Art sold his house, which was not encumbered with a mortgage. Closing expenses were $5, 264, and paid a commission of 7% of selling price. He received a check at closing for $372,316. What did the house sell for?
A. $398,000
B. $404,260
C. $406,000
D. $411,100
Answer: C. $406,000
The house sold for $372,316, plus whatever was subtracted from the sales proceeds at closing (that is, the seller's selling expenses). Thus, to get the sales prices (so we can determine the commission), you first add the selling costs to the sales proceeds. $5,264 / $372,316 =$377,580. Then use the seller's net formula. That is, divide the sales price by the commission rate subtracted from 100 (100% -7% =93%). $377,580 / .93 = $406,000.
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