Calculating the Minimum Selling Price for Home Sales in Utah

What is the minimum selling price of the home if Mrs. Brown wants to net $150,000 after paying a 6.5% brokerage fee and $3,900 in closing costs?

• A. $153,900.00
• B. $2,367,692.30
• C. $164,327.80
• D. $164,598.93

Answer: (D)

To determine the minimum selling price at which Mrs. Brown can net $150,000 after accounting for the brokerage fee and closing costs, we start by breaking down the costs involved. The total expenses consist of a 6.5% brokerage fee and $3,900 in closing costs. To find the selling price, we first need to express it in terms of the net amount Mrs. Brown desires. Let \( P \) be the minimum selling price. The brokerage fee is calculated as \( 0.065P \). After paying this fee, Mrs. Brown will retain \( P - 0.065P = 0.935P \). From this amount, she also needs to cover the closing costs of $3,900, so we need to set up the following equation: \[ 0.935P - 3,900 = 150,000 \] Now, we can manipulate this equation to find \( P \): 1. First, add $3,900 to both sides of the equation: \[ 0.935P = 150,000 + 3,900 \] \[ 0.935P = 153,900 \] 2. Next, divide both sides by 0.935

When it comes to selling a home, understanding your minimum selling price is crucial to achieving your financial goals. Just ask Mrs. Brown, who wants to net $150,000 after selling her home. Are you ready to dive into the numbers? Let’s break it down together!

Let’s Set the Scene

You may be thinking, “What’s the big deal with a brokerage fee and closing costs?” Well, they can sneak up on you if you’re not paying attention! In Mrs. Brown's case, she has to factor in a 6.5% brokerage fee and a flat $3,900 in closing costs. So, how do we find out how much Mrs. Brown needs to sell her house for? Here’s the plan: we set up an equation based on her desired net amount.

Unraveling the Total Costs

Let’s denote the minimum selling price as P. Here’s where it starts to get mathematical, so hang with me!

• The brokerage fee is a percentage of the selling price: 0.065P.

• After paying this fee, she holds on to 0.935P (that’s P minus the fee).

• But wait, she also has to cover those pesky closing costs of $3,900!

This gives us the equation:

0.935P - 3,900 = 150,000

(We're trying to find out what P needs to be so that after all the fees, she walks away with her goal!)

Solving for the Selling Price

Alright, let’s solve this puzzle step-by-step, shall we? First things first, add the closing costs back into the mix.

0.935P = 150,000 + 3,900

0.935P = 153,900

Now comes the fun part—dividing!

P = 153,900 ÷ 0.935

Take your time with this division; it’s important!

After a little number crunching, we find:

P ≈ $164,598.93

Voila! That’s the minimum price Mrs. Brown needs to set. Easy as pie, right?

And Why Does This Matter?

Understanding how to calculate this selling price isn’t just about numbers—it’s about making informed decisions. Real estate can be emotional, full of ups and downs, but having clarity can give you that edge when negotiating. You wouldn’t want to sell yourself short, would you?

Think Bigger

This concept of financial clarity goes beyond just one sale. Whether you’re helping clients buy or sell, having a sturdy grasp of brokerage fees and closing costs will serve you well when pursuing your Utah General Sales License. And what a ride that can be!

Final Thoughts

Mrs. Brown’s situation might seem specific, but it illustrates a fundamental principle in real estate: always know your numbers. Preparing a solid foundation with these calculations can transform a stressful sale into a smooth transaction.

So, next time you're faced with a similar situation, remember why numbers matter—they make your dreams achievable. Happy selling!