Question

A broker lists a motel for $1450000. The listing contract specifies a 6.5% sale commission for the first $600000 of selling price, 7% for the next $800000, and 8% commission on all of the actual sale price exceeding $1.4 million. The broker has agreed to a 45-55 split if the property is sold by one of the broker's sales associates. The property is sold "in house". The broker pays the sales associate involved in the transaction 55% of the total commission. What is the sales associate's commission if the associate sells the motel for the listed price?

A. $44550
B. $54450
C. $95000
D. $99000

Answer 1

The sales associate's commission is $54,450 if the motel is sold for the listed price of $1,450,000. Option number b is correct.

Step-by-step explanation:

To calculate the sales associate's commission, we need to determine the selling price of the motel first. Given that the listing price is $1,450,000, we can see that it exceeds $1.4 million. Therefore, the commission for the sales associate on this portion of the sale price is 8%. Now, let's calculate the commission for each tier of the selling price:

1. Commission for the first $600,000: $600,000 * 6.5% = $39,000
2. Commission for the next $800,000: $800,000 * 7% = $56,000
3. Commission for the portion exceeding $1.4 million: ($1,450,000 - $1,400,000) * 8% = $4,000

To find the sales associate's commission, we add up the commissions from each tier: $39,000 + $56,000 + $4,000 = $99,000. However, the sales associate will receive 55% of this commission, so their actual commission amount is $99,000 * 55% = $54,450.

Therefore, the sales associate's commission if the motel is sold for the listed price of $1,450,000 is B. $54,450.