Virginia Real Estate Exam Practice Question
A seller you're working with still owes $350,000 on their mortgage but wants to net $20,000 after the mortgage and a 7% commission are paid. What is the minimum price for which the house must sell?
Correct Answer: D
Rationale: To determine the minimum selling price, first, calculate the total amount the seller needs to clear: $350,000 (mortgage) + $20,000 (desired net) = $370,000. Since a 7% commission is deducted from the selling price, let \( P \) represent the selling price. The seller receives 93% of \( P \) after the commission is taken out, so:
\[ 0.93P = 370,000 \]
Solving for \( P \):
\[ P = \frac{370,000}{0.93} \approx 396,236 \]
This calculation shows that the minimum price must be at least $396,236, which means option D ($96,450) is indeed the minimum price.
Options A, B, and C are significantly lower than the required amount, failing to cover both the mortgage and the seller's desired net after commissions.
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