A seller wants to net $200,000 from a transaction but will have to pay off a home loan and other fees, at a total cost of $288,800. The seller will…

To determine the required selling price, first sum the seller's desired net profit and all fixed costs. This total represents the amount the seller must receive after the commission is paid. This amount is then divided by the percentage of the sale price the seller will retain (100% minus the commission rate).

Calculation:

1. Seller's Desired Net + Fixed Costs = $200,000 + $288,800 = $488,800

2. Seller's Retained Percentage = 100% - 6% (commission) = 94% or 0.94

3. Required Sale Price = $488,800 / 0.94 = $520,000

A. This amount fails to account for the 6% sales commission that must be paid from the gross sale proceeds.

B. This is the result of incorrectly adding 6% to $488,800. Commission is calculated on the total sale price, not the seller's net amount.

D. This figure is the result of a significant mathematical error and does not align with the standard formula for calculating a seller's required sale price.

1. North Carolina Real Estate Commission. (2023). North Carolina Real Estate Manual. Chapter 11, "Closing the Real Estate Transaction," Section: Math Calculations. The manual outlines the formula for this calculation as: (Seller's Desired Net + All Seller Costs) / (100% - Commission Rate) = Sales Price.

2. Galaty, F. W., Allaway, W. J., & Kyle, R. C. (2022). Modern Real Estate Practice (21st ed.). Chapter 14, "Real Estate Mathematics." This university-level textbook details the methodology for "seller's net" problems, confirming that all seller financial obligations must be divided by the net percentage remaining after commission.