WA PSI Real Estate — Critical Numbers & Formulas

Land & Area — Must-Know Numbers

land

1 Acre 43,560 sq ft

1 Mile (linear) 5,280 ft

1 Square Yard 9 sq ft

1 Cubic Yard 27 cubic ft

1 Section (1 sq mile) 640 acres

1 Township 36 sections · 6×6 miles

Section Fractions

½ Section 320 acres

¼ Section 160 acres

⅛ Section 80 acres

¹⁄₁₆ Section 40 acres

¹⁄₃₂ Section 20 acres

¹⁄₆₄ Section 10 acres

Area Formulas

land · math

Rectangle / Square

Area = Length × Width

Triangle

Area = ½ × Base × Height

Volume (3D)

Volume = Length × Width × Height

Convert sq ft → Acres

Acres = Sq Ft ÷ 43,560

Section math trick

640 × (each fraction multiplied)
  NW¼ of SE¼ = 640 × ¼ × ¼ = 40 acres

Subdivision — usable lots

Lots = Usable Area ÷ Lot Size
  Always round DOWN (no partial lots)

Commission Math

math

Basic commission

Commission = Price × Rate

Seller's required selling price (net a specific amount)

Price = Desired Net ÷ (1 − Commission Rate)
  e.g. Net $340K @ 6% → $340K ÷ 0.94 = $361,702

With closing costs added

Price = (Net + Closing Costs) ÷ (1 − Rate)

Seller's actual net (reverse)

Net = Price − Commission − Closing Costs

Profit goal: sell for X% profit

Step 1: Desired Net = Cost × (1 + Profit%)
  Step 2: Add closing costs
  Step 3: ÷ (1 − commission rate)

Part = Whole × % universal rule

Part ÷ Whole = % | Part ÷ % = Whole

Capitalization & Income

math · appraisal

Three-way cap rate formula (know all forms)

Value  = NOI ÷ Cap Rate
  NOI    = Value × Cap Rate
  Cap Rate = NOI ÷ Value

NOI calculation steps

Effective Gross = Gross Income − Vacancy
  NOI = Effective Gross − Operating Expenses
  Do NOT subtract mortgage payments from NOI

OER (Operating Expense Ratio)

Expenses = Gross Income × OER%
  NOI = Gross Income × (1 − OER%)

GRM (Gross Rent Multiplier)

GRM = Value ÷ Annual Gross Rent
  Value = GRM × Annual Gross Rent
  Uses GROSS (not net) rent — quick screening only

Low cap rate → ? value

Lower cap rate = Higher property value
  Higher cap rate = Lower property value

Profit, Loss & Appreciation

math

Core formula

Now = Then × (100% ± Change%)
  Appreciation: Now = Then × 1.10 (if +10%)
  Depreciation: Now = Then × 0.90 (if −10%)

Find ORIGINAL value (Then is unknown)

Then = Now ÷ (100% ± Change%)
  e.g. Now $550K after +10% → $550K ÷ 1.10 = $500K
  e.g. Now $588K after −16% → $588K ÷ 0.84 = $700K

⚠️ Common trap

NEVER add/subtract % from current value directly
  Always DIVIDE by the remaining percentage

Net profit on a sale

Profit = Sale Price − Cost − Commission − Expenses

Interest & Loan Math

loan · math

Annual interest

Annual Interest = Loan Balance × Rate

Monthly interest

Monthly Interest = Annual Interest ÷ 12

Find loan balance from interest paid

Loan = Annual Interest ÷ Rate
  If semi-annual: multiply payment × 2 to annualize first

Loan-to-Value Ratio (LTV)

LTV = Loan Amount ÷ Appraised Value
  Loan = Price × (1 − Down Payment %)

Discount Points

1 point = 1% of loan amount
  Points Cost = Loan × (Points ÷ 100)
  1 point ≈ 0.25% rate reduction to borrower
  1 point = 0.125% effective yield to lender

Effective yield & cash outflow

Eff. Yield = Rate + (Points × 0.125%)
  Cash Outflow = Loan − Points Cost

Sales price from LTV + interest

Step 1: Annualize interest payments
  Step 2: Loan = Annual Interest ÷ Rate
  Step 3: Price = Loan ÷ LTV%

Proration at Closing

math

Three-step process

1. Daily Rate = Annual Amount ÷ 365 (or 360)
  2. Count days of responsibility
  3. Share = Daily Rate × Days

Property taxes — UNPAID at closing

Seller owes buyer a CREDIT for their days
  (buyer will pay full bill later)

Property taxes — PREPAID at closing

Buyer owes seller for days buyer will own
  (seller already paid the full bill)

Prepaid rent

Seller owes buyer for buyer's days of ownership
  Daily = Monthly Rent ÷ 30 days

Prepaid interest (buyer's new loan)

