## Real Life Real Estate Math: An agent’s guide to choosing a brokerage

Congratulations! You’re a licensed agent! Your first major decision will be to choose which brokerage you will associate with. Here are some of the numbers you’ll have to take into account when deciding which brokerage you should go with:

1) How many transactions will you do this year? If this is a new full-time career for you, you may be able close a lot more transactions in a year than if you were doing it part-time. You should figure out realistically how much you plan to make. Let’s say you will be doing this full time and you plan to close 6 transactions that have a sales price of \$150,000 each. Your total sales volume would be 6 x \$150,000 = \$900,000.

2) Commission splits – Most brokerages have some type of commission split, where a percentage of your commission is split between your broker and yourself. For example, if you closed a transaction that provided your brokerage with \$5000 and had a 75/25 commission split, you would receive \$5000 * 0.75 = \$3750 from the sale.

3) Desk fees – Some brokerages require a monthly desk fee to cover the overhead costs of running the office.

4) Other expenses (e.g., marketing, lead generation, office expenses, etc…) – You should also take into account what the brokerage will provide you in terms of getting your transactions done. Some brokerages provide business cards, websites, marketing materials, signs, etc. If your brokerage does not provide these materials, you’ll have to pay for it yourself.

5) Intangibles – Although this post is about the numbers, you should also take into account the intangibles, such as brand recognition, mentoring, training, and corporate culture.

### Example: Part-Time Patty versus Full-Time Fred

Let’s say you have two brokerages that offer different fee structures:

Brokerage 1 has a desk fee of \$300/month, \$0 annual fee, and a 90/10 commission split

Brokerage 2 has a desk fee of \$0/month, a \$100 annual fee, and a 70/30 commission split

Let’s assume that the brokerage commission is 3% and that all other fees and expenses are equal. Now let’s take two different new real estate agents:

### Part-time Patty plans to do 2 transactions this year of \$200,000 each for a total volume of \$400,000.

With Brokerage 1

Expenses = \$ 300×12 months = \$3600

Total commission = \$400,000 x 3% brokerage commission x 90% commission split = \$10,800

Total profit = \$10,800 – \$3,600 = \$7,200

With brokerage 2

Expenses = \$55 annual fee

Total commission = \$400,000 x 3% brokerage commission x 70% commission split = \$8400

Total profit = \$8,400 – \$55 = \$8,435

### Full-time Fred plans to do 6 transactions this year of \$150,000 each for a total volume of \$900,000.

With Brokerage 1

Expenses = \$300×12 = \$3,600

Total commission = \$900,000 x 3% brokerage commission x 90% commission split = \$24,300

Total profit = \$24,300 – \$3,600 = \$20,700

With Brokerage 2

Expenses = \$55 annual fee

Total commission = \$900,000 x 3% brokerage commission x 70% commission split = \$18,900

Total profit = \$18,900 – \$55 = \$18,845

## 25 Strategies to Solve Real Estate Math Problems (Part 2)

Taking the real estate licensing exam can be difficult, especially if math isn’t your strong suit. But don’t worry, EZ Real Estate Math is here to help with your real estate licensing exam prep! In the two-part post, we describe 25 strategies for tackling the math questions on your real estate licensing exam. Our first post covers 15 general test taking and real estate exam prep strategies. This second post covers 10 strategies to use when answering a real estate math question.

## Tackling Real Estate Math Questions At The Licensing Exam

1. Recognize the type of problem you are solving. Is it a commission problem, mortgage math, or geometry?

2. Read the entire problem carefully – Know what you are solving for (e.g., are you looking for annual or monthly payments?)

3. Figure out your plan for solving the problem – Many of the problems will require you to do 2-3 math calculations to get to the right answer. Plan your work, then work your plan.

4. Break down word problems into their parts and formulas. Don’t get caught up with all of the words. The words are just extra!

5. Don’t skip steps – For multi-step problems, make sure you write down each step. That way, if you make a mistake, it’ll be easier to see where the problem is.

6. Once you come up with the answer, re-read the problem to make sure you solved for the right thing. Check your units!

7. When you go back to a question that you couldn’t solve, use a new sheet of paper. Sometimes using a new sheet of paper will mentally un-block your approach to solving the problem.

8. Don’t feel like you need to use every piece of information in the problem. Some exams will purposely put additional, unnecessary information in the problem to throw you off, so don’t worry if you do not use a piece of information given in the question.

