To net $40,000 from a property sale with 7% commission and $2,500 closing costs, what must the property sell for?

To determine the selling price required to net $40,000 after accounting for a 7% commission and $2,500 in closing costs, it’s essential to understand how commissions and closing costs affect the net proceeds from a sale.

First, you have to calculate the total costs that will be deducted from the sale price. In this case, these include the commission and the closing costs. The commission is generally calculated based on the sale price, which means the net amount received after paying the commission is less than the sale price.

Let’s denote the selling price as “S.” The commission on the sale price would be 7% of S, or 0.07S. The total deductions from the selling price will be the commission plus the closing costs, which is $2,500. Therefore, you can express the net proceeds from the sale as follows:

Net Proceeds = Sale Price - Commission - Closing Costs

Substituting what we know:

$40,000 = S - 0.07S - $2,500

This can be simplified to:

$40,000 = S(1 - 0.07) - $2,500 $40,000 = 0.93S - $2