Tennessee Real Estate License Exam Practice Question
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?
Correct Answer: D
Rationale: To determine the seller's net proceeds at closing, start with the sale price of $375,000 and subtract the mortgage balance of $301,000. This provides a preliminary amount of $74,000.
The closing costs and invoices paid by the seller, totaling $400 for utilities, $1,200 for appliances, and $700 for roofing repairs, are not deducted from the seller’s proceeds, as they are not typically subtracted at closing in this context. Therefore, the seller retains the full amount after the mortgage payoff, leading to a final net amount of $74,000.
Options A ($71,700), B ($72,400), and C ($73,600) incorrectly account for deductions that do not apply, resulting in lower figures than the actual proceeds.
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