Sarah sold property for 200,000 and agreed to pay 6% commission as well as 2 points for the buyer's loan as concessions based on 90% loan. What would she clear at closing?

• A. 176,000
• B. 184,400
• C. 200,000
• D. 188,000

Answer: (B)

The main idea is to determine seller net proceeds by subtracting costs tied to the sale from the sale price. The sale price is 200,000. The broker’s commission is 6% of the sale price: 0.06 × 200,000 = 12,000. The buyer is getting a loan at 90% of the sale price, so the loan amount is 0.90 × 200,000 = 180,000. The 2 points on the loan are 2% of that loan amount: 0.02 × 180,000 = 3,600. Add these deductions: 12,000 + 3,600 = 15,600. Subtract from the sale price: 200,000 − 15,600 = 184,400. So she would clear 184,400 at closing (assuming no other costs).