Covers closing date → end of closing month
  Annual Interest ÷ 360 = Daily Rate
  Charge = Daily × Days remaining in month
  ⚠ No payment due next month; first payment = month after

Property Tax

tax · math

Core formula

Tax = Assessed Value × Tax Rate

Mills

1 mill = $0.001 per $1 of Assessed Value
  Tax = AV × (Mills ÷ 1,000)
  e.g. 14 mills → multiply AV × 0.014

Dollar per $100 or $1,000

Per $100:  Tax = (AV ÷ 100) × Rate
  Per $1,000: Tax = (AV ÷ 1,000) × Rate

Assessment ratio

Assessed Value = Market Value × Assessment Ratio
  Find Market Value: MV = AV ÷ Assessment Ratio

Find assessed value from tax paid

AV = Tax ÷ Rate
  e.g. $5,460 tax ÷ 0.014 = $390,000 AV

Ad valorem means "according to value"

Property tax lien priority Super-priority — always #1

Loan Programs — Key Numbers

loan

Conventional Loans

PMI required when LTV exceeds 80%

Typical minimum down payment 5–20%

FHA Loans

FHA minimum down payment 3.5%

FHA mortgage insurance MIP (always required)

FHA — insured by Federal gov't (HUD)

VA Loans

VA down payment $0 required

VA PMI required? No — funding fee instead

USDA Loans

USDA down payment $0 required

USDA property requirement Rural areas only

DTI Ratios (Underwriting)

Front-end ratio (PITI only) ≤ 28%

Back-end ratio (all debt) ≤ 36–43%

Washington State — Critical Numbers

WA law

Licensing

Pre-license education (broker) 90 clock hours

Continuing education per cycle 30 hours / 2 years

CE mandatory core hours 3 hrs (each cycle)

License renewal cycle Every 2 years (birthday)

Late renewal window Up to 1 year (with penalty)

After 1 year expired Must re-apply as new

Trust Accounts & Discipline

Trust account records retention 3 years

Max DOL fine per violation $5,000

Disclosures & Timing

Form 17 (Seller Disclosure) rescission 3 business days

Agency disclosure timing First substantial contact

Written agency agreement required Before / at time of offer

WA Protected Classes (beyond federal)

Federal protected classes 7 (Race, Color, National Origin, Religion, Sex, Disability, Familial Status)

WA additional classes Sexual Orientation · Gender Identity · Veteran Status · Marital Status · Source of Income

Washington Legal Rules

WA law

Foreclosure method Non-judicial (Trustee's Sale)

Security instrument Deed of Trust (3 parties)

Recording statute Race-Notice

Community property Yes — WA is one of 9 states

Both spouses must sign to transfer Community property

Net listings ILLEGAL in WA

Dual agency Legal — written consent required

Designated agency WA preferred solution (in-house)

Governing agency statute RCW 18.86 (REBRA)

Governing licensing statute RCW 18.85

Governing rules WAC 308-124

Water rights system (WA) Prior Appropriation

Statute of limitations — written contract 6 years

Statute of limitations — oral contract 3 years

Federal Deadlines & Day Rules

deadlines

TRID (TILA-RESPA Integrated Disclosure)

Loan Estimate delivery 3 business days

(after receiving loan application) ⤴

Closing Disclosure delivery 3 business days

(before closing date) ⤴

TILA (Truth in Lending Act)

Right of rescission (refinance of primary residence) 3 business days

Lead-Based Paint Disclosure

Homes built before 1978

Buyer inspection period 10 days

FIRPTA

Standard withholding 15% of sale price

Withholding $300K–$1M (owner-occupied) 10%

Exempt if owner-occupied AND price ≤ $300,000

Forward to IRS within 20 days

IRS Form 8300 (Cash Transactions)

Triggers at cash received over $10,000

File within 15 days

Retain records for 5 years

Appraisal — Three Approaches

appraisal

Sales Comparison Approach

Best used for Residential property

Adjust the ___ COMP (not subject)

Comp has feature subject lacks Subtract from comp

Subject has feature comp lacks Add to comp

Cost Approach

Best used for Special-purpose / new construction

Formula

Land Value + (Repro. Cost − Depreciation)

Income (Capitalization) Approach

Best used for Income-producing property

Formula

Value = NOI ÷ Cap Rate

Depreciation Types

appraisal

Physical deterioration — curable Deferred maintenance

Physical deterioration — incurable Structural (short-lived)

Functional obsolescence — curable Outdated but fixable feature

Functional obsolescence — incurable Poor floor plan / design

External / Economic obsolescence Always incurable

(caused by outside forces — freeway, plant) cannot fix what's off your land

OLDCAR — Fiduciary Duties

acronym

O ObedienceFollow all lawful instructions of the principal

L LoyaltyClient's interests above all others, including your own

D DisclosureDisclose all material facts known to the agent

C ConfidentialityDon't reveal client's confidential info without consent

A AccountabilityAccount for all funds and property entrusted to agent

R Reasonable CareUse professional skill and diligence in all actions

MARIA — Fixture Test

acronym

M Method of AttachmentCemented, screwed in = likely fixture

A AdaptabilityCustom-fitted item = likely fixture

R Relationship of PartiesSeller vs. buyer → buyer wins · Landlord vs. tenant → landlord wins

I IntentionDid the party intend to make it permanent?

