Question

A seller netted $55,000 at closing. if the seller paid costs of $1000 and an 8.5% commission, what was the sale price to the nearest dollar?

Answer 1

Answer: The sale price to the nearest dollar was $61,202

We arrive at the answer as follows:

The term 'netted' refers to the seller's profits after deducting costs and commissions.

Hence we need to add back these amounts to arrive at the sale price.

                      Net Proceeds                                       $55,000

Add:              Costs                                                          $1,000  

                     Total                                                         $56,000  

The commission is 8.5%; however commissions are quoted as a percentage of sales price.

Expressed in other words, if the sale price was 100, commissions were 8.5. That would mean that the total above would be the equivalent of $100 - 8.5 = 91.5$

From this we can arrive at the sale price as follows:

$Sales Price = \frac{56000 * 100}{91.5}$

$Sales Price = 61,202$