A seller sold a property for $375,000, with the closing on July 1st, in a jurisdiction where the buyer pays for the day of closing. The seller had a mortgage balance at the time of closing of $301,000, and had recently paid invoices of $400 for the second quarter's water and electricity, $1,200 for new appliances, and roofing repairs of $700. Based only on these items, how much will the seller receive at closing?

Rationale

The seller will receive $74,000 at closing.

To determine the net proceeds the seller will receive at closing, we subtract the mortgage balance and the seller's expenses from the sale price of the property. The calculation reflects the seller's financial situation by accounting for both the selling price and the costs incurred.

A (71,700) YOUR ANSWER

This amount incorrectly assumes a greater deduction from the sale price than is warranted. It likely miscalculates the total expenses or fails to properly account for the mortgage balance, resulting in an underestimate of the seller's net proceeds at closing.

B (72,400) YOUR ANSWER

This choice may represent a miscalculation of the seller's expenses or an incorrect assumption about the closing costs. It does not accurately reflect the necessary deductions from the sale price of $375,000, leading to an underestimation of the actual amount the seller will receive.

C (73,600) YOUR ANSWER

This option suggests a minor deduction from the sale price, but it still does not account for all expenses correctly. It overlooks one or more of the seller's costs, resulting in an amount that is still less than the actual proceeds the seller is entitled to at closing.

D (74,000) CORRECT

This figure accurately reflects the seller's net proceeds after accounting for the mortgage balance of $301,000 and the total incurred expenses of $2,300 (the sum of $400 for utilities, $1,200 for appliances, and $700 for roofing repairs). Thus, the calculation is as follows: $375,000 (sale price) - $301,000 (mortgage) - $2,300 (expenses) = $74,000.

Conclusion

In conclusion, the seller's net proceeds at closing are calculated by deducting the outstanding mortgage balance and additional expenses from the sale price. The correct amount the seller receives, after careful accounting of all financial obligations, is $74,000. This calculation is crucial for understanding the financial implications of the sale and ensuring clarity in real estate transactions.

The seller will receive $74,000 at closing.

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