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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. DON’T PSYCH YOURSELF
OUT! If you can do each step
separately, there’s no reason you can’t do multiple steps together in the same
question.

Let’s 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 60’ X 65’,
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 30’
and a height of 40’ (really a frontage of 30’ and a depth of 40’). 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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Grade