A AgreementWritten agreement between parties always controls

DUST — Four Elements of Value

acronym

D DemandDesire + purchasing power

U UtilityUsefulness; ability to satisfy needs

S ScarcityLimited supply drives value up

T TransferabilityAbility to convey ownership to another

CLACO — Valid Contract Elements

acronym

C Capacity18+ years old; mentally competent

L LegalityPurpose of contract must be legal

A AgreementOffer + Acceptance (meeting of the minds)

C ConsiderationSomething of value exchanged by both parties

O On Paper (Writing)Real estate contracts must be in writing — Statute of Frauds

Contract Status Cheat Sheet

Illegal purpose VOID

Court-declared incompetent signs VOID

Minor signs VOIDABLE

Fraud / Undue influence / Duress VOIDABLE

No writing (real estate) UNENFORCEABLE

TTIP — Joint Tenancy Four Unities

acronym

T TimeAll owners acquire title at the same time

T TitleAll owners acquire title by the same instrument

I InterestAll owners hold equal shares

P PossessionAll owners have equal right to possession

Right of survivorship Yes — bypasses probate

Must be explicitly stated in deed? Yes

LEGAL-CD — Valid Deed Elements

acronym

L Legal description of property

E Expressed consideration

G Grantor with legal capacity (18+, competent)

A Acknowledgment (notarized grantor signature)

L Legal words of conveyance ("grant and convey")

C Competent grantee (must be identifiable)

D Delivery and acceptanceNo recording required for validity between parties

Deed Types — Protection Level

title

General Warranty Deed Warrants ALL defects (even before ownership)

→ Best for Regular market sales — max buyer protection

Special Warranty Deed Warrants only DURING grantor's ownership

→ Best for Commercial / REO / bank-owned sales

Quitclaim Deed NO warranties — whatever interest grantor has

→ Best for Clearing title, family transfers, divorce

Bargain & Sale Deed Implies grantor has title — no express warranties

→ Best for Foreclosure / tax deed sales

Key Federal Laws — Quick Reference

federal law

RESPA Closing cost disclosure; prohibits kickbacks

TILA / Reg Z Requires APR disclosure

TRID Merged RESPA + TILA (2015)

ECOA No lending discrimination; adverse action notice

CRA Banks must serve all communities / low-income

CERCLA / Superfund Hazardous waste strict liability (even innocent buyer)

Innocent Landowner Defense Requires Phase I Environmental Assessment

Federal Fair Housing Act 7 protected classes

FIRPTA Foreign seller withholding (15% / 10%)

Government Powers — PETE

law

P Police PowerRegulate for public health/safety — no compensation

E Eminent DomainTake property for public use — MUST pay just compensation

T TaxationAd valorem property taxes — super-priority lien

E EscheatOwner dies intestate with no heirs → title passes to state

Condemnation Formal legal process for eminent domain

Inverse condemnation Gov't action reduces value → owner sues

Environmental Hazards — Key Facts

environmental

Lead-based paint — homes built before 1978

Lead paint buyer inspection period 10 days

Radon Colorless, odorless gas

Radon — #___ cause of lung cancer #2

Asbestos removal Licensed professionals only

Wetlands — regulated by Army Corps of Engineers

Wetlands — law Clean Water Act § 404

CERCLA liability Strict — even innocent buyers

⚠ Exam Traps — Common Mistakes

traps

Seller's net — ALWAYS divide, never multiply

÷ (1 − rate) NOT × (1 + rate)

Original value from current (appreciated/depreciated)

÷ the remaining % NOT ± % from current value

Adjust the COMP, not the subject

Comp has pool, subject doesn't → subtract from comp

Semi-annual interest — annualize FIRST

× 2 before dividing by rate to find loan balance

NOI never includes mortgage payments

NOI = before financing costs (debt service)

Net listing — illegal in WA

Correct answer on WA state section is always ILLEGAL

Dual agency — written consent required

Without it → violation, regardless of disclosure intent

Subdivision lots — always round DOWN

You cannot sell a partial lot (fractional = discard)

Property tax lien — super-priority

Comes before first mortgage, judgment lien, all others

Deed doesn't need to be recorded to be valid

Valid between grantor/grantee upon delivery + acceptance
  Recording only protects against third parties