Freehold
Real Estate Math term
Dividing ongoing expenses like taxes between buyer and seller based on each party's period of ownership.
This term belongs to Real Estate Math. The questions below are real items from Freehold's bank that use it - each one cites its source.
Every Freehold question shows why the right answer is right — and cites its source.
At closing, the seller's prorated share of the annual HOA dues was $637.50 for 8.5 months of ownership (paid in arrears, monthly proration). What is the annual HOA due amount?
$900 — The monthly rate is $637.50 ÷ 8.5 = $75. Multiplying by 12 gives the annual amount: $75 × 12 = $900.
Source: PSI National Real Estate Exam Content Outline §11 Real Estate Calculations
A home sells for $525,000 with a 5.5% commission, $6,400 in closing costs, a $265,000 loan payoff, and a $1,800 property tax proration credited to the buyer. What are the seller's net proceeds?
$222,925 — Commission is $525,000 × 5.5% = $28,875. Net proceeds subtract commission, closing costs, loan payoff, and the tax credit: $525,000 − $28,875 − $6,400 − $265,000 − $1,800 = $222,925.
Source: PSI National Real Estate Exam Content Outline §11 Real Estate Calculations
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