Question

In preparing estimated seller proceeds, you should remember that

a) Closing costs are not included
b) It's solely based on the property's price
c) It only involves the down payment
d) Seller's fees are not considered

Answer 1

Estimated seller proceeds include various expenses like a) closing costs and seller's fees, and are not solely based on the property's price or the buyer's down payment. Escrow can be used to manage periodic expenses, and less than 20% down payments may require mortgage insurance.

Step-by-step explanation:

In preparing estimated seller proceeds, it is essential to remember that this calculation should not exclude closing costs and seller's fees. These costs are deducted from the property's price to determine the actual amount the seller will receive. Estimated seller proceeds take into account various expenses, including agent commissions, potential repair credits, and other transaction fees that may apply. Additionally, these proceeds are not solely based on the property's price or the down payment amount made by the buyer. Understanding the role of escrow is also important, as it can be used to manage periodic expenses, such as home insurance and property taxes, by rolling them into the regular monthly payment. On the buyer's side, making a down payment of less than 20% typically requires the purchase of mortgage insurance, which protects lenders in case of default and adds to the cost of the home over time.