Question

You are trying to obtain a listing on a property. Mr. And Mrs. Seller indicate they want to net $75,000.00 after paying off their $7,500 mortgage balance, closing expenses of $2,500, paying you a 7% commission and receiving a refund for prepaid taxes of $1000. How much would the property have to sell for to net the Sellers' $75,000?

Answer 1

Answer: The property will have to sell for $90,322.58 for the Sellers to net $75,000.

We arrive at the answer as follows:

We need to add the expenses to the net amount and deduct any refunds from it to arrive at the Selling price before the sales commission.

So, we have:

Net $75,000

Add: Mortgage Balance $ 7,500

Closing Expenses $2,500 $10,000

Total $85,000

Less: Refund of prepaid taxes - $ 1,000

Total before sales commission $84,000

Since sales commission is 7%, this $84,000 corresponds to 93% of Sales Price.

Hence sales price is
`(84000)/(0.93) = 90,322.58`.