TN RE Salesperson · Cheat Sheet
| Formula | Use | TN Rule | |
| Commission = Sale Price × Rate | Calculate broker earnings & splits | Apply before taxes | |
|---|---|---|---|
| Proration = Annual Amount ÷ 365 × Days | Prorated taxes, insurance, interest | Earnest money: 3 biz days to deposit | |
| Value (Income) = NOI ÷ Cap Rate | Income property valuation | NOI excludes mortgage | |
| GRM = Sale Price ÷ Monthly Rent | Estimate value = GRM × monthly rent | Quick income analysis | |
| LTV = Loan ÷ (Lower of Appraisal or Price) | Determines PMI requirement | Lender uses lower value | |
| TN Deed Tax = (Sale Price ÷ 100) × 0.37 | Real estate transfer tax | Seller pays | |
| TN Mortgage Tax = (Loan ÷ 100) × 0.115 | Financing tax | Buyer pays | |
| Acreage = Sq Ft ÷ 43,560 | Convert square feet to acres | 1 section = 640 acres | |
| Depreciation = Cost ÷ Useful Life × Years | Cost approach; tax calculation | Physical, functional, external types | |
| Approach | Formula | Best Used For | Key Adjustment |
| Sales Comparison | Adjusted comp prices → estimate | Residential (most common) | CBS rule: better comp = subtract |
| Cost Approach | Land + (Improvements − Depreciation) | New/special-purpose buildings | Depreciation: physical, functional, external |
| Income Approach | NOI ÷ Cap Rate | Investment/rental properties | Exclude mortgage from NOI |
| Item | Detail | TN Note | |
| LTV Threshold | >80% LTV = PMI required | Lender uses lower of appraisal or price | |
| Discount Points | 1 point = 1% of loan amount | Paid upfront; lower rate | |
| RESPA | Loan Estimate (3 days); Closing Disclosure (3 days before closing); no kickbacks | Federal; nationwide | |
| TILA | APR disclosure; 3-day rescission on refinance | Federal; nationwide | |
| Mortgage vs. Deed of Trust | Mortgage = 2-party; DoT = 3-party (trustor, trustee, beneficiary) | Deed of trust = foreclosure vehicle | |
| Mortgage Tax | $0.115 ÷ $100 loan | Buyer pays in TN | |
| Deed Tax | $0.37 ÷ $100 sale price | Seller pays in TN | |
| Type | Cause | Curable/Incurable | Example |
| Physical | Wear and tear | Curable | Peeling paint; roof repair |
| Functional | Design or layout flaw | Curable/Incurable | Stairs in middle of room; outdated kitchen |
| External | Outside forces | Always incurable | Highway noise; nearby landfill; economic decline |
| Confused Pair | Rule | ||
| Cap Rate vs. GRM | Cap Rate for NOI/value; GRM for rent/price quick estimate | ||
| LTV: Loan amount in numerator vs. denominator | Loan ÷ (lower of appraisal/price); >80% triggers PMI | ||
| Proration: 365 vs. 360 days | TN uses 365-day year; annual ÷ 365 × days | ||
| Earnest money deadline | 3 business days to deposit in TN | ||
| Deed tax vs. Mortgage tax payer | Deed = seller; Mortgage = buyer | ||
| RESPA vs. TILA | RESPA = timing/disclosure; TILA = APR/rescission | ||
| Principle | Definition | Exam Focus | |
| Substitution | Value = price of equally desirable substitute | Sales comp basis | |
| Conformity | Maximum value when properties conform to neighborhood | Highest/best use context | |
| Contribution | Component value = change in total value when added | Appraisal adjustments | |
| Highest & Best Use | Legally permitted, physically possible, economically feasible use | Appraisal foundation | |
| Anticipation | Value based on future expectations | Speculation discount | |
| Regression | High-value property next to low-value depressed | Negative adjustment | |
| Progression | Low-value property in high-value area appreciates | Positive adjustment |
EXAM TIP: Finance/Math = ~16–20 questions; focus on formulas first, then TN-specific taxes (deed $0.37, mortgage $0.115). Commission and proration = highest-frequency calc questions.
Aligned to the Tennessee TREC affiliate broker exam outline.
Personalize this sheet — focus it however you study, or build one from the exact questions you keep getting wrong.