What does it mean when the question is asking me to calculate the seller’s net?

The first deduction from the the sales price is the real estate commission, agreed.

For example, if you sold a property from $100,000 with a 5% commission, that means the agent earned $5,000 and the seller took $95,000. So the seller received 95% of the sale amount after paying the real estate commission.

The seller will use the 95% of the sale amount to pay off any encumbrances (ie mortgage) and closing costs. What ever is left is what the seller will net.

What you need to remember is that the sales price represents 100%. So 100% minus the commission percentage equals percent after commission.

So if you want to calculate:

Percent after commission = Seller’s Net After Commission divided by Sales Price

100% Sales Price - 5% Real Estate Commission = 95% Percent after Commission

Sales Price = Seller’s Net After Commission divided by Percent after Commission

$95,000 / 95% = $100,000

Seller’s Net After Commission = Sales Price x Percent After Commission

$100,000 x 95% = $95,000

Sample Questions:

After deducting $7,800 in closing costs and a 7 percent broker’s commission, the sellers received their original cost of $225,000 plus a $12,500 profit. What was the sales price of the property?

$7,800 closing costs + $225,000 original cost + $ 12,500 profit = $245,300 Sellers Net After Commission

100% Sales Price - 7% = 93% Percent After Commission

$245,300 Sellers Net After Commission divided by 93% Percent After Commission = $263,763 Sales Price is the answer

A seller agrees to lis his property on the condition that he will receive at least $47,300 after paying a 5 percent broker’s commission and paying $1,150 in closing costs. At what price must it sell?

$47,300 + $1,150 = $48,450 Seller’s Net After Commission

100% Sales Price - 5% = 95% Percent After Commission

$48,450 Sellers Net After Commission divided by 95% Percent After Commission = $51,000 Sales Price

Remember that you often have to to some type of conversion prior to your calculation and you will do just fine.

Interested in a career in real estate? The Real Estate Class is the place to start.