A broker lists a property at $340,000. The seller agrees to a 5% commission with 60% going to the buyer's broker. The property successfully closes at $350,000. The buyer's broker will receive:

Rationale

The buyer's broker will receive $10,500.

The total commission on the property sale is calculated based on the final selling price of $350,000, which results in a 5% commission. After determining the total commission, 60% of that amount will be allocated to the buyer's broker.

A ($7,000) YOUR ANSWER

This amount represents a commission based on an incorrect calculation. If the property sold for $340,000, a 5% commission would equal $17,000. However, this option does not reflect the actual selling price of $350,000, leading to a miscalculation of the broker's share.

B ($10,500) CORRECT

This is the correct amount. The total commission on the sale is 5% of $350,000, which equals $17,500. Since the buyer's broker receives 60% of this total commission, the calculation is $17,500 * 0.60 = $10,500.

C ($17,000) YOUR ANSWER

This figure represents a 5% commission based on the initial listing price of $340,000 instead of the actual closing price of $350,000. The amount is misleading as it fails to account for the correct property sale price, which is critical for calculating the commission accurately.

D ($17,500) YOUR ANSWER

While this is the total commission amount calculated from the closing price of $350,000, it does not reflect the buyer's broker's share. This option ignores the 60% split and represents the total commission rather than the specific amount allocated to the buyer's broker.

Conclusion

To determine the buyer's broker's commission, it is essential to calculate the total commission from the final sale price and then apply the percentage agreed upon for the broker's share. In this case, the buyer's broker is entitled to $10,500, which is 60% of the total commission from the sale of the property. Understanding the correct sale price and commission structure is vital for accurate calculations in real estate transactions.

A broker lists a property at $340,000. The seller agrees to a 5% commission with 60% going to the buyer's broker. The property successfully closes at $350,000. The buyer's broker will receive:

The buyer's broker will receive $10,500.

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