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Eight years ago the homeowner purchased the property for $500,000. The market in that price range has basically been stagnant since then, and the owner now tells his sales agent (working on a 5.5% commission) he wants to sell the property and at least break even. How much should he list it for?

User Raeann
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1 Answer

4 votes

Final answer:

The homeowner should list the property for at least $529,100.53 to cover the original purchase price of $500,000 plus the 5.5% sales commission in order to break even.

Step-by-step explanation:

To calculate the listing price needed for the homeowner to at least break even after selling the property with the sales agent's commission of 5.5%, we need to account for the commission in the final sale price. First, let's define the original purchase price as P, which is $500,000. The sales commission is represented as C, which is 5.5% or 0.055. To break even, the homeowner needs to recover P plus the sales commission. The equation to calculate the listing price (L) will be:

L = P / (1 - C)

Plugging in the values we have:

L = $500,000 / (1 - 0.055)

L = $500,000 / 0.945

L = $529,100.53

Therefore, the homeowner should list the property for at least $529,100.53 to break even after accounting for the sales commission.

User Quy Tang
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