Math Walkthrough
Seller's Net Calculation: Real Estate Exam Math Walkthrough
Seller's net problems determine what the seller actually receives at closing after deducting mortgage payoff, commission, and closing costs. The exam often asks 'What sale price does the seller need to net X dollars?' — which requires reverse-engineering from the desired net amount.
Forward Problem (Easy)
Given the sale price, calculate the net: Net = Sale Price − Mortgage Payoff − Commission − Closing Costs.
Reverse Problem (Trickier)
Given the desired net, find the required sale price. The trick: commission is a percentage of sale price, not net. So if seller wants $X net after a 6% commission, the sale price must be calculated using:
Sale Price = (Desired Net + Mortgage Payoff + Closing Costs) ÷ (1 − Commission Rate).
Three Worked Examples
Question 1
Sale price: $400,000. Mortgage payoff: $200,000. Commission: 6%. Closing costs: $5,000. What's the seller's net?
Commission: $400,000 × 6% = $24,000. Net = $400,000 − $200,000 − $24,000 − $5,000 = $171,000.
Question 2
A seller wants to net $200,000 after a 6% commission, mortgage payoff of $150,000, and $4,000 in closing costs. What's the required sale price?
Sale Price = ($200,000 + $150,000 + $4,000) ÷ (1 − 0.06) = $354,000 ÷ 0.94 = $376,595.74.
Question 3
Sale price: $325,000. Mortgage payoff: $180,000. Commission: 5.5%. Closing costs: $3,500. Property tax credit to buyer: $800. What's the seller's net?
Commission: $325,000 × 5.5% = $17,875. Net = $325,000 − $180,000 − $17,875 − $3,500 − $800 = $122,825.
Practice Seller's Net
Drill forward and reverse seller's net problems.
Related Math Pages
Seller's Net FAQ
Why divide by (1 − commission rate) in reverse problems?
Because commission is a percentage of sale price. If commission is 6%, seller keeps 94% of sale price after commission. To find the price that yields a target net, you divide the needed amount by 0.94.
Does net include closing costs?
Yes. Net is what the seller actually receives after ALL deductions including closing costs, transfer taxes, and prorations.
Are credits to buyer deducted from seller's net?
Yes. Any credits to buyer (e.g., for prepaid taxes or repairs) reduce seller's net.