A seller sold a property for $375000 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 $301000 and had recently paid invoices of $400 for the second quarter's water and electricity $1200 for new appliances and roofing repairs of $700. Based only on these items how much will the seller receive at closing?

Rationale

$71,700

To determine how much the seller will receive at closing, we need to account for the sale price, deduct the mortgage balance, and subtract any outstanding invoices. The seller sold the property for $375,000 and must pay off the mortgage of $301,000, leaving $74,000. From this amount, we then subtract the total of the invoices ($400 for water and electricity, $1,200 for appliances, and $700 for roofing repairs), which totals $2,300. Therefore, the amount received at closing is $74,000 - $2,300 = $71,700.

A ($71,700) CORRECT

This is the correct calculation based on the sale price minus the mortgage balance and total outstanding invoices. After selling the property for $375,000 and paying off the mortgage of $301,000, the seller has $74,000 remaining. Deducting the $2,300 in invoices results in $71,700, which accurately reflects the funds the seller receives at closing.

B ($72,400) YOUR ANSWER

This amount is incorrect because it does not accurately account for the total deduction of invoices from the $74,000 remaining after paying off the mortgage. Specifically, it mistakenly assumes a lesser amount of outstanding expenses, which leads to an overestimation of net proceeds.

C ($73,600) YOUR ANSWER

This figure is incorrect as it also miscalculates the outstanding invoices. It appears to incorrectly deduct a smaller sum than the actual invoice total, leading to an inflated amount that the seller would receive.

D ($74,000) YOUR ANSWER

This option neglects to account for the total outstanding invoices that must be deducted from the net proceeds after paying off the mortgage. It mistakenly suggests that the seller retains the entire amount remaining after the mortgage without considering additional expenses that need to be settled.

Conclusion

The seller's net proceeds from the property closing amount to $71,700 after deducting the mortgage balance and outstanding invoices. Each incorrect option results from either miscalculating the deductions or failing to account for all expenses, highlighting the importance of careful calculations in real estate transactions. Understanding these deductions is crucial for accurately determining the seller's final payout at closing.

$71,700

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