTION!Notice we did not use the 60% in our calculation, but instead we used the 40% received by the selling broker.This is just a simple example.In questions you may actually get on your exam, the catch may be far less noticeable, so you have to be EXTREMELY careful!

 

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