9. If you have to guess, eliminate as many answers as possible first. Use your best judgment to eliminate obviously wrong answers. For example, let’s say you have a commission problem and you need to solve for the sales price. You know that the sales price will be greater than the commission. Therefore, you can eliminate any answers that are smaller than the commission.

10. If you can’t figure out a question, go back to it later rather than waste too much time on one question. It’s better to work efficiently on the entire test than to spend too much time on a single problem. You don’t need to get 100% correct, so it’s ok skip a problem and go back to it only if you have time. Just don’t skip too many problems!

Remember to take our FREE PRACTICE EXAM to identify the math areas you need to work on and download our FREE e-book “10 Essential Real Estate Math Calculations Every Agent Should Know To Succeed.”

## 25 Strategies to Solve Real Estate Math Problems (Part 1)

Taking the real estate licensing exam can be difficult, especially if math isn’t your strong suit. But don’t worry, EZ Real Estate Math is here to help with your real estate licensing exam prep! In the two-part post, we describe 25 strategies for tackling the math questions on your real estate licensing exam. This first post covers 15 general test taking and real estate exam prep strategies. Stay tuned tomorrow for our second post, which will cover 10 strategies to use when answering a real estate math question.

## General Test Taking Strategies

1. Know how you learn – by reading, hearing, or seeing? We all learn in different ways. You may pick up the information by watching a YouTube video or listen to a podcast. Others may need to read examples to understand the math concepts. By understanding how you learn, you can tailor your studying to maximize its effectiveness.

2. Reach out for help! If you need help, ask for it! Feel free to leave a comment or email us if you have a real estate math question. We’re here to help you pass the real state licensing exam.

3. Practice, practice, practice – Practice makes perfect. The more example problems you see and are familiar with, the better you will do on the licensing exam. Start with our FREE real estate math exam to identify which types of real estate math problems you are having trouble with.

4. Pay particular attention to errors that you do all of the time. Make note of these. Learn from your mistakes. For example, students often solve for an annual payment, when the question asks for a monthly payment. By knowing which mistakes you make often, you can pay particular attention to these on the exam.

5. When you are practicing, keep track of your guessing ability – While you are practicing, keep track of the problems you had to guess at, and if you guessed right or wrong. By keeping track of how you guess, you can become a better guesser.

6. Get a study group together. If you feed off of other people’s energy, you may want to get a study group together to review problems. When you all pass the exam, you will have an immediate network of real estate agents you know!

7. Explain the problem to someone else (it may be your cat!) – Following on the previous strategy, if you can teach someone how to do a problem, you’ll know it much better yourself. If you don’t have a study group, just try to explain it to yourself or even your cat!

8. Come up with a schedule for studying. Don’t wait until the last minute! A schedule allows you to make sure you have enough time to prepare for the exam and that you’ve covered all of the materials you need to. If you’re intimidated by real estate math, creating a schedule also breaks down real estate math into bite-size, do-able chunks.

9. Get to the test site relaxed and prepared – Make sure you have your calculator, ID and required papers in one place before the exam. Do a test run to the exam site and leave plenty of time to get there.

10. Get a good night’s sleep for the exam!

## Real Estate Math Exam Prep Strategies

11. Be familiar with your calculator – Use the same calculator when you are studying as the one you will use on your exam. You don’t want to get frustrated at the exam because you don’t know how to use the calculator. A simple, basic calculator will be enough for all of your calculations.

12. Know the basics inside out – especially decimals, percentages, and the T method . Many of the real estate problems you’ll encounter will require you to do something with decimals, percentages and the T method, so make sure you get these concepts down!

13. Create flashcards for definitions and formulas so you can memorize them. If you’re always on the go, make flashcards so you can review them when you have free time (e.g., waiting for the bus, waiting for an appointment, etc..)

14. Create problem flash cards with step by step solutions on the back. Flashcards don’t have to be just for words and definitions. Write a flashcard for each “typical” problem so you can review those also.

15. Try to associate the concepts with real life experiences. Math is around us every day, so pay attention to relationships between sales price, percentages, and decimals. For example, if you see a shirt that is \$100, and it’s on sale for 50% off, you know the sales price is \$5

Stay tuned tomorrow for more strategies to pass the real estate licensing exam!