A buyer made a 10% earnest money deposit on the sale of a $77,000 house. The listing agreement stated that the licensee's commission was to be 6% of the sale price. As authorized by the buyer and the seller, the licensee paid, for the seller, the title fee of $190 and the termite inspection fee of $125. At the closing, how much money will the seller receive from the balance of the earnest money deposit?

Rationale

$2,765

To determine how much money the seller will receive from the balance of the earnest money deposit, we first calculate the total earnest money deposit, the commission owed to the licensee, and subtract any fees paid on behalf of the seller from the deposit.

A ($2,765) CORRECT

The earnest money deposit is 10% of $77,000, which totals $7,700. The commission at 6% of the sale price equals $4,620. The total fees paid by the licensee for the seller ($190 for the title fee and $125 for the termite inspection fee) amount to $315. Therefore, the seller's net from the earnest money deposit is calculated as follows: $7,700 - $4,620 - $315 = $2,765.

B ($3,080) YOUR ANSWER

This amount incorrectly assumes that the seller receives more than the fees and commission deducted from the earnest money deposit. It does not account for the appropriate deductions from the total deposit, leading to an overestimation of the funds the seller would receive.

C ($4,620) YOUR ANSWER

This figure represents the total commission owed to the licensee, not the amount the seller will receive. It overlooks the deductions for the title and termite inspection fees, which must be accounted for to determine the seller’s actual net proceeds.

D ($4,936) YOUR ANSWER

This choice incorrectly sums the commission and fees without deducting them from the earnest money deposit. It miscalculates the net amount the seller receives, failing to reflect the correct financial outcome after all payments have been made.

Conclusion

The accurate calculation of the seller's proceeds from the earnest money deposit reveals that after deducting the commission and fees, the seller will receive $2,765. This reflects the importance of careful accounting in real estate transactions, ensuring that all relevant fees are considered to determine the net amount received by the seller at closing.

$2,